Love that car, hate the fees

Ben has a soft spot for European cars. When he found a Renault Clio RXT for sale for $14,995 he couldn’t believe his luck. He hadn’t seen one for sale for months.

Ben hadn’t really been intending to change his car, but the yard offered him $2,000 as a trade-in for his old car and said they could get him approval for a loan for the balance while he took a test drive. Ben thought the interest rate was pretty fair - 13.95% sure sounded a lot better than what he pays on his credit card (19.9%). So, without looking too closely at what he was signing, he put his name to the deal and drove the car home, feeling great.

Two days later Ben received the disclosure statement for his loan in the post. He sat down and read it carefully and was surprised to see that he had borrowed $14,995, not the $12,995 he had expected. He rang up the yard to point out the mistake and was told there was no mistake. The deal Ben signed up to included repayment insurance and the premium for the insurance was added to the loan amount, along with administrative charges and approval fees.

Ben wasn’t impressed. He rang around a few other financial institutions and organised a replacement loan at a similar interest rate. Then he advised the dealer that he had changed his mind about the finance deal he signed up for at the yard. A couple of days later he received a letter in the post confirming that the finance deal had been cancelled - and that he owed the company $395 for their costs.

Ben has decided that next time, if there is a next time, he will organise a loan before he goes car hunting or simply hold out until he’s got enough money saved.