Buying a car...

pimento

Beware the advertised rate. My bank (First Direct) also advertise a rate of 8.9% for personal loans but they only offered me 11.9%.

Now, I don't apply for loans very often, have no debts apart from my mortgage (15% of the value of my house), service my (First Direct) credit card sensibly, have savings and earn eight and a half times the amount I wanted to borrow, so what on earth you have to do to qualify for the 8.9% interest rate I'd be very interested to know. First Direct couldn't/wouldn't tell me.

I'll admit to being slightly miffed about it all.

buglawton

If you are repaying any kind of serious monthly mortgage, and can ask for a temporary period of interest only payments, then do this first, putting all the diff into cash for the vehicle.

owitemisermusa

buglawton wrote: »

If you are repaying any kind of serious monthly mortgage, and can ask for a temporary period of interest only payments, then do this first, putting all the diff into cash for the vehicle.

Interesting thought. You mean plow the capital repayment bit into saving for the deposit? Hmm....
Interesting thought indeed. Any downsides beyond paying off your mortgage (slightly) later?

Hintza

buglawton wrote: »

If you are repaying any kind of serious monthly mortgage, and can ask for a temporary period of interest only payments, then do this first, putting all the diff into cash for the vehicle.

But will that not attract a fairly hefty admin fee at the very least?

buglawton

When I've done it, fee to the Mortgage co. has been £50 each time. If you freeze paying mortgage capital you get penalized at (for example) 5% on the outstanding capital, this is much cheaper than any loan I would know of.

[ PS - nearly all mortgage co's allow a one-off annual payment into the mortgage for say, £2000, so you could actually go permanently interest-only then pay lump sums in yearly based on circumstances. If there is a downside it is that you get a false sense of security while carrying forward maybe a huge mortgage. With your LTV ratio I doubt that would be an issue ]

owitemisermusa

buglawton wrote: »

When I've done it, fee to the Mortgage co. has been £50 each time. If you freeze paying mortgage capital you get penalized at (for example) 5% on the outstanding capital, this is much cheaper than any loan I would know of.

[ PS - nearly all mortgage co's allow a one-off annual payment into the mortgage for say, £2000, so you could actually go permanently interest-only then pay lump sums in yearly based on circumstances. If there is a downside it is that you get a false sense of security while carrying forward maybe a huge mortgage. With your LTV ratio I doubt that would be an issue ]

A loan at 5% sounds very appealing. It would have probably been better to do this over the last few years to save up the cash as right now, it would just be a means to shore up reserves for a monthly payment and actually enable one to shorten the loan term significantly!
Lots to think about..

In other news, thank God the Chancellor is NOT planning any pay cuts for public sector workers! Was waiting for the budget to see how it would affect my car purchase decision.

Lemonade_Pockets

owitemisermusa wrote: »

Hi guys,

Need to pick your brains on this one. Want to buy a car. Less than a year old, German marque, about 14-15K on the clock.

Deposit (including p/x, cash from various sources {cc bal transfer, cc payment}) - about £4k

Amount to finance/pay - £15K approx (asked dealer to strip out GAP insurance, paint and tyre protection - a whopping ~£1000!)

Still trying to work out how to haggle for a lower sale price - need advice on this.

How to tackle the £15k amount - personal loan of about 8.8% over 5 yrs or dealer finance (PCP deal over 3 or 4 yrs at 10.9%). Both monthly payments are within my comfort zone.

Loan comes to about £300/mth then add £50/mth for cc min payment.

PCP about £340/mth over 3 yrs (after stripping out dealer's extras; don't have the 4yrs' figure).

I plan to get the GAP insurance independently via ala or click4gap.

Have I covered all the bases? Anything else I can do to i mprove this? Should I aim to put more of my own money in and reduce the amount taken on loan or the PCP? Which is better, the PCP or the loan?

Very many thanks.

Difficult to say without the full figures but if it was me i'd be haggling on the PCP rate (9/10 on used cars this is negotiable). If you could get this close to the rate of the loan then go with this it gives you far more options and you are more likely to retain the ability to get a loan if you have any sudden change in financial circumstances over the next few years.

