M&S car loan

bankhater_1965

pheonixrising21 wrote: »

bankhater1965, can I ask, do you have a mortgage? If so, how is that different from a car loan? Now, I know a car and a house are very different things, especially in terms of long term value, but surely the premise is the same? Why have a mortgage when you can save and buy a house for cash? I assume you did this?

Just playing devil's advocate....

if you have something on credit and you have the money your self to back it up , thats fine , but im guessing you havent got the cash to back the credit up , this is called living beyond your meens and without dout will come unstuck later on , a mortgage is an asset that is a life long investment as to a car which is merley a few year purchase which is gauranteed to lose money every year regardless, and a car is much more affordable to most people
if you can get a loan for 0% for the full term and keep equal amount in saving earning money yes thats sensible finance
perhaps im old fashioned

pheonixrising21

bankhater_1965 wrote: »

if you have something on credit and you have the money your self to back it up , thats fine , but im guessing you havent got the cash to back the credit up , this is called living beyond your meens and without dout will come unstuck later on , a mortgage is an asset that is a life long investment as to a car which is merley a few year purchase which is gauranteed to lose money every year regardless, and a car is much more affordable to most people
if you can get a loan for 0% for the full term and keep equal amount in saving earning money yes thats sensible finance
perhaps im old fashioned

I'm sorry bankhater, but a mortgage is not an asset, it is a liability. Ask any accountant. A mortgage is a debt. The house is the asset and if you have a mortgage you only part own that asset. Your share in it increases over time as you pay off your mortgage, until at the end of the mortgage, you own the asset.

Lets take your car loan example shall we... imagine we have jobs paying the same salary and are a similar distance from our respective homes. Neither of us own a car and we have £1000 of savings to our name. We both want to buy the same car. It costs £15000.
I'm offered a deal on a new car, on a 3 yr PCP scheme. If I pay £1000 up front deposit, I get a new car for £229 per month. I get £500 additional paid for as I am taking the finance. As a cash buyer, you don't get this.
So, I have to finance the £13500 (well, £13500 minus the guranteed future value of the car), you have to save £14000. Putting aside the £229 per month that my finance costs, it will take you 61 months to save this. Lets say the interest knocks this down 3 months. To buy the car outright, you have to save for nearly 5 years. I have the car now.

At the end of my 3 year deal, I have the option to trade in my car to swap it for a new one on a similar deal, buy it outright (either in cash or further finance) or walk away. Meanwhile, you still have no car and are nearly 2 years away from owning one. You are spending vast sums of money on public transport, which also adds 3 hours to your working day, making you tired and irritable at home. I am driving to and from work in less than 1 hour in total.

I choose to swap my 3 yr old car for the latest version of it, as the warranty is about to expire. The manufacturer has now increased the warranty from 3 years to 5 years and allows finance over 3, 4 or 5 years as well which means lower repayments should I choose to pay over a longer term. Also, the car is more efficient than the first one, which actually saves me money (in real terms), meanwhile the cost of your public transport has risen by more than the cost of my fuel has risen. You have also had two warnings from your employer about constant lateness to work which have been caused by delays in public transport. To get around this, you decide to catch the earlier train, adding a further hour to your working day in total.

Still think all finance is bad?

bankhater_1965

pheonixrising21 wrote: »

I'm sorry bankhater, but a mortgage is not an asset, it is a liability. Ask any accountant. A mortgage is a debt. The house is the asset and if you have a mortgage you only part own that asset. Your share in it increases over time as you pay off your mortgage, until at the end of the mortgage, you own the asset.

Lets take your car loan example shall we... imagine we have jobs paying the same salary and are a similar distance from our respective homes. Neither of us own a car and we have £1000 of savings to our name. We both want to buy the same car. It costs £15000.
I'm offered a deal on a new car, on a 3 yr PCP scheme. If I pay £1000 up front deposit, I get a new car for £229 per month. I get £500 additional paid for as I am taking the finance. As a cash buyer, you don't get this.
So, I have to finance the £13500 (well, £13500 minus the guranteed future value of the car), you have to save £14000. Putting aside the £229 per month that my finance costs, it will take you 61 months to save this. Lets say the interest knocks this down 3 months. To buy the car outright, you have to save for nearly 5 years. I have the car now.

