Car finance question
Discussion
Sorry if this sounds like a stupid question but believe or not I have little to no experience and perhaps this is something too sensitive to discuss with people IRL...
Currently I am on a finance deal of £400/pm for 5 years. This is for a £18,000 finance. Not sure this is a good deal as this is the first time I've took out finance.
Anyhow, I might be looking at purchasing another car. Long story short after the p/x and balance settlement I am looking to borrow £30,000. My income has only slightly changed for the better since I've applied for this finance at the start of the year.
Do you think I would even qualify for such a finance deal based on my current circumstances? For arguments sake let's say I have excellent credit rating.
I know this is stupid but I will feel utterly embarrassed if I went ahead and apply for finance and get rejected based on salary/income...
Currently I am on a finance deal of £400/pm for 5 years. This is for a £18,000 finance. Not sure this is a good deal as this is the first time I've took out finance.
Anyhow, I might be looking at purchasing another car. Long story short after the p/x and balance settlement I am looking to borrow £30,000. My income has only slightly changed for the better since I've applied for this finance at the start of the year.
Do you think I would even qualify for such a finance deal based on my current circumstances? For arguments sake let's say I have excellent credit rating.
I know this is stupid but I will feel utterly embarrassed if I went ahead and apply for finance and get rejected based on salary/income...
It's not only credit rating but amount you are putting up front into the deal. The only time I have been questioned was when I put a rather pathetic 10k into a 75k car (I was building a house at the time!) On every other occasion, the deal has gone through without even having to disclose how much I earn.
So over 5 years your £18000 loan has cost you £6k or £100 a month.
I think that's about 10% APR. Quite a lot. Maybe see if you can get a striaght bank loan? Check out Moneysupermarket.com sainsburys are doing loans @ 6% APR.
Whether or not you can afford it only you know, in the current climate they're much tighter who they lend to, they won't let you spunk away hapf your monthly income on loan repayments.
I think that's about 10% APR. Quite a lot. Maybe see if you can get a striaght bank loan? Check out Moneysupermarket.com sainsburys are doing loans @ 6% APR.
Whether or not you can afford it only you know, in the current climate they're much tighter who they lend to, they won't let you spunk away hapf your monthly income on loan repayments.
GetCarter said:
It's not only credit rating but amount you are putting up front into the deal. The only time I have been questioned was when I put a rather pathetic 10k into a 75k car (I was building a house at the time!) On every other occasion, the deal has gone through without even having to disclose how much I earn.
Correct. Don't forget being on the voter's role helps, as does living at the same address for a long time. dibbers006 said:
More interest in why someone would want to put down £400p/m on a vehicle if they have mortgage payments. If it is all affordable, then I don't see why you wouldn't use a loan of some sort rather than Finance.
My mortgage is around 600p/m so that leaves around 1k after finance+mortage for me. I must admit I don't go out much except to parks etc with family so my monthly outgoings are low. I also only shop for cheap stuff on eBay :Pmattnunn said:
So over 5 years your £18000 loan has cost you £6k or £100 a month.
I think that's about 10% APR. Quite a lot. Maybe see if you can get a striaght bank loan? Check out Moneysupermarket.com sainsburys are doing loans @ 6% APR.
Whether or not you can afford it only you know, in the current climate they're much tighter who they lend to, they won't let you spunk away hapf your monthly income on loan repayments.
Yes, the interest is quite high but the finance co is linked to the dealership where I bought my car so got tied in. I would be tempted to get a personal loan however with buying cars especially one with outstanding finance and also as p/x I reckon finance is the best way to go?I think that's about 10% APR. Quite a lot. Maybe see if you can get a striaght bank loan? Check out Moneysupermarket.com sainsburys are doing loans @ 6% APR.
Whether or not you can afford it only you know, in the current climate they're much tighter who they lend to, they won't let you spunk away hapf your monthly income on loan repayments.
If I do get a personal loan it would have to a) pay off the remainder of my finance and b) pay the outstanding amount of the new car... which I reckon would be way over £35,000...?
al1991 said:
Correct. Don't forget being on the voter's role helps, as does living at the same address for a long time.
Voter I am however I do move house quite often... I was renting for many years until 2 years ago when I first got on property ladder. However I've moved twice since then due to selling properties etc... I'm in my current house just over one year. In regards to credit rating, I did the Experian thing 2 months ago and it came back as good.dibbers006 said:
Tyrewrecker said:
dibbers006 said:
Do you own a house?
Huge difference if one is a home owner I assume?I do get a little tired of this constant debate about, why people pay finance for a car....For me, I pick an amount that's affordable each month and see what I can get for my money. Other wise I'm paying out ,000's in cash to lose 30% of it as soon as I drive off the forecourt.
