Car Loan v's Bank Loan

Babiesmummy_2

Ok, we are part exchanging our car to bring down our monthly payments and looking to re-finance.

New car £15710
Part ex £13500 = £2210
+ o/s finance £13158
- Deposit £200

£15,168 to finance (£15,000 to borrow on finance)

We have been quoted a figure of £341 per month (60mths) for car finance @ 7% fixed / 14.1% apr. Is it the Apr I should be looking at on the car loan to compare to personal loans or the fixed %

I have also been looking at bank loans and have been offered £315.14 per month 9.9%apr with First Direct (60mths) (our bank)

I know there are other loans out there with an APR of 6.??% and I know there is no guarantee to getting one.

We currently have an o/s loan with Santander would they look at us move favourably as we already have a loan with them?

We don't have a bad credit rating, First direct have just accepted us as new customers and approved a re-mortgage without jumping through hoops,, but I know how difficult it is now to get credit.

Any advice or recommendations would be good.


Thanks

Kelly

InsideInsurance

Have you been offered these rates? Have you actually applied for them?

If you have then you are potentially going to have caused yourself problems because each time you apply for credit you get a footprint left on your credit history and when you make your next application other people will see you have already recently applied for a loan with the car company and a loan with FD and will have to consider that you may take out all 3 loans and can you afford to pay 3 new loans - ie the more applications you make in a short period of time (normally 6 months) then the less chance you have of getting the next one or the worse terms you will be offered.

FD's headline rate is 6.1% and if they have offered you 9.9% then it is likely, but not certain, that others would offer you the same or worse if they have the same headline rate.

Babiesmummy_2

I have spoken today with First direct and yes they have offered us 9.9% without going externally ie to Experian based on our affordability, so no footprint left there.

We have not applied for the car finance, but have been advised this would be the rate.

I am aware of the footprint left when applying for credit, which is why I am asking for advice before I take my next step.

We applied last year to Sainsburys for a loan and was offered a silly rate of about 13%apr then applied to A&L and was offered there headline rate of about 7.5% straightaway.

CLAPTON

whilst it seem mad to pay 18,900 for something worth 15,000 and repay over 5 years (the car will probably be worth maybe 3,000 by then )

however it is the APR you need to compare between different loans and the 9.9% is a reasonable rate

Idiophreak

What kinda car are you after? Have you considered leasing as an alternative to bring down payments?

Have you approached any dealerships about the rates they'd offer? Not uncommon to find 0% deals if you shop around a bit....

InsideInsurance

With the exclusion of both property and business, are there many loans that are sort where the item/ service to be bought with the money actually appreciates in value?

Before applying for anything check what the bands are for rates, you may find that £15k is a tipping point for a higher APR and simply getting just under it will give you a lower APR

Babiesmummy_2

Idiophreak wrote: »

What kinda car are you after? Have you considered leasing as an alternative to bring down payments?

Have you approached any dealerships about the rates they'd offer? Not uncommon to find 0% deals if you shop around a bit....

We are looking at a used Audi A4 white S-Line Fsi 1.8T 09 plate (husbands dream car) and pretty sure to lease something like this would be well over the £300 mark. We currently have a BMW5 series (59plate) which is fab, but DH has seen this car and all common sense has gone out of the window.

Babiesmummy_2

InsideInsurance wrote: »

Before applying for anything check what the bands are for rates, you may find that £15k is a tipping point for a higher APR and simply getting just under it will give you a lower APR

We need about £15,200 but kept it at £15,000 as then the rates do go up.

CLAPTON

InsideInsurance wrote: »

With the exclusion of both property and business, are there many loans that are sort where the item/ service to be bought with the money actually appreciates in value?

no indeed

that's why we need to go back to the old meaning of 'afford' to mean 'I have the money to buy this item' rather than 'I can afford monthly payments for 5 years and pay loads of interest'

and of course why the amount of unsecured debt is £208 billion and why 301 people are declared bankrupt every day.

sadly cars are a major cause of all this debt even when there are loads of decent motors costing only 2-3 grand

moatmeister

Get a Skoda Octavia VRS instead. Pretty much the same car, just as well made, half the price!

iolanthe07

If I could recover just 10% of the money I've needlessly wasted on cars over the last half century I'd be a wealthy man.........