Car finance - Whats a good / bad rate/deal?

Gibbo

Gibbo

Gibbo

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Hi there


Right I am possibly planning a car change April/May.

The plan is if I go ahead, sell EVO privately for 20k ish then with money saved I shall have an easy 30k to drop on a car. :)

Or alternatively trade the EVO in against a car plus 10k ish cash, but as a trade-in at a none Mitsubishi dealer they will easily take the mick.

So lets say for example I buy 50k car.

Deposit of 25k.

That leaves 25k too finance.

So based on that which equals more than a 50% deposit on the car what kind of finance deal could I get, I'd far rather a 5yr term due to the flexibility it gives me unless if by having a lower term means there is interest free options.

Before anyone ask yes I can afford it easily and the reason I'd rather have a 5yr term is simple, it gives me flexibility and I've heard as of recently new finance laws means you can now pay of clumps of finance when you like too.

Example been I could take out 25k finance over 5yr term, and 3 months later pay a 5k chunk off, reducing payments and/or term. Is this true?

So whats typically a good deal in such circumstances to expect to get on finance when giving a greater than 50% deposit?


P.S. I want replies on this topic, not financial advice, or that I should be buying property or going to local broffle for whores. Just advice on car finance please guys. :)
 
25k is the max you can borrow unsecured.

7% Apr would be a good target rate.

With unsecured borrowing the amount of deposit is not relevant.
 
[TW]Fox;18591624 said:
25k is the max you can borrow unsecured.

7% Apr would be a good target rate.
Click to expand...


Was offered at luch time 5% flat which was 9.8% APR. Does that sound right?

When you say unsecure? Surely its secured against the car?
 
If you go for a commercial unsecured loan, I don't think loan to value % comes into it at all. So whether you've got 50% deposit or 0% deposit won't make any difference.

Looking at moneysavingexpert the best rates for £15k<>£25k is ~8.3% for a five year term. This assumes the highest credit score.



It won't be secured against anything.
 
No, that's a poor deal really for that amount. Beware of people using flat rate to make it look good.

Unsecured borrowing would be something like a personal loan - you could get 8.3% from Sainsburys bank on a personal loan. You own the car using this, not the finance co.
 
[TW]Fox;18591667 said:
No, that's a poor deal really for that amount. Beware of people using flat rate to make it look good.

Unsecured borrowing would be something like a personal loan - you could get 8.3% from Sainsburys bank on a personal loan. You own the car using this, not the finance co.
Click to expand...


I am talking finance where you go to car dealerm, choose car, give them deposit and remainder on finance.

So I assume that is car finance and is secured against car? BMW have offered 5% flat rate on 27k which was 9.8% APR.

If I went ahead with this I assume I need to get that rate down to 7% APR yes?

Also that was for 27k, so what is this 25k limit as BMW instantly smashed it.

I'd not go ahead with this deal as the trade-in value was an insult, they offered me 13k LOL, trying to claim Mitsubishi would sell my car at £15,995, I said show me one for sale at that price to which they asked has it got leather. At this point I said whoever your talking too is telling you nonesense as all 360's are leather! :eek:
 
[TW]Fox;18591667 said:
No, that's a poor deal really for that amount. Beware of people using flat rate to make it look good.

Unsecured borrowing would be something like a personal loan - you could get 8.3% from Sainsburys bank on a personal loan. You own the car using this, not the finance co.
Click to expand...

Got no issue with finance company owning the car mate, so I am OK with that. I am fortunate, I have no outgoings, but that is why I choose a longterm as it allows me to save quickly and pay big chunks off or the whole amount.

Any truth in this new car finance where you can pay chunks of randomly?
 
Early repayment is included in a lot of finance deals but many will come with an early repayment charge (often something like 1 month interest value). I saw a few when looking at loans that dont have an early repayment charge so i think that would suit you well, black horse finance were one of those afaik. I've been looking at the exact same kind of situation recently, it seemed like a loan from a bank on a good rate, or some of the private loan companies can be a lot better than the finance provided by a dealership but i guess a lot is based on personal status.
 
This is kind of relevant and not relevant but just to let you know what is available in terms of finance.

My car - £24k, paid £2k deposit, inserted £6k baloon and financed over 3 years. Repayments come right down to my car allowance spend, APR 6.9%. I did this through a finance broker - I think we paid them a £250 fee and they did the leg-work inc paying the dealer by CHAPS.

What I'm getting at is 1) there's decent finance brokers out there and 2) you could consider a baloon in the finance and up your screen price budget if you wanted something a bit tastier.
 
merlin said:
This is kind of relevant and not relevant but just to let you know what is available in terms of finance.

My car - £24k, paid £2k deposit, inserted £6k baloon and financed over 3 years. Repayments come right down to my car allowance spend, APR 6.9%. I did this through a finance broker - I think we paid them a £250 fee and they did the leg-work inc paying the dealer by CHAPS.

