Finance on a £2500 car? I have zero experience...

[Louisa911]

Hi all. Okay I'm a complete noob when it comes to finance, never had any experience with it at all regarding cars. But to put as simply as possible:

I've left education, and just want a local crappy job for now to save for a car, rent and everything else that comes with not being a student anymore. Have just handed in my part time job and aquired another 36hrs per week job at a local retail store with decent pay (for a 20yr old) will be bringing in £230 a week before tax. I'm going to be relying on other people and unreliable, limited public transport for getting to work and back, so having a car now would be ideal.

I've seen my perfect car for sale at a garage 30 miles away, its just an 02 Astra Coupe Convertible but its very clean, low mileage and I've wanted one for ages. Its up at £2500, and the dealer's listing states that finance is considered.

Would I be likely to get finance at all considering my current situation? How easy is it to apply for it? As far as I know, I don't have ANY credit rating.

If I was granted it, what would I be expecting to pay monthly and for how long? I would rather take it out over a year, or two at most, of payment but of course my wage is relatively low and might not even be possible. I've scoured google but most examples are for high value or new vehicles.

If anybody could give me a rough idea of what to expect if I wanted to talk finance with the dealer, it would be brill. In particular what you would expect to have to pay and for how long? Any info at all would be most appreciated, as right now, all I know is haha.

Thanks

[T84]

Tried googling loan calculator? Set the APR for about 12%, I reckon.

[Louisa911]

Does this sound about right?

Loan amount of £2200, with 12% APR, over 2 years of monthly £103 payments. Total interest paid £271, meaning the £2200 car would cost me £2471 over the two years?

Seems pretty cheap to me, always thought financing a car would be a lot more pricey than that!

[T84]

You're better off with a 0% credit card for that amount Money Saving Expert has a good article.

[okgo]

I doubt you'd get approved tbh.

[Zippee]

T84 said:

You're better off with a 0% credit card for that amount Money Saving Expert has a good article.

- or a personal loan so at least then you have nothing secured on the car. A credit card (used sensibly) would also be a very good way of kickstarting your credit history along with allowing you the option to overpay when you have spare cash with no penalyt, thus reducing your borrowing term even more.

Take heed of the words in brackets though!

Edited by Zippee on Wednesday 3rd November 12:18

[DanL]

Zippee said:

- or a personal loan so at least then you have nothing secured on the car.

Indeed - for this amount, I'd have thought a personal loan from your bank over 2 years would be the easiest (and probably cheapest) way of financing the purchase using a loan. 0% credit card would be cheaper still, assuming you have the discipline to pay it off as though it were a loan, and to keep an eye on the 0% period to make sure it's paid (or transferred) before it expires.

Don't forget - just because the dealer is selling you the car doesn't mean you have to do everything through them!

[Dave81]

DanL said:

Zippee said:

- or a personal loan so at least then you have nothing secured on the car.

Indeed - for this amount, I'd have thought a personal loan from your bank over 2 years would be the easiest (and probably cheapest) way of financing the purchase using a loan. 0% credit card would be cheaper still, assuming you have the discipline to pay it off as though it were a loan, and to keep an eye on the 0% period to make sure it's paid (or transferred) before it expires.

Don't forget - just because the dealer is selling you the car doesn't mean you have to do everything through them!

+1

Personal Loan is top of the list at this price.
Also when you turn up to the dealership you'll be able to get the car quite a bit cheaper if its a whole lump sum cash sale than a finance deal.

[okgo]

Dave81 said:

DanL said:

Zippee said:

- or a personal loan so at least then you have nothing secured on the car.

Indeed - for this amount, I'd have thought a personal loan from your bank over 2 years would be the easiest (and probably cheapest) way of financing the purchase using a loan. 0% credit card would be cheaper still, assuming you have the discipline to pay it off as though it were a loan, and to keep an eye on the 0% period to make sure it's paid (or transferred) before it expires.

Don't forget - just because the dealer is selling you the car doesn't mean you have to do everything through them!

+1

Personal Loan is top of the list at this price.
Also when you turn up to the dealership you'll be able to get the car quite a bit cheaper if its a whole lump sum cash sale than a finance deal.

Why do you think that?

[T84]

Not any more, they stand to make more money from the finance deal.

I would still ask for some money off and pick faults with the car though.

Credit card would be the best if you can afford £200 a month to get it paid off ASAP.

Speak to *your* bank first as you're more likely to get credit from them.

[CWH]

I had a loan last year for my car insurance.
I was quoted £2200 to pay Admiral in a lump sum with the pay monthly option with interest totalling £3500.
So I went my bank and asked for a loan of £2200, paid interest of £200 so a total of £2400.
I'd base your decision on how much you can afford to pay monthly.
With a 0% credit card, at first you may not even get that much money as your limit, and you then have to definitely pay it off in the 12-16 months the card offers.
Your only option may turn out to be to ask your bank and then it's not certain you'd be accepted.
You can only try.

[DanL]

okgo said:

Why do you think that?

In fairness, it was an assumption based on larger loans! That said, money supermarket seems to think ~ 16% APR is about the best you can do over two years on £2,200, so it may well be worth comparing the garage's rate.