In terms of the best way to balance the deposit. I'd put whatever you can comfortably get rid of on 0% within the interest free period. Bearing in mind life is going to get more expensive all round.

I'm always wary of messing about with mortgages to release money, unless your really sure of the FULL cost....beware the power of compound interest 5% is a lot over 25 years!!!

General Haggling: Knowledge is power, know the market and the going rate for whatever you'e looking. Make allowances for spec, condition etc etc. Then haggle to what you think is a fair price, stay calm and don't be afraid to walk. If what you are aiming for is reasonable then there should be no reason not to get it.

HTH

eschaton

owitemisermusa wrote: »

Thanks eschaton. I didn't make myself clear from the start.

Savings are fixed, so cannot release them without loss. Hence the thought of using 0% cc (only paying the balance transfer fee).

Please tell, how on earth did you get a 0% finance deal? The personal loan rate I'm eyeing is 8.8% APR as against the dealer's PCP rate of 10.9% APR.
If I could get a 0% deal, I would grab it! PS: what car did you get if you don't mind?

Thanks all. The discussion helps me make a good, informed choice and all comments are welcome.

Thanks.

Finance offer was available with the car - Peugeot 308CC GT.

Offer has now changed and is now 2.9% but still not bad - 25% deposit required.

owitemisermusa

Lemonade_Pockets wrote: »

Difficult to say without the full figures but if it was me i'd be haggling on the PCP rate (9/10 on used cars this is negotiable). If you could get this close to the rate of the loan then go with this it gives you far more options and you are more likely to retain the ability to get a loan if you have any sudden change in financial circumstances over the next few years.

In terms of the best way to balance the deposit. I'd put whatever you can comfortably get rid of on 0% within the interest free period. Bearing in mind life is going to get more expensive all round.

I'm always wary of messing about with mortgages to release money, unless your really sure of the FULL cost....beware the power of compound interest 5% is a lot over 25 years!!!

General Haggling: Knowledge is power, know the market and the going rate for whatever you'e looking. Make allowances for spec, condition etc etc. Then haggle to what you think is a fair price, stay calm and don't be afraid to walk. If what you are aiming for is reasonable then there should be no reason not to get it.

HTH

Thanks. The car is already pretty much the cheapest approved used for 200 miles!
I didn't know I could haggle on the PCP rate. Which do I do first, haggle the sale price or the PCP rate?
I'd never do an 'equity release' for a car. Just thought the idea of dropping the capital repayment bit for a year to raise a deposit was interesting.

Lemonade_Pockets

owitemisermusa wrote: »

Thanks. The car is already pretty much the cheapest approved used for 200 miles!
I didn't know I could haggle on the PCP rate. Which do I do first, haggle the sale price or the PCP rate?
I'd never do an 'equity release' for a car. Just thought the idea of dropping the capital repayment bit for a year to raise a deposit was interesting.

Granted as i said just make sure you consider the full cost and any associated charges that may be compounded over the remained of your mortgage term.

If its the cheapest car for 200 miles i would haggle on the PCP rate first. If you buy cash they will earn no additional ££££'s, by selling you finance of some description they will make more money so the first aim is to get this back by haggling on the rate.

In terms of the sale price they will probably be well aware that it is cheap. So i would not expect anything. However this doesn't mean don't try, test the water and see what their reaction is.

Dealers have things called "trail closes" which means they try to test out if your buying before they actually ask for your business. E.g. "If i do you a good deal would you be interested" Would be a typical (but lazy and not great) example.
You can do the same when out on test drive, by asking what sort of deals are on, make noises about it being a little bit too much etc etc and use the salesmans reaction to gauge how likely you are to get any more money off. If its the cheapest around i would be thinking in £100's rather than £1000's off.

There's a million different ways of negotiating but getting that final bit is tricky and mostly relies on your gut instinct and how naturally good you are in those situations. Sorry for the wishy washy answer, but getting from a good/fair deal to screwing every last penny out of them is not particularly scientific. (buying a new car is different)

At the end of the day if its a good car for cheaper than average money, you've not done badly.