Am I being stiched up by this car finance deal.
Discussion
Ok heres the story.
I am taking some car finance out on a 2nd hand 182 Clio at present, due to the fact that all my cash and savings are going into another account so that we can save for our deposit.
I have therefore got an arrangement with the dealer who has set something up with a company called Isis finance.
As I have knocked the guy down some money its working like this.
I have got him down to 4,550 and have given him a 250 deposit to hold the car.
We have financed the car for 5,000 and he is giving me back my 250 deposit plus another 200 totalling 450 he will give back to me, as I can then take this cash to get the service it needs.
Now the finance company have come back with this agreement.
Amount of credit 5,000
Total amount payable 6,868.32
duration 36 months
APR 17.5%
35 payments of 174.12 payable 1 month after the date of this agreement followed by 1 payment of #274.12 payable 36 months after the date of this agreement.
To me this seems ridiculous and im very scared to sign this agreement when I have had problems with payments before.
Im also not 100% sure on how easy it will be to get out of this agreement say we end up selling the car in 12 months time.
Does anyone have any experience with this company or this type of agreement who would be willing to look at it and help me out.
I dont no whether I should just top up my outstanding natwest loan with another 5000 or just go with this credit agreeement.
Help please im really desperate to get hsi sorted ASAP.
I am taking some car finance out on a 2nd hand 182 Clio at present, due to the fact that all my cash and savings are going into another account so that we can save for our deposit.
I have therefore got an arrangement with the dealer who has set something up with a company called Isis finance.
As I have knocked the guy down some money its working like this.
I have got him down to 4,550 and have given him a 250 deposit to hold the car.
We have financed the car for 5,000 and he is giving me back my 250 deposit plus another 200 totalling 450 he will give back to me, as I can then take this cash to get the service it needs.
Now the finance company have come back with this agreement.
Amount of credit 5,000
Total amount payable 6,868.32
duration 36 months
APR 17.5%
35 payments of 174.12 payable 1 month after the date of this agreement followed by 1 payment of #274.12 payable 36 months after the date of this agreement.
To me this seems ridiculous and im very scared to sign this agreement when I have had problems with payments before.
Im also not 100% sure on how easy it will be to get out of this agreement say we end up selling the car in 12 months time.
Does anyone have any experience with this company or this type of agreement who would be willing to look at it and help me out.
I dont no whether I should just top up my outstanding natwest loan with another 5000 or just go with this credit agreeement.
Help please im really desperate to get hsi sorted ASAP.
Even before credit tightened it would have cost around 150 per month for 5k over 3 years so it doesn't sound that drastic. You should check that they don't have an early redemption penalty clause in the agreement and that they are willing to give you a settlement figure at any stage throughout the life of the loan.
Edited by Alonso on Monday 15th February 16:37
Edited by Alonso on Monday 15th February 16:40
True say JDM.
i just saw car finance as a secure means as your borroeing against the collateral, when the loan I currently have is unsecured.
I want to know if my bank can give me a secured loan against the car at a much cheaper rate, as I just dont want to pay an extra 1,800 for no reason what so everm just seems mad.
(Runs off to ring the bank)
i just saw car finance as a secure means as your borroeing against the collateral, when the loan I currently have is unsecured.
I want to know if my bank can give me a secured loan against the car at a much cheaper rate, as I just dont want to pay an extra 1,800 for no reason what so everm just seems mad.
(Runs off to ring the bank)
I'm a little confused!
So you got him down to £4,550 and have given him a £250 deposit so need to finance £4,300. But sounds like you are looking at financing it for £5,000 - I'm assuming because you want £700 quid in your pocket!
So question is are you getting a good deal on either the £4,300 or the £5,000 and at 17.9% I would say no. So unless you have an adverse credit rating then you should be able to borrow reasonably easily at between 10.9% and 12.9% APR.
Making the payments as follows;
10.9% APR
£4,300 = £139 per month for 36 months
£5,000 = £162 per month for 36 months
12.9%
£4,300 = £143 per month for 36 months
£5,000 = £166 per month for 36 months
These are with no balloon.
The bit that worries my is when you state that you are worried as you have had trouble with payments before - I'm all in favour of finance but with every thing - make sure it's affordable!
So you got him down to £4,550 and have given him a £250 deposit so need to finance £4,300. But sounds like you are looking at financing it for £5,000 - I'm assuming because you want £700 quid in your pocket!
So question is are you getting a good deal on either the £4,300 or the £5,000 and at 17.9% I would say no. So unless you have an adverse credit rating then you should be able to borrow reasonably easily at between 10.9% and 12.9% APR.
Making the payments as follows;
10.9% APR
£4,300 = £139 per month for 36 months
£5,000 = £162 per month for 36 months
12.9%
£4,300 = £143 per month for 36 months
£5,000 = £166 per month for 36 months
These are with no balloon.