At the end of my 3 year deal, I have the option to trade in my car to swap it for a new one on a similar deal, buy it outright (either in cash or further finance) or walk away. Meanwhile, you still have no car and are nearly 2 years away from owning one. You are spending vast sums of money on public transport, which also adds 3 hours to your working day, making you tired and irritable at home. I am driving to and from work in less than 1 hour in total.

I choose to swap my 3 yr old car for the latest version of it, as the warranty is about to expire. The manufacturer has now increased the warranty from 3 years to 5 years and allows finance over 3, 4 or 5 years as well which means lower repayments should I choose to pay over a longer term. Also, the car is more efficient than the first one, which actually saves me money (in real terms), meanwhile the cost of your public transport has risen by more than the cost of my fuel has risen. You have also had two warnings from your employer about constant lateness to work which have been caused by delays in public transport. To get around this, you decide to catch the earlier train, adding a further hour to your working day in total.

Still think all finance is bad?

look credit is ok as long as you can back it up with saving !

DavidDebt

does anyone smell a troll?

Johnmcl7

pheonixrising21 wrote: »

Lets take your car loan example shall we... imagine we have jobs paying the same salary and are a similar distance from our respective homes. Neither of us own a car and we have £1000 of savings to our name. We both want to buy the same car. It costs £15000.
I'm offered a deal on a new car, on a 3 yr PCP scheme. If I pay £1000 up front deposit, I get a new car for £229 per month. I get £500 additional paid for as I am taking the finance. As a cash buyer, you don't get this.

You've no idea what deal people will get, I've had discounts of more than £500 for paying cash as the dealer (for whatever reason) wasn't bothered about a finance package.

Furthermore the bigger flaw in your example is that there are cars available for less than £15,000. I know it seems a common belief from those looking for loans on here that older cars are entirely unreliable and new cars are flawless but there's lemons everywhere and choosing well in the first place can avoid that. I've never bought a car on finance and none of my cars have let me down (current car is an Octavia Mk II VRS bought at three years old so no cheap banger either) and I've never had any of the issues you've mentioned which get somewhat ridiculous. Furthermore the cases you mention yourself protecting against can just as easily happen with a new car, perhaps even more so as they seem to get increasingly complex electronics and sensors which misbehave. You may not have to pay for warranty work but you still lose time having to get the car back and forth to the garage which given the lack of dealers to properly assess faults rather than reading a fault code the car is giving, can mean quite a few trips.

Still think all finance is bad?

Your example is very specific, of course it can work out fine when everything else is as expected but it doesn't work so well with unexpected circumstances like redundancy. Looking at the money section of MSE car credit is a frequent issue as people take out a decent chunk of credit to get a car (frequently perhaps quite a bit more than they should) believing they can afford it then hitting problems with other unexpected expenses or redundancy making the loan payment combined with other commitments difficult or impossible to manage.

This is why I don't like using car finance and if I would I'd keep it minimal as that way if I'm out of work unexpectedly (which has happened twice now when companies have gone bust) I don't need to worry about maintaining payments for the car nor losing it. When I'm saving up for a car I get a small amount of interest back from the bank and if I need to take a break or reduce the payment at any time, I can do without any issue at all.

John

pheonixrising21

John, yes, I was using a specific example, feel free to change to value of the car to any number you want. And yes, I took it to the extreme with the warnings for lateness etc. Of course you can get good discounts for cash purchases, but these days there is often a further discount off the list price for taking their finance packages. Of course the person in my example who has a £1000 savings and doesn't want credit may well buy a £1000 banger and trade up in a year when they have some more savings, but law of averages does suggest that any car bought for £1000 is more likely to be unreliable than a brand new one (there wouldn't be a premium on new cars if all of them remained as new for eternity would there?)