Yes, No, Maybe.
A good clear credit history is the bare minimum to be considered for prime rate funding at the moment.
The rest will be down to other factors.
If it's secured finance against the car, the value of it and it's perceived value through the course of the finance agreement will be a factor. Buy a new car with 10% deposit and it will be a negative equity purchase at least for the first year, maybe longer, if it's a badly depreciating car like a large BMW or Merc Coupe it could be as long as 3 years. Buy a 2 year old car with a 30% deposit and the opposite is true.
Affordability, this is a simple calculation of income verses expenses and set amount for 'living expenses' in that respect a 20 something person who lives with their parents might be considered in a more positive light than a 30 something person with 2 kids and a big mortgage.
In the case of a default the lender can't force anyone to sell their house to pay off some Car HP, so there is little comfort for underwriters in having £200k equity in a house if the mortgage takes all their income to pay. So for you a £10k finance deal might pass, but a £30k deal might not.
Plus market / industry factors play a huge part - in 2007 I could have agreed a finance deal for pretty much anyone with a clear credit history and a 10% deposit - even if the deposit was in the form of a dealer discount, in 2009 the same underwriters wanted 20%, rock solid proof of income and bank statements to even consider a Car deal.
So, if you’ve got a decent deposit, it’s a decent asset, and you can afford the increased payments leaving a suitable amount left over for living expenses – then probably.
A good clear credit history is the bare minimum to be considered for prime rate funding at the moment.
The rest will be down to other factors.
If it's secured finance against the car, the value of it and it's perceived value through the course of the finance agreement will be a factor. Buy a new car with 10% deposit and it will be a negative equity purchase at least for the first year, maybe longer, if it's a badly depreciating car like a large BMW or Merc Coupe it could be as long as 3 years. Buy a 2 year old car with a 30% deposit and the opposite is true.
Affordability, this is a simple calculation of income verses expenses and set amount for 'living expenses' in that respect a 20 something person who lives with their parents might be considered in a more positive light than a 30 something person with 2 kids and a big mortgage.
In the case of a default the lender can't force anyone to sell their house to pay off some Car HP, so there is little comfort for underwriters in having £200k equity in a house if the mortgage takes all their income to pay. So for you a £10k finance deal might pass, but a £30k deal might not.
Plus market / industry factors play a huge part - in 2007 I could have agreed a finance deal for pretty much anyone with a clear credit history and a 10% deposit - even if the deposit was in the form of a dealer discount, in 2009 the same underwriters wanted 20%, rock solid proof of income and bank statements to even consider a Car deal.
So, if you’ve got a decent deposit, it’s a decent asset, and you can afford the increased payments leaving a suitable amount left over for living expenses – then probably.
sixpot said:
Quite simple, car finance is secured against the car....If all goes t**s up, they reposess the car, if you default on a loan for whatever reason, they come after you. I know which I would prefer!!!
The unsecured loan which allows you to sell the car, pay off some/all the debt and doesn't leave a bad mark on your credit history?mudster said:
sixpot said:
Quite simple, car finance is secured against the car....If all goes t**s up, they reposess the car, if you default on a loan for whatever reason, they come after you. I know which I would prefer!!!
The unsecured loan which allows you to sell the car, pay off some/all the debt and doesn't leave a bad mark on your credit history?
ked ether way. Your credit history will be trashed in both cases.In regards to repo, it's not that straight forward. Yes, they'll repo the car, but you'll be charged for it, unless you surrender it to the repo guys it'll be damaged in the process in some way, then it'll be given a quick jet-wash and sent off to auction - usually missing the service history. So generally a Car with a book value of £20k will turn into £15k, or worse after fees and charges that'll be £13k - and you're still liable for the short-fall.
The fact that you have been paying £400 per month on a current agreement which will be replaced with this new commitment is a positive factor as far as underwriting is concerned. You won't get a black mark for settling the agreement early at all - it's your right to do so as part of the consumer credit act and you'll receive a settlement figure that is regulated as such. (Voluntarily terminating an agreement and handing it back to the finance company is a different matter completely but that's not what you're looking to do here.)
Your current finance (£400 x 60 payments on an £18k loan) is approx 13.2% APR. Not bad, but could be improved upon depending on your personal credit.
On the subject - if you'd like a finance example, pop me a quick email and I'll oblige (this is my line of work.) Cheers, Richard.
Your current finance (£400 x 60 payments on an £18k loan) is approx 13.2% APR. Not bad, but could be improved upon depending on your personal credit.
On the subject - if you'd like a finance example, pop me a quick email and I'll oblige (this is my line of work.) Cheers, Richard.
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