The bit that worries my is when you state that you are worried as you have had trouble with payments before - I'm all in favour of finance but with every thing - make sure it's affordable!
Sorry for the essay, but this is the cheapest option.
Apply for one of the following credit cards. They currently offer the longest 0% on purchases (the garage will probably charge you 2.5% handling fee though).
Tesco (12 months 0%)
Sainsburys (10 months 0%)
Pay off as much as you can per month, before the promotional rate ends. When the promotional rate ends, you'll then be charged interest at a rate of 17% APR (which is what the car finance would cost anyway), but you've had 12 months interest free, saving £800.
When the promotional rate is nearing it's end, apply for a new credit card which offers 0% BALANCE TRANSFERS. Whatever balance is left on the card after 10/12 months, BALANCE TRANSFER to the new card.
Go for a card with the longest 0% balance transfer (MBNA/Virgin/Amex are good).
The card issuer will charge you up to 3% of the balance to transfer.
So 2 years will cost you no more than 6% APR.
NEVER, EVER, EVER SPEND ON THESE CREDIT CARDS, EVER. EVVVVVER. NEVER MISS A PAYMENT, SENT UP A DIRECT DEBIT TO PAY OFF THE MINIMUM EACH MONTH, THEN PAY OFF WHATEVER YOU CAN AFFORD ON TOP.
If you were to miss a single payment, the promotional rate would be lifted.
Here's the maths.
Purchase car on credit card for £4750. Garage charges 2.5%.
Balance on Card 1 = 4865
12 months x £175 = 2100
After 12 months, balance on card = 2765
Balance transfer to new card (3%)
Balance on Card 2 = 2850
12 months x £175 = 2100
After another 12 months, balance on card 2 = 750
Ring Card 1, ask if they are doing any promotional rates on balance transfers. If so, and the rate is more than 3% cheaper, balance transfer back to card 1. Otherwise, pay the 17%ish for the final 6-7 months
Total saving, nearly 2 grand.
Amount borrowed 4750
Repaid 4975
2.5% admin fee = 120 (@ 2.5%)
Balance transfer onto card 2 after 12 months having paid £170 per month for 12 months = £83 (3% of the remaining balance £2768.75
Balance transfer onto card 1 after 12 months having paid £170 per month for 12 months = £22.5 (3% of the remaining balance £750
It's worth the legwork. On a side note, there's no minimum/maximum/fixed term/early repayment penalties. If you get a bonus at work, throw some extra at the debt. If you have spare cash, do the same. Also works if you lose your job, you'll only have to find £25 per month to repay, which isn't end of the world.
Just have discipline and you'll do fine. NEVER spend on them though, that's all.
Apply for one of the following credit cards. They currently offer the longest 0% on purchases (the garage will probably charge you 2.5% handling fee though).
Tesco (12 months 0%)
Sainsburys (10 months 0%)
Pay off as much as you can per month, before the promotional rate ends. When the promotional rate ends, you'll then be charged interest at a rate of 17% APR (which is what the car finance would cost anyway), but you've had 12 months interest free, saving £800.
When the promotional rate is nearing it's end, apply for a new credit card which offers 0% BALANCE TRANSFERS. Whatever balance is left on the card after 10/12 months, BALANCE TRANSFER to the new card.
Go for a card with the longest 0% balance transfer (MBNA/Virgin/Amex are good).
The card issuer will charge you up to 3% of the balance to transfer.
So 2 years will cost you no more than 6% APR.
NEVER, EVER, EVER SPEND ON THESE CREDIT CARDS, EVER. EVVVVVER. NEVER MISS A PAYMENT, SENT UP A DIRECT DEBIT TO PAY OFF THE MINIMUM EACH MONTH, THEN PAY OFF WHATEVER YOU CAN AFFORD ON TOP.
If you were to miss a single payment, the promotional rate would be lifted.
Here's the maths.
Purchase car on credit card for £4750. Garage charges 2.5%.
Balance on Card 1 = 4865
12 months x £175 = 2100
After 12 months, balance on card = 2765
Balance transfer to new card (3%)
Balance on Card 2 = 2850
12 months x £175 = 2100
After another 12 months, balance on card 2 = 750
Ring Card 1, ask if they are doing any promotional rates on balance transfers. If so, and the rate is more than 3% cheaper, balance transfer back to card 1. Otherwise, pay the 17%ish for the final 6-7 months
Total saving, nearly 2 grand.