The point is still the same. Saving takes time, and while I agree having savings is extremely important, sometimes it is not always possible or desirable to save first and buy the goods in cash outright. My point is that not all credit is bad, some things that people want/need require credit to purchase as the time required to save for them is just too long. Personally, I would rather have as new a car as possible as they are generally more reliable, generally cheaper to run and if they do go wrong (as you quite rightly point out, any car can go wrong at any time), warranty will cover repairs. I'd be much happier to keep taking the car to the garage for free repairs than to keep taking it to the garage for repairs I have to pay for (I wouldn't be happy per se in either case, but I would be less unhappy if I wasn't paying for the repairs).

Some people on this site seem to think that the aim of the site is to bash the banks at every opportunity, to tell anyone and everyone they can that all credit is bad, you should only buy things that you have the cash for, etc, etc. I thought the point of this site was to make sure people get the best deal they can for things that they decide they want/need, and to make sure that companies providing goods/services live up to their end of the bargain by not ripping us off.

Personally, I am not too keen on some banks myself, but this is for poor customer service issues and hiking interest rates unfairly, not because they have lent me money (or not). I know I am not perfect, I have debts (they are all there in my signature), but I am reducing them and once they are gone, I intend to use the money I was paying off debts to be my savings. I also have a mortgage and a car loan, which I am not putting on my signature because I will always have them, because I like having a new(ish) car that is always in warranty, has low (ish) mileage, with the latest equipment, the latest safety technology and better fuel efficiency.

You talk of what happens if you are made redundant. You wouldn't have credit on a car becasue if you are made redundant, you would lose the car? I assume you have the same issue with mortgages, and I assume you currently rent and have no intention of ever buying a house? I just say that because with a mortgage, you have the same risk.

That's just my opinion, yours is equally as valid, just different.

PS, good choice in car John!

pippitypop

I'm not quite sure what the last few posts have got to do with the OPs post? It would be really helpful if people didn't 'thread hijack' and simply answered the OPs question.

The best port of call would be to phone up the lender and ask them why they can't offer you the headline rate, it's their credit scoring process and eligibility criteria that matters - not the credit reference agencies score. Best of luck!

Joeler

Just because you have credit doesn't mean you cant afford to pay it back. I pay mine back early when I can...

The world revolves around credit, without it you wouldn't be able to buy your food from supermarkets as they'd have no stock, and your car that you paid for in full would have no fuel in it. Credit lines run through everything we do on a daily basis.

Maybe we should all go and live in the woods and ride horses and grow our own food and swap things we need with others

Actually I think I'll stick to how it is now!

DCFC79

pippitypop wrote: »

I'm not quite sure what the last few posts have got to do with the OPs post? It would be really helpful if people didn't 'thread hijack' and simply answered the OPs question.

The best port of call would be to phone up the lender and ask them why they can't offer you the headline rate, it's their credit scoring process and eligibility criteria that matters - not the credit reference agencies score. Best of luck!

The OP had an answer back on page 1 albeit 1 they maybe didnt like but still answer, i just leave the thread hijackers to it

Gra76

twins2 wrote: »

Hi. I'm new to this please be nice?

Has anyone managed to get an M&S car loan at the headline rate of 6%? With an Experian credit rating of 999/1000 we were offered 9%as apparently we don't meet the credit rating to get 6%! It seems that M&S don't follow the lead credit rating company. Shocking - is it surprising the economy is in such a mess when they won't lend at best rates to best risks??

I have a 6% M&S loan. My (completely pointless) Experian credit rating was 514 if memory serves correctly. Had it since March this year. I know when I called to apply they told me they were snowed under with applications. Maybe they've just agreed a few more loans than they should have done @ 6% and need to even out the numbers to keep the 51%...other than that only M&S can tell you why they won't offer 6%.