housemaster said:The thing that has always annoyed me with finance is that the people who need it most usually get penalised more!
I am fully aware of the reasons, I was being ironic..[TW]Fox said:This is becuase people who need it most are the most risk to the lender. It's quite simple really. Totally skint people who can't afford any sort of wheels without finance = bad risk for credit.
So they get charged loads.
Finance - If the company don't get payment they can take the car.[TW]Fox said:This is becuase people who need it most are the most risk to the lender. It's quite simple really. Totally skint people who can't afford any sort of wheels without finance = bad risk for credit.
So they get charged loads.
housemaster said:So the guy who got 4% needs to check his numbers
Partly true, but not always the case. People can take out secured loans, which are secured on property, assuming there is equity in the property of course. Also, Finance is not always the easier route for the self employed. My friend who is self employed found it very difficult to get finance on his 911 even though he was putting 50k cash into it. No history of credit was his problem, not the fact he was self employed.Simon said:Finance - If the company don't get payment they can take the car.
Loan - Company can not take anything to cover the missed payments.
For this reason it is a lot easier to get finance for people with bad credit historys (and who are self employed)
A good rate my friend!Pug said:by that i suspect you mean me
Well, i ignored base rates and the like, and calculated it this way to check:
i borrowed £10k @ a supposed 4%
Over 3 1/2 i'm paying £274.
eg:
10k + 1yr @ 4%, (£400) = £10400
10400 + 1yr @ 4% (£416) = £10816
10816 + 1 yr @ 4% (£432) = £11249
11249 + 0.5yr @ 4% (£225) = £11473 or £274 a month (which is what i pay).
Was a good deal i thought, hence them "paying" me to have the car loan (the 10k i had cash is in a FTSE tracker, and over the same period will hopefully make twice that)
housemaster said:Partly true, but not always the case.<snip>
Many car sales people are rewarded on the volume of sales rather than the profit in the car they sell. Finance has become more and more profitable for most car dealers nowadays and it is why they typically have a finance manager or alike, ensuring the car salesman is controlled somewhat.Pug said:thats what the guy at toyota prety much said. They dont want to make money on the finance, its just a means of getting the car. They even mentioned that if i pay back the last payment a month early, i'll miss out on the £60 administration fee or whatever it is - they were really helpful.
As I said with finance its down to each individual and why it makes its difficult to provide generic advice on how to finance something.Simon said:I am just going by the experience of my parents who are self employed. They can't just go out and get an unsecured low interest loan like an employed person can
Tdh1987 said:I was accepted for a Capital one card, but I'm still waiting for my card. I phoned my bank today and can't offer loans to students.
Conanius said:save then, honestly, you'll get pee'd off massively if you start having an outgoing you cant control
housemaster said:Well I am no expert on car finance, but I have financed a number of cars over a number of years so can perhaps shed some light on things. The first thing to consider is how much you want to borrow. If you are talking about a couple of grand then there are probably cheaper and safer ways to secure finance than taking out a car finance agreement. Bank loan, overdraft extension, cheap or ideally interest free credit card are all good options, but remember that when the interest free period runs out on your credit card you might well find it expensive if its not paid off. I bought my first and second car with a bank loan, and they were £1,000 and £3,400 in the early 80's.
As with most finance there are many options to consider with car specific finance. It is fair to say that if you finance a car using this method the car is not yours, but what does this really matter? To say you can't get out of it as easy is utter and total rubbish with most modern finance arrangements, but again it all depends on the small print. Some lease and PCP agreements will have penalties attached to them, but you would be foolish to take them.
The thing that has always annoyed me with finance is that the people who need it most usually get penalised more! I would also focus less on the APR, which can be shown and accounted for in many different ways and look more at the rate over FHBR (finance house base lending rate) or BOEBR (Bank of Englands Base Rate).
Most car dealers will talk 'flat rates' when they mean percentage over FHBR. So when you hear 4% flat, it is actually 9% APR or more! So the guy who got 4% needs to check his numbers because I bet its 4% over FHBR which is the normal rate for dealers.
I currently pay 1.9% over FHBR which is exceptional for a car finance agreement. You have to negotiate hard and also look for agreements which account for interest daily. That was you don't get a front loaded deal that sees you paying interest for the first 12 months!
It is a minefield out there and most people don't have a clue what they are doing and get ripped off. They get £500 off the car then get thumped by stupid finance, which costs much more over the period of the finance.
Car finance can be extremely competitive but like all things you need to shop around and look at the small print.
aztechnology said:I don't really follow Housemasters' logic there. The way "the powers that be" determined we all should compare interest rates is with APR.
Everyone who offers loans must quote the APR as the most prominent figure, and it is an attempt to give a direct comparison of the various loan figures.
the only way loan figures can appear to be loaded, is to not reallt indicate that an initial payment does not form part of the loan (it can make the APR look better as less money is actually loaned over the same period)
Maz said:The documentation fee and option fee actually increase the APR.
aztechnology said:technically, if the fee is payable up front, it doesn't form part of the loan, so is not part of the APR calc.