car finance HELP!!!!!

paddy wright

paddy wright

Elite
 south yorkshire
Site Supporter
my better halfs car packed up a month ago- ive tried fixing it but to b honest it's so old and unsafe im happier she doent get it fixed. She has set her heart on a beetle convertble (the z got her hooked in cars and the open air buzz!)
The prob is she has just set out on her career and has no savings. What do banks base loans on (she wont have the best cedit score) do car dealers eg VW give finance to anyone as long as they can put down adeposit and at what rate would this normally be?
 
You can use one of the credit rating agencies to see what you're available credit would be and see if anything is stopping you from getting credit.

However, you might as well visit a couple of dealers anyway and see what they're offering, as if the monthly payment is too high then you won't be able to afford it no matter what the rate.

Typical published rates are around 8% APR, but there's some play in them and you can play them off against each other. Unfortunately if she's only after a new Beetle Cabrio then she's limited to the VW dealers.

Don't forget that you'll get £2000 'scrappage' from your old car (assuming it's over 10 years old and been owned for at least a year).

BTW, VW have a 'finance' calculator, but it does rely on a 20% deposit and 40% final payment (if you want to keep it).
 
Car finance generally will be easier to obtain than a bank loan if her credit isn't so good (though still subject to status). A car finance loan is secured on the vehicle, so they have an asset they can claim if she defaults (the car). On a fully unsecured bank loan their whole amount is at risk, so the lending criteria is stricter and the amount you can borrow often a lot lower. Car finance with a balloon figure on the end will also give her lower monthly payments if that is what she is looking for. The APR will be slightly higher, but that's the trade off.

Dealerships will always quote the most expensive car finance figures, anything from 11-15% APR at the moment. You can use a car finance broker (google) instead and they can arrange a deal with an underwriter direct at a more competitive rate. Mine saved me £105PCM on my old M3, for example.

mmm-five said:
You can use one of the credit rating agencies to see what you're available credit would be and see if anything is stopping you from getting credit.
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Where can you do this? Experian and Equifax both offer credit check services where you can obtain a report for about £15 and see what your rating is like, but as every lender will lend a different amount to everyone based on their own criteria, I have not heard of anywhere you can see 'how much you can borrow' - it's down to the individual bank...?
 
mikedav said:
Where can you do this? Experian and Equifax both offer credit check services where you can obtain a report for about £15 and see what your rating is like, but as every lender will lend a different amount to everyone based on their own criteria, I have not heard of anywhere you can see 'how much you can borrow' - it's down to the individual bank...?
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Er, to be honest I can't remember - it was something I did a while back to see whether I should apply for another balance transfer credit card and the report stated I had £22k of 'available credit'. But as you say it's probably just a rough guess based on your credit score, earnings, etc.
 
would these dealer finace deals be avaible on a used car? sorry to be so dumb- i normally get a bank loan andbuy car cash butned to explore all ptions this time- just want to see her lovin her nw car and crusing with a huge smile on her pretty face!!!
 
some deals can be taken on used cars - that how I bought my z - youd have to talk to the dealers though :D
 
Dealer rate won't be quite so good on a s/h vehicle but you should press for the best you can get.

DO NOT go in to the dealer acting all apologetic and telling them what you told us, as if they need to do you a favour. They'll eat you for beakfast. Be positive and confident and act as if they have a chance to quote but you're just as likely to pay cash or take a bank loan.....they get paid extra commission on the finance (whatever rate they charge you, but the more you pay the more they get) so (i) they have more incentive to get the application cleared, and (ii) they want the business.

Good luck!
 
paddy wright said:
would these dealer finace deals be avaible on a used car?
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Yup, sure you can. Usually it needs to be 'under 7 years old at the end of the agreement term' or something like that...

