Personal Loans – What Can Go Wrong? | The Best Car Finance Blog In The World

Personal Loans – What Can Go Wrong?

Monday, 7. September 2009

The test of a finance arrangement isn’t so much the cost or the APR but in the current climate, what happens when things go wrong. Most of my readers know my views on the heavy promotion of personal loans rather than dealer HP but another issue was mentioned to me this week that again shows why HP is far more beneficial than a personal loan. When you take out dealer HP it is what is known as a linked transaction so the lender shares responsibility for the representations made by the dealer as well as the merchantable quality and fitness for purpose of the vehicle. This not only means that you can sue either or both parties over a misrepresentation but lets say that you bought a used car and it was shown to be not of merchantable quality as it suffered many faults within a couple of days of you collecting the car. Not only have you the right to reject the goods but you also reject the finance which means you are entitled to a return of all money paid. Under the recourse terms that exist between the lender and the dealer the lender can seek to recover his losses but this won’t affect you and you can walk away cleanly. Compare this with a personal loan, the money would have been paid over to the dealer for the car. You have no redress on the lender, he will simply expect you to repay the loan so you must now fight the dealer to get your money back to enable you to buy another car. But the good news is you saved yourself a few percentage points on the APR – good luck with getting your money back and well done to all the newspapers, motor magazines and TV and radio experts that told you to go the personal loan route!! By Graham Hill