Is car finance a good idea?

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Is car finance a good idea?

I’m in the market for a new car. My current car needs a new clutch and new drive shafts. I need to travel 60 miles to work everyday, I need a reliable car. So I think it’s time for it to go.

I’ve got a £1000 banked but pondered on the thought of financing a car instead.

I’ve looked around a few garaged and some of the boast a guaranteed finance scheme, so is this all circumstanced accepted?

I’m 19, studying a part time degree, while also working at Halfords, earning me approximately £600 a month. More like £900 a month now that I’m working full time during the summer break.

I live at home with my parents and my only outgoings are my contract phone and £80 a month rent.

Student finance direct are kindly providing me with a loan for £3515, but in 3 equal instalments, one in September, one in January and the final one in April.

I think I could easily afford to finance a car, I only plan to spend up to £2,500.

What’s your opinion on car finance for someone in my position?

Thanks

Tom
 
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If you only plan to spend that much and already have £1k, apply fo a credit card with interest free purchases or one with interest free ballance transfers (and buy it on another card then transfer it over).

You can then clear this as and when you have enough money from your student loan payments rather than having to pay back your loan at a fixed amount each month.
 
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SgtTupac said:
How do you think most people afford their cars? :)
Cash talks
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If you can afford the repayments and get a loan with a sensible interest rate then I'd go for it.

Borrowing £1,500 isn't much at all if you're earning £600 a month with few outgoings. To be honest, you could probably just use a low interest overdraft to finance that amount, might be easier as getting a low interest loan whilst working only part time might be tricky.

Even juggling the £1,500 on interest free credit cards might be the best bet - as you could easily have that paid off within 6 months.
 
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In your circumstances the best option would be to get a credit card or two, that way you can buy it on this and pay off as little or as much each month. I.e. you could pay it off in a few months or pay minimum payment over something like 10 years.

This will probably work out a better rate than finance on this amount. Will give you more flexibility as well to look at other dealers who dont do the finance.
 

GT3

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Isn't your car that quite tidy '99 1.8 306? If so get a pair of driveshafts for about £140 reconditioned, clutch for about £60 and book a couple of days off work and DIY. Not that hard :) £200 is cheaper than a few grand on a new car...
 
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Yup I used to have a 1.8 306, but had an accident in that. Now I'm driving a 106.

I did try for a credit card last year, but I got declined, whether thats because of my lack of credit history or my young age, I don't know.

So my next question what is a good rate to pay for car finance, I'm not an expert on the subject.

I'm going to view a few cars today. A '99 2.0 306 XSI(phase 3), a '00 Saxo VTR, a '00 306 L HDI and a '99 Saxo VTR and if I get time a '01 1.8 Xsara VTR(mk1).

I can't think of another car I'd like to buy, possibly a Focus?
 

Pug

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When i bought the celica Toyota were quite happy to give me a finance rate of 4%, which is pretty cheap tbh, and even tho i had the cash i decided to invest that in shares etc and make money on having the finance...

doubt all places will be as cheap tho - a good personal loan rate - as a guide - is 5.9%
 
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Find out what your best rate of interest would be from a bank and then make sure car finance won't cost you any more.
Most people can get loans these days from many banks at around the 6.9% APR level.
Peugeot initially wanted to charge me somewhere in the region of 9% APR and even when I said I could get a bank loan for less they initially dropped only as far as 8%.

A "I'm really going to have to think about this" later and I managed to wangle if I remember correctly somewhere in the region of 4% APR - they are still making something but to me that amount is acceptable in so far as to get that low you usually have to have a much more hefty deposit than I had.
 
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i'd avoid finance secured against the car, check out www.gemoney.co.uk I got a 5.7% APR loan agreed inside a few hours from them. If things go wrong you just sell the car and pay off the loan. Rather than handing the car back and having nothing to show.
 
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Car finance is, in my opinion, a bad idea. You don't own the car until the agreement is up, and you can run into issues if you want to sell it before then.

A bank loan however, is fine. You own the car from day 1 and can sell the car at any stage without any issues, should you so wish. Just make sure you get a decent rate, and can definately afford the monthly repayments.
 
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Trojan said:
Car finance is, in my opinion, a bad idea. You don't own the car until the agreement is up, and you can run into issues if you want to sell it before then.

A bank loan however, is fine. You own the car from day 1 and can sell the car at any stage without any issues, should you so wish. Just make sure you get a decent rate, and can definately afford the monthly repayments.

this in my limited experience is by far the best option, much more flexible and in most cases much cheaper.
 
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I went to look at the cars mentioned earlier in the thread. The 306 was stunning, I took it for a spin and instantly fell in love. Not wanting to make my mind up straight away, I left to view some other cars.

I went to look at a Xsara VTR and a Xsara VTS. Both were facelift model, which in my opinion look far worse than the older models. The VTR was awful, the VTS was nice, but not nearly as nice as the 306 and insurance will be cheaper on the 306.

I filled out a finance form for the 306 XSI (borrowing £2,300 over 24 months) They later contacted me and said that i needed a Guarantor, which shouldn't be a big problem for me. I asked what the repayments would be, but he couldn't tell me until I had passed a credit check. Fair enough I thought, I asked for an approximate figure to which he replied "about £30 a week). Thats £3120 altogether. To me that sounds a lot, anyone agree?

Thanks for you help guys. I think I'm gonna pop into my bank and see what they can offer.
 
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If your only after a small amount, you are living at home and have a regular income it might be worth asking the parents ! I borrowed 6k off my dad for first car, tax, insurance etc. had it paid back in 5 months or so

edit: corrected the awful spelling
 

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Tdh1987 said:
I went to look at the cars mentioned earlier in the thread. The 306 was stunning, I took it for a spin and instantly fell in love. Not wanting to make my mind up straight away, I left to view some other cars.

I went to look at a Xsara VTR and a Xsara VTS. Both were facelift model, which in my opinion look far worse than the older models. The VTR was awful, the VTS was nice, but not nearly as nice as the 306 and insurance will be cheaper on the 306.

I filled out a finance form for the 306 XSI (borrowing £2,300 over 24 months) They later contacted me and said that i needed a Guarantor, which shouldn't be a big problem for me. I asked what the repayments would be, but he couldn't tell me until I had passed a credit check. Fair enough I thought, I asked for an approximate figure to which he replied "about £30 a week). Thats £3120 altogether. To me that sounds a lot, anyone agree?

Thanks for you help guys. I think I'm gonna pop into my bank and see what they can offer.


Holy Smokes its a rate of 18% flat DONT take they're finance/
 
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Tdh1987 said:
I went to look at the cars mentioned earlier in the thread. The 306 was stunning, I took it for a spin and instantly fell in love. Not wanting to make my mind up straight away, I left to view some other cars.

I went to look at a Xsara VTR and a Xsara VTS. Both were facelift model, which in my opinion look far worse than the older models. The VTR was awful, the VTS was nice, but not nearly as nice as the 306 and insurance will be cheaper on the 306.

I filled out a finance form for the 306 XSI (borrowing £2,300 over 24 months) They later contacted me and said that i needed a Guarantor, which shouldn't be a big problem for me. I asked what the repayments would be, but he couldn't tell me until I had passed a credit check. Fair enough I thought, I asked for an approximate figure to which he replied "about £30 a week). Thats £3120 altogether. To me that sounds a lot, anyone agree?

Thanks for you help guys. I think I'm gonna pop into my bank and see what they can offer.

Yep, don't do it. Get a credit card or wait tbh, that is a high rate of interest with what will be little flexibility.
 
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