Buying a used car on Finance, help needed

[Nefos]

Hey guys,

My Alfa Romeo GT decided that it does not want to live and the timing belt has snapped, which I wanted to change in January.
I was thinking about buying a car outright in the £2-3k territory, but as I have a decent job and okay income, I am thinking about treating myself a bit.
So the car I was eyeing is an Audi TTS, they seems to be reliable, there are a couple around, and importantly many of them has service history and warranty from a used car dealer. The price is around £8-9k at the lower end (not the lowest mind you) which I can afford even with 20% APR (worst rate I found on autotrader, if I can afford that I then if someone gives me a better rate than happy days). I just moved to a new flat, and with christmas coming, there is a chance that I can go home (depends on many factors of course, but would be an expensive last minute trip) and some salary anomalies (my december pay is early) I feel like I can comfortably afford it around February time.

My question is how does deposit works. I had £2000 deposit in mind, as an arbitary number, but it might be a good idea to have that money in my pocket, just to see what 2021 throws at me. Would it be really beneficial to pay £2000 or more deposit, or would a £1500 be enough? Does deposit greatly impact my acceptance possibility?

Sorry if this question comes out a bit pointless, but I have too much time to spend alone, and all I worry about is the deposit that I should pay in February. I think all I need is a reassurance to calm me down that I am not crazy, and the math which I have done many many times is not incorrect.

[RS93]

Have you thought about a personal loan with a lower interest rate potentially

[resolve10]

I would be looking at a personal loan to pay for a car at this price point, but if you do go down the dealer route - do not pay 20% APR! I wouldn't even look at anything over 10%.

A higher deposit probably won't make any difference to whether you are accepted or not, but bear in mind if you keep the £2,000 in your pocket you will be borrowing more and therefore paying more interest.

Good luck

[Sc0tchland]

Remember you can fund the car from wherever you like, i.e the bank. You don't need to use the vehicle finance facilities.

[Nefos]

resolve10 said:

I would be looking at a personal loan to pay for a car at this price point, but if you do go down the dealer route - do not pay 20% APR! I wouldn't even look at anything over 10%.

A higher deposit probably won't make any difference to whether you are accepted or not, but bear in mind if you keep the £2,000 in your pocket you will be borrowing more and therefore paying more interest.

Good luck

I have tried Personal loan before, once a year ago (just started my job, right out of uni, it was not a great idea, got a bad APR, so turned it down) and once July (got rejected, it turned out Experian said that Tesco Loan is not givin loans due to uncertainty), so even though my credit rating went up, I got a bigger credit card offered, I am a bit worried still. I would be looking around 10% APR, it just makes the math easier to know that I can afford an extra £20 easily.

I am planning to pay off the car in 2 years max, and when (if?) things go back to normal I would use the remaining money from deposit fund to pay off the car faster.

Thank you for your replies.

[AnhBanhBao]

Another vote for a personal loan. I recently spent a similar amount on a GT86 that way, and whilst I see it as a bit of a keeper in any case, I’d much rather go down the loan route over finance etc.

[Macneil]

If you can't get a personal loan at a reasonable apr don't take 20% dealer finance, it will kill you. Save up your good money for a while, or just get a 2k car in February. What % of your nett would the payments be?

[Nefos]

Macneil said:

If you can't get a personal loan at a reasonable apr don't take 20% dealer finance, it will kill you. Save up your good money for a while, or just get a 2k car in February. What % of your nett would the payments be?

The 20% came from an Autotrader "quick calculator" as a worst case scenario, 10% would be the aim. Certainly the buying a cheaper car outright is still an option, but the warranty would be a great peace of mind for a year, I can do maintanance myself. Payments would be under 12% of my nett.

[Chicken Chaser]

I've been looking at personal loans around 2.9% (for £18k) so don't look at 20% finance!

[TheDrownedApe]

OP go to MSE. They have a feature where a soft check on your credit rating to give you a close estimate of the APR you are likely to pay. Then use their site to see the best deals for your loan amount.

If you are young and without a credit history the BEST thing you can do is get a bit of debt on a credit card (say £100) then pay off the minimum amount per month for a year of so. It will cost you about £30 ( high end guess) over the year but far more importantly it will show you can manage debt which will help your score rise.


https://www.moneysavingexpert.com/loans/cheap-pers...

[mickyh7]

It might be worth getting a couple of Insurance Quotes for that car first.
If your young it might make your eyes water!

[Nefos]

TheDrownedApe said:

OP go to MSE. They have a feature where a soft check on your credit rating to give you a close estimate of the APR you are likely to pay. Then use their site to see the best deals for your loan amount.

If you are young and without a credit history the BEST thing you can do is get a bit of debt on a credit card (say £100) then pay off the minimum amount per month for a year of so. It will cost you about £30 ( high end guess) over the year but far more importantly it will show you can manage debt which will help your score rise.


https://www.moneysavingexpert.com/loans/cheap-pers...