And as above, whatever figures the dealer gives you, tell them you want a MUCH better deal...they can always cut quite a bit off the finance figures. Personally I've always found they cannot match broker figures though. Just sorted an Alfa MiTo 155 Veloce for my sister and it was 15% cheaper arranging the finance with a broker.

mmm-five said:
Er, to be honest I can't remember - it was something I did a while back to see whether I should apply for another balance transfer credit card and the report stated I had £22k of 'available credit'. But as you say it's probably just a rough guess based on your credit score, earnings, etc.
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That makes sense, credit is such a black art / random at times and it really shouldn't be IMO
 
Just for info, I was going to go with a loan from my bank, but the dealer undercut them - bank offered 7.2% APR, dealer went down to 6.9% APR (started at 11).

The other benefit is as it's HP rather than an unsecured loan, if I need to I can take advantgage of the voluntary termination clause in the HP agreement.

Check how the interest is calculated/paid, as some will pre-load the agreement with the interest so the first year pays nothing off the capital amount owing - although I don't think they're allowed to do that on HP anymore, so another possible benefit over an unsecured loan.
 
thanks for the advice- will it effect her credit rating if they turn her down? Should i agree the price on the car and then work out the apr on the fnance or vice versa. Sorry to be so thick but its goin to a close call on this one!!!
 
paddy wright said:
thanks for the advice- will it effect her credit rating if they turn her down? Should i agree the price on the car and then work out the apr on the fnance or vice versa. Sorry to be so thick but its goin to a close call on this one!!!
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Any check which fails will leave a mark in the same way any successful check leaves a mark...

Get the car price softed first - then fight for the right finance deal. Its nowhere near as good and easy as it used to be to get good finance deals, but its starting to ease a little...

I just went through this with BMW again for the second time in 5 years - basically I told them how much I wanted to borrow, for how long and how much I was willing to pay back per month (realistically) - ended up with a 4.9% APR deal with them this way - it works for me as I won't have the loan for the term.

Make sure you check the arrangement and settlement fees of any deal - they are NOT usually included in the deposit amount and usually come out of the first and last payments made.
 
Ive just left uni, with BMW on 12k i was on 12.9% however just switched to a personal loan at 8% which I dont find too bad at all (Tesco).

Ive been in work two months so similar situation I guess.
 
speedski said:
paddy wright said:
thanks for the advice- will it effect her credit rating if they turn her down? Should i agree the price on the car and then work out the apr on the fnance or vice versa. Sorry to be so thick but its goin to a close call on this one!!!
Click to expand...

Any check which fails will leave a mark in the same way any successful check leaves a mark...
Click to expand...

All searches are recorded but it does not list 'accepted' or 'declined', just that a search was made. If she has too many searches, it will affect her rating for some lenders (they assume she's either borrowed a lot lately or has been turned down by someone else - catch 22). If she tries with a couple of lenders and has no luck, it's best to leave it for a few months. Again this is where a broker can be handy....dealers will simply submit it to their run-of-the-mill in house finance and see what happens, if you fail they give up. A broker submits it to the underwriter he knows will be interested.

speedski said:
I told them how much I wanted to borrow, for how long and how much I was willing to pay back per month (realistically) - ended up with a 4.9% APR deal with them this way
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Personally I would never say how much I want to spend per month, as magically, that is what their figures will come out at (or a few quid above). But 4.9% APR sounds extremely low, is that straight line HP?
 
If you're confused about APRs just use the bare numbers. The danger with APR is that its a calculation (with about 20 variables in it as I recall from my CCA Act days) that is intended to compare similar products.

So just look at the overall cost; deposit + repayments and compare the deals that way....then its really down to whatever cash flow suits you best. And its been a long-standing fact in the finance business that, whatever you might think, peoples primary consideration, above all others, is the ease of getting their mitts on the dirty money - and that makes people do silly things...quite often!

I mean when buying a house, bust your arse bigtime, especially now, but not with a car, take your time and make a sensible decision. :thumbsup:
 
the bank came through and going to view the car 2moro- she loves it and ive done a belting deal on it so subject to it being as good as it sems pics will follow!
Cant wait to see her happy face!
 
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