Borrowing for a car - HP vs Personal Loan (probably Zopa)
Discussion
I'm looking at buying a car and weighing up my options. I have a part-ex plus a bit of cash (can probably stretch to £13,000 but would prefer if it was more like £10,000 or £11,000) and I'm looking at to borrow an additional £15,000.
I can do the HP route to raise the rest of the money and need to make repayments as cheap as possible so might be looking at a 5 year plan (I know 5 years is generally not recommended). Monthly repayments on this would be about £312 and the total cost would come to £18,720.
Been looking at Zopa and I can get the £15,000 over 5 years at £296 a month, total cost being £17,794.
The thing that bothers me is if I need to get rid of the car - I think the Zopa route is most attractive here as it means the car isn't tied to HP and I can probably get a better price if I sell. I can then repay the loan off without penalty (according to their terms https://uk.zopa.com/help/help-faqs-borrowing#early...
I've never used HP route before but think I'll be more restricted when I come to sell - would probably have to sell to dealer and take a hit on the car value and also incur HP penalties too?
Right now, I'm thinking the Zopa route is best but would be interested in opinions on this and also any other general advice.
Cheers!
I can do the HP route to raise the rest of the money and need to make repayments as cheap as possible so might be looking at a 5 year plan (I know 5 years is generally not recommended). Monthly repayments on this would be about £312 and the total cost would come to £18,720.
Been looking at Zopa and I can get the £15,000 over 5 years at £296 a month, total cost being £17,794.
The thing that bothers me is if I need to get rid of the car - I think the Zopa route is most attractive here as it means the car isn't tied to HP and I can probably get a better price if I sell. I can then repay the loan off without penalty (according to their terms https://uk.zopa.com/help/help-faqs-borrowing#early...
I've never used HP route before but think I'll be more restricted when I come to sell - would probably have to sell to dealer and take a hit on the car value and also incur HP penalties too?
Right now, I'm thinking the Zopa route is best but would be interested in opinions on this and also any other general advice.
Cheers!
HP is not restricted as far as early settlement is concerned, and is in fact more strictly regulated than personal loans. Quite straight forward (with the right calculator) to calculate early settlements in advance, I think Zopa are working to the same criteria.
Will email you a couple of examples of early settlement for reference. Cheers, Richard
Will email you a couple of examples of early settlement for reference. Cheers, Richard
Thanks Richard, just read your message too. One thing that bothers me about HP though is selling the car - I can't imagine this is easy privately and a dealer would know you're at their mercy!
Credit card - hadn't thought of that. But, I'd be concerned about asking for such a high credit limit and getting knocked back. I have a very good credit rating at the moment and usually pay my current credit card balance in full. But, would requesting such a high limit on a new card be a red flag?
Credit card - hadn't thought of that. But, I'd be concerned about asking for such a high credit limit and getting knocked back. I have a very good credit rating at the moment and usually pay my current credit card balance in full. But, would requesting such a high limit on a new card be a red flag?
cc000001 said:
Thanks Richard, just read your message too. One thing that bothers me about HP though is selling the car - I can't imagine this is easy privately and a dealer would know you're at their mercy!
Credit card - hadn't thought of that. But, I'd be concerned about asking for such a high credit limit and getting knocked back. I have a very good credit rating at the moment and usually pay my current credit card balance in full. But, would requesting such a high limit on a new card be a red flag?
credit limit doesn't affect your credit rating but your limit will be ahem...limited by how much you already have on other cards. If you are rejected for a credit card application that will affect your credit rating though. Another thing to keep in mind is that even though the card is interest free there is always still a clause which says you must pay some form of miminum payment on it. Having a balance on your card (i.e not settling balance in full) will also affect your credit ratings depending how long the balance is left for.Credit card - hadn't thought of that. But, I'd be concerned about asking for such a high credit limit and getting knocked back. I have a very good credit rating at the moment and usually pay my current credit card balance in full. But, would requesting such a high limit on a new card be a red flag?
Take a look at the M&S car buying loan, works in a similar way to a pcp where a % of the loan amount is paid at the end of the term (or refinanced) so lower monthly payments. The interest rate is pretty good too. I bought my current car this way on a 2 year loan so will sell the car and pay the lump sum and start again at the end of the 2 yrs.
HP does have it advantages, you get the possibly of a VT, plus if anything goes wrong with the Car in the early days and you have a issue with the garage the Bank can lean on the garage much harder than you can (they're liable as by the letter of the law they supplied the car to you - although they will avoid getting involved if they can).
Selling the car mid-term isn't the nightmare you might think it is, although it does require a bit more faf and a little bit of trust between you and the buyer. All you need to do it request a settlement figure from your lender provide this to your buyer and ask them to pay that amount to the bank directly and the remaining equity to you. The bank will confirm when they have the money. The buyer knows their car if HPI clear and you know your liability is covered, it can add a few days to the transaction though.
Selling the car mid-term isn't the nightmare you might think it is, although it does require a bit more faf and a little bit of trust between you and the buyer. All you need to do it request a settlement figure from your lender provide this to your buyer and ask them to pay that amount to the bank directly and the remaining equity to you. The bank will confirm when they have the money. The buyer knows their car if HPI clear and you know your liability is covered, it can add a few days to the transaction though.
minipickup said:
Take a look at the M&S car buying loan, works in a similar way to a pcp where a % of the loan amount is paid at the end of the term (or refinanced) so lower monthly payments. The interest rate is pretty good too. I bought my current car this way on a 2 year loan so will sell the car and pay the lump sum and start again at the end of the 2 yrs.
Sorry, been off the radar with this and dealing with other things but picking it up again now. I wasn't aware of the M&S loan and it does indeed look very good. Seriously thinking of taking the plunge now 
Gassing Station | Finance | Top of Page | What's New | My Stuff