Great ide will do!

I am not *too* young, 26, I just never had the chance to buy a car over £700 (I lived in Leeds centre as a student, insurance was horrendous)

I was actually doing that, but I was thinking about paying the whole credit card off this month, so by February I have 0 credit usage

mickyh7: surprisingly the insurance for a TTS is cheaper than my 2.0 Alfa GT. As well I quoted a Porsche Boxster 2.7 and it was much cheaper, but the whole IMS bearing issue, and the possibility of big bills keeping me away

[mickyh7]

Nefos said:

Great ide will do!

I am not *too* young, 26, I just never had the chance to buy a car over £700 (I lived in Leeds centre as a student, insurance was horrendous)

I was actually doing that, but I was thinking about paying the whole credit card off this month, so by February I have 0 credit usage

mickyh7: surprisingly the insurance for a TTS is cheaper than my 2.0 Alfa GT. As well I quoted a Porsche Boxster 2.7 and it was much cheaper, but the whole IMS bearing issue, and the possibility of big bills keeping me away

How much were these quotes out of interest?

[Nefos]

mickyh7 said:

How much were these quotes out of interest?

So in Leeds we were talking about £1500+ for anything, as I lived in the worst post code

I am 26, with 1 year bonus, and my current post code is not the best, narrow road, so probably a couple of mirror smashing drove the prices up

My Alfa Romeo GT 2.0 is £1100/y
Audi TTS £900/y
Porsche Boxster 2.7 £560/y

confused.com prices

[mickyh7]

Nefos said:

So in Leeds we were talking about £1500+ for anything, as I lived in the worst post code

I am 26, with 1 year bonus, and my current post code is not the best, narrow road, so probably a couple of mirror smashing drove the prices up

My Alfa Romeo GT 2.0 is £1100/y
Audi TTS £900/y
Porsche Boxster 2.7 £560/y

confused.com prices

Black Magic those prices.
Porsche cheaper by half !
How do they work that out then?
Good luck with your loan etc.

[TheDrownedApe]

Nefos said:

Great ide will do!

I am not *too* young, 26, I just never had the chance to buy a car over £700 (I lived in Leeds centre as a student, insurance was horrendous)

I was actually doing that, but I was thinking about paying the whole credit card off this month, so by February I have 0 credit usage

It's not about how much you owe (well it is but that's a different discussion) rather how reliable you are in paying/clearing managed debt. If you have no debt then you have no evidence that credit lenders can use to determine your risk. A little bit of debt is a good thing if you will want more in the future.

Lenders will also look at your wider "life" such as how long you've lived at an address, how old is your bank account, if you're registered to vote at your address etc. Do you have a contract mobile phone? again it's a form of debt that provides evidence

Edited by TheDrownedApe on Wednesday 11th November 10:04

[ToastMan76]

TheDrownedApe said:

It's not about how much you owe (well it is but that's a different discussion) rather how reliable you are in paying/clearing managed debt. If you have no debt then you have no evidence that credit lenders can use to determine your risk. A little bit of debt is a good thing if you will want more in the future.

Lenders will also look at your wider "life" such as how long you've lived at an address, how old is your bank account, if you're registered to vote at your address etc. Do you have a contract mobile phone? again it's a form of debt that provides evidence

Edited by TheDrownedApe on Wednesday 11th November 10:04

Yes and no, a key part to any credit check would be debt utilisation ratio. Hence sometimes its beat to get a credit card with as high a limit as possible ensuring its POIF every month. Your credit report does show balances and will always show a ‘live’ balance on a credit card - think the perfect % is around 20-25% IIRC.

NOTH with key factors though - electoral roll (+2 years pref) and mobile, thats where a lot of young folk come unstuck with missed payments.

[Nefos]

ToastMan76 said:

Yes and no, a key part to any credit check would be debt utilisation ratio. Hence sometimes its beat to get a credit card with as high a limit as possible ensuring its POIF every month. Your credit report does show balances and will always show a ‘live’ balance on a credit card - think the perfect % is around 20-25% IIRC.

NOTH with key factors though - electoral roll (+2 years pref) and mobile, thats where a lot of young folk come unstuck with missed payments.

so my credit card limit is quite high, £2500, and current utilisation is 20%, it does not have interest yet so I pay it back bit by but, bit I will pay it back to 0%.
I have a mobile contract for years now, so thats handy and I am registered for electoral for half a year now.

TheDrownedApe:
My bank account is 9 or so years old, but I move every 12 month, as I was a student and every year was different, and now my contract has not been renewed (landlord changing up the house a bit, nothing to do with me) so that can look weird.

Also good news, just got a promise of a promotion in the near future ( couple of month), so the whole process should be easier!
I am much calmer now, thank you very much guys