20 Nov 2012

Dacia Sandero costs £69 a month. What's the catch?

We love Dacia.  We love the concept of a cheap, no-nonsense hatchback or SUV and we think, and hope, Dacia will sell lots of Sanderos and Dusters.

Dacia announced today that the Sandero is now Britain's most affordable new car with monthly payments from £69.  On paper that looks a fantastic deal - The Sandero Access 1.2 16v 75 costs £5,995.

This has been reported widely as a continuation of Dacia's incredible affordability.  The headline figure has been screamed across the headlines of the UK motoring press.

But something's got to give.  For a start the deal is over 48 months which is a hell of a long time to own a car.  But, some people do keep them that long, so we'll forgive that.  Now multiply 48 by 69.  The answer is £3,312.  That  means after 4 years you'll still be short of £5,995 by £2,683.  Oh, and add in the fact you have to put down a deposit of £1,845 in the first place.  And a £99 acceptance fee.  And if you want to own it after 48 months you'll need to pay another £1701 and a £149 option to purchase fee on top of that.

You might be feeling confused after reading that last paragraph.  Here's how it all stacks up:

Deposit £1,845
49 monthly payments of £69 £3,312
Acceptance fee £99
Total payment £5,256

And after 48 months you don't own the car.  You'll have paid an average of £110 per month, not £69.  If you want to own the car, in order to realise it's used value, you'll need to pay another £1,850.  That brings the average cost per month up to £145.

If you end up buying a Sandero, on a £69 per month finance deal, at the end of 48 months you will have paid a total of £7,106 (and will have paid an average £145 per month).  That means you've paid £1,111 in interest and other fees - Dacia charge 9.4% interest on the loan.  Given the only loan you are taking from Dacia is the £3,312 in monthly payments then that £1,111 in interest and fees represents 33% of the total credit.

So don't be fooled by the headlines.  The Sandero is a fantastic car for the money but if you buy one make sure you enter into the deal with your eyes open.

Don't think £69 per month.  Think £145 per month.