What I'm getting at is 1) there's decent finance brokers out there and 2) you could consider a baloon in the finance and up your screen price budget if you wanted something a bit tastier.
Click to expand...

What are these baloons mate?

Does such a finance deal with a baloon mean you can't randomly pay of chunks and that your stuck to the term of the deal and then cough up the baloon at the end or can you still pay a chunk of earlier or all of it anytime?
 
If you are paying chunks off why are you even bothering with 5 years, have it over 2 and be done with it, you live at home, make use of it.
 
Robbie G said:
Doesn't mean you should choose a worse APR rate though.



Yes. Lenders are now forced to allow you to overpay...

http://www.moneysavingexpert.com/ne...-card-and-loan-shake-up-what-it-means-for-you

...but they can penalise you 1% of the overpayment amount.
Click to expand...


No of course not, now I know 7% is a good rate, thats of course what I'd aim for. When buying from a dealership can you barter them on the rate or do they have no control over that?

This overpayment function, the 1% charge I take it is just for the amount your over paying buy?
 
Gibbo said:
No of course not, now I know 7% is a good rate, thats of course what I'd aim for. When buying from a dealership can you barter them on the rate or do they have no control over that?

This overpayment function, the 1% charge I take it is just for the amount your over paying buy?
Click to expand...

They can control the rate.
 
DiamondMark said:
If you are paying chunks off why are you even bothering with 5 years, have it over 2 and be done with it, you live at home, make use of it.
Click to expand...

Because a £500 per month payment changes to nearly £1500 at a guess....

At £500 per month I can save a large amount much quicker for obvious reasons as such paying it off far sooner.

I could go for a lower term as you suggest but I'd save far less and if my finances in life change £1500 a month may become not so easy, wheras £500 is easily controlled and with my current outgoing I could save a large sum quickly.

Basically with 5yr term I could clear it off in 12-18 months, with a 2yr term well it would probably be the full term but I've got far less flexibility. Don't know if that makes any sense at all......
 
Gibbo said:
What are these baloons mate?

Does such a finance deal with a baloon mean you can't randomly pay of chunks and that your stuck to the term of the deal and then cough up the baloon at the end or can you still pay a chunk of earlier or all of it anytime?
Click to expand...

Crudely - you want a car screen price £60k.

You have a £20k deposit.

That leaves £40k balance.

You don't like the look of the monthly instalments on £40k of finance so rather than financing the £40k balance - you finance £30k (for example) and that lowers your monthly instalments because you're only paying back the
£30k (plus interest on the £10k you're not paying back) over 3 years.

Then after 3 years you have a car worth say £25k, and a baloon to pay of £10k. How you pay that £10k off it up to you.

This effectively makes you able to afford a £60k car rather than a £50k or £40k car.

The log book is still in your name - you own it but at the end of the finance you have a baloon to pay off.

All these figures are just examples, I used it to get the car I wanted for the monthly spend I am allowed.
 
DiamondMark said:
If you are paying chunks off why are you even bothering with 5 years, have it over 2 and be done with it, you live at home, make use of it.
Click to expand...

I'm also opting for a 5 year loan soon because it will have no impact on my lifestyle, i could pay it back in 2 or 3 years but i'd probably have to budget a little here and there. Instead with having no early repayment charges i can choose whether to put my end-of-month spare cash in to the loan or spend it on something fun, having the freedom to do that is key for me. Its the same with my mortgage, i could put more in and pay it off quicker but im very comfortable with my lifestyle, when i get a higher paid job the increase in pay will be going in to the mortgage primarily because my lifestyle wont need to change :)
 
[TW]Fox;18591891 said:
They can control the rate.
Click to expand...

Excellent so they are in a position to barter then. :D

So basically I can barter with a car dealer on:-

Car sticker price
My trade in price
Finance APR Rate

Once hit price targets on above three can try ones luck with getting stuff thrown in like service packs or extras. :)
 
Gibbo said:
No of course not, now I know 7% is a good rate, thats of course what I'd aim for. When buying from a dealership can you barter them on the rate or do they have no control over that?

This overpayment function, the 1% charge I take it is just for the amount your over paying buy?
Click to expand...

I seriously doubt that a dealer will come down to 7% for a ~£25k car finance deal, but then they'd consider what you're paying for the car also so you can but try.

Yes they can charge 1% of the overpayment amount, not the whole lot.

For example if your payment for March was £1000 and you paid £5000, they could charge you up to £40 (or £20 if you were in the last year of the term).

This is obviously very good for borrowers. Whereas previously, someone might have been keen to borrow over the shortest possible term in order to reduce the total interest paid, borrowers can now pay over the term that suits their lifestyle, choosing to overpay very cheaply if their circumstances change and they find themselves in a position of higher disposable income.
 
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