Amount borrowed 4750
Repaid 4975
2.5% admin fee = 120 (@ 2.5%)
Balance transfer onto card 2 after 12 months having paid £170 per month for 12 months = £83 (3% of the remaining balance £2768.75
Balance transfer onto card 1 after 12 months having paid £170 per month for 12 months = £22.5 (3% of the remaining balance £750
It's worth the legwork. On a side note, there's no minimum/maximum/fixed term/early repayment penalties. If you get a bonus at work, throw some extra at the debt. If you have spare cash, do the same. Also works if you lose your job, you'll only have to find £25 per month to repay, which isn't end of the world.
Just have discipline and you'll do fine. NEVER spend on them though, that's all.
Edited by JDMFanYo on Monday 15th February 17:05
Edited by JDMFanYo on Monday 15th February 17:05
Couple of points which I picked up on...
Firstly, it sounds like you are buying a car which needs a service, is this right? Why not buy a 182 which has just had a service, I'm sure you can find one for similar money.
Secondly, it is never a good idea to get a loan for more than the car is worth, it will be a year or 2 into the loan repayments before you have less to pay off than the car is worth IMO. Get the smallest loan you can physically afford, and preferably with a bank and a lower APR.
Firstly, it sounds like you are buying a car which needs a service, is this right? Why not buy a 182 which has just had a service, I'm sure you can find one for similar money.
Secondly, it is never a good idea to get a loan for more than the car is worth, it will be a year or 2 into the loan repayments before you have less to pay off than the car is worth IMO. Get the smallest loan you can physically afford, and preferably with a bank and a lower APR.
JonX2C said:
I really dont like this whole ballon payment at the end, and im paying 7k for the car instead of 4,550.
just seems stupid to take out such an agreement right!!!
First of all, the "balloon payment" is not much of a balloon, since it is only £100 more that the regular monthly payment.just seems stupid to take out such an agreement right!!!
Secondly, you are forgetting that the loan that you are taking out is for £5,000 and that you are getting £450 cash back at the outset.
Thirdly, the APR of 17.5% seems a bit high and might be beaten by your bank, although from experience, small bank loans of circa £5,000 do attract APR rates in double figures.
Fourthly, an unsecured bank loan would provide you with the protection of the car not being re-possessed if you do not keep up the payments.
AnthonyC said:
So you have a combined income of £70k, but are struggling with an outstanding bank loan of £7k, and now you are looking to finance a £5k Clio ?
Am I missing something........?
Wow your really following me around.Am I missing something........?
Our combine income has only in January gone up to #70k my outstanding loan has nothing to do with my partner.
I could pay off my loan earlier, but I am saving an extra 700 per month to save for a deposit on a house next year.
And now i am financing a clio now, so that i can continue paying my 700 into a saving account every month and then sell the car in a years or two years time if needs be to give me that extra bit to either pay off more of the loan or use as more cash for my house deposit.
In regards to the original post I have binned the finance contract and upped my personl loan with the bank to make life easier and safer.
I have never struggled with repayments just when I turned 18 i ran up 56k worth of debt being stupid, but thats a lesson learned.
mcflurry said:
JonX2C said:
I could pay off my loan earlier, but I am saving an extra 700 per month to save for a deposit on a house next year.
Unless the savings are earning 17% interest it's madness IMHO to borrow rather than save the £700 for 6 months, then get the car?mcflurry said:
JonX2C said:
I could pay off my loan earlier, but I am saving an extra 700 per month to save for a deposit on a house next year.
Unless the savings are earning 17% interest it's madness IMHO to borrow rather than save the £700 for 6 months, then get the car?mcflurry said:
JonX2C said:
I could pay off my loan earlier, but I am saving an extra 700 per month to save for a deposit on a house next year.
Unless the savings are earning 17% interest it's madness IMHO to borrow rather than save the £700 for 6 months, then get the car?JDMFanYo said:
You ran up a 56k debt when you were 18?
Didn't think that was even possible
This kind of thing is a result of today's 'have to have now' society. Just like paying for a £5k Clio on the never never at a time when you are supposed to be saving for a house and you could wait a year to buy that 'dream' car. Of course you could put the house purchase back Didn't think that was even possible
Targarama said:
JDMFanYo said:
You ran up a 56k debt when you were 18?
Didn't think that was even possible
This kind of thing is a result of today's 'have to have now' society. Just like paying for a £5k Clio on the never never at a time when you are supposed to be saving for a house and you could wait a year to buy that 'dream' car. Of course you could put the house purchase back Didn't think that was even possible
Even in the 'have it now' world. For good reasons, I maxed out my credit cards when 18/19 (The act of 'Stoozing' where you have a 0% credit card for 12 months with a low transfer fee, stick it in an ISA or high savings account and make around 4% profit on the original borrowed amount).
Note: That was when interest rates were 6%+
The most the banks/card issuers would allow me to borrow was £7k, and that's with a pretty good household income and good credit history.
Edited by JDMFanYo on Tuesday 16th February 09:06
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