Is it difficult getting hire purchase finance?

pheonixrising21

Apples2 wrote: »

All sounds like a gamble to me, you are gambling a job loss won't occur until there is less finance outstanding than the car is worth.
Gambling that the monthly repayments are manageable month in month out without incurring any other catastrophe.

I don't like gambling like that where money is concerned. Protect yourself and only buy what you CAN afford, not what you are hoping to afford.

Each to their own though. There are plenty of posts around here by people looking to take £30k cars with a pitiful deposit, no savings and a £24k Salary.

I think Mercedes lead the field with plenty of horror stories about what happens after a VT with those guys.

A £30k car on a £24k salary with little deposit certainly is a gamble, especially on a rubbish Merc! . Madness in fact

I may purchase cars on credit, but I know my limits in terms what type/cost of car I want. I usually aim for the £12-£14k mark on my £27-30k income. Ex-demo and pre-reg cars are a target for me too as the big discounts offered soften the initial depreciation blow. My current car is a 2010 Megane Coupe diesel, bought for £13k (second hand with 1000 miles only). Think I financed £11k of that. I do quite high mileage (car has 47k on the clock now), so I want a reliable, comfortable car. My aim is to change the car when I have more than £2k equity in it, so have a bigger deposit than last time. I've been checking on sites like webuyanycar.com and it looks like my equity increases by around £80 per month i.e. my car depreciates by around £80 less than my loan capital reduces by month on month (on average) - currently about £1.5k equity

With regards to your only buy what you can afford and not what you hope to afford comment, can I ask, do you have (or have you ever had) a mortgage? I know they are different to a car loan in terms of depreciation on a car compared to (probable) long term appreciation on a house, but surely its the prinicple of the thing?

BTW, I say probable appreciation as I am still yet to see any on my flat after over 6 years of mortgage payments! I know in all likelihood I will do by the time the mortgage is paid off, but still...its not guaranteed . Also, I won't actually see "profit" until its worth double what I paid for it due to the interest

There is no right and wrong here, IMO both are valid options

Apples2

pheonixrising21 wrote: »

With regards to your only buy what you can afford and not what you hope to afford comment, can I ask, do you have (or have you ever had) a mortgage? I know they are different to a car loan in terms of depreciation on a car compared to (probable) long term appreciation on a house, but surely its the prinicple of the thing?

I don't think we should compare cars to houses, they are too discreet.

In my younger days I used to get loans for cars, repaying over no more than 3yrs as that was the longest I ever kept a car before getting bored.
I used to get a similar value Personal Loan but used the current car to Part Ex so moved up in the World of cars (slightly!!).

I'm on £46k and spent £7k on my last car (£1.5k part ex so a screen price of £8.5k) on a BMW 530D. I paid cash, the car is mine, I owe nobody anything. Of course I could have got a much pricier newer car and could have "easily afforded the payments"... but why?

No car is worth the screen price as it depreciates the second you take ownership, couple that with the interest on the finance and already you have a very long way to go before owning anything like the value of your debt.

I learned a long time ago the value of money and dug myself out of a fairly deep hole without borrowing (2007 I became debt free). Before buying anything now I work out how long it will take me to replace that money, it's a key fact in my spending.
It takes such a long time to earn and takes seconds to spend.

Cars always come with bills, all cars are money pits. You either spend it all up front by commiting to a new car with warranty, or spend less and save up for when those bills arrive (because you aren't making monthly repayments to anyone).

If you can't save, something needs to change or you're heading for a fall....or a life on credit paying over the odds for everything you own.

I do recognise the logic in your car buying method but do you not wonder, if you bought a banger (and it didn't go wrong) how much of that debt in your sig you could clear by using those monthly car repayments?

Tixy

xsupercarlx wrote: »

Hmm, anyway back to my original question, is it easier to get? I REALLY need a car because I work way to far from home to be catching the bus for much longer.

It can be easier to get, providing you can demonstrate affordability and have a fairly decent credit history.

But if you are currently managing on the bus then you could carry on doing that for a few months more and save money each month (that you would have used on car loan/HP repayments).
Then you'd be able to buy a cheap runaround outright. And if you did lose your job and were unable to afford to keep running the car you could sell it.

xsupercarlx

wow, didnt expect so many posts, to clarify.

I have a decent Deposit, I also have a high paying permanent job with much income and little outgoings. When I mention redundancy, I mention it because I'm the type who likes to have all angles covered, the last thing I want is to become fortunes fool.

My plan is put down double of whatever the monthly payments would be and ill also have income payment protection (the 12 month one).

I don't want a cheap car that just about passes its MOT for a few hundred quid, I know people who know about cars and they have advised I get as little miles as possible which is see the logic in, also I'm buying what I can afford to finance, keep that in mind guys.


Regardless of loan or HP, I will pay more than the car is worth due to interest, but (for me) that is the cost of the convenience of not paying a lump sum, and to be honest, I don't really mind. My intention is to have the car for 5 years (at least).

Also when I said ''profit'', that was the wrong word to use, I should have said, I could sell, pay off the rest of the loan and have some money left over to spend on a few shirts. :money:

pheonixrising21

Apples2 wrote: »

I don't think we should compare cars to houses, they are too discreet.

In my younger days I used to get loans for cars, repaying over no more than 3yrs as that was the longest I ever kept a car before getting bored.
I used to get a similar value Personal Loan but used the current car to Part Ex so moved up in the World of cars (slightly!!).

I'm on £46k and spent £7k on my last car (£1.5k part ex so a screen price of £8.5k) on a BMW 530D. I paid cash, the car is mine, I owe nobody anything. Of course I could have got a much pricier newer car and could have "easily afforded the payments"... but why?

No car is worth the screen price as it depreciates the second you take ownership, couple that with the interest on the finance and already you have a very long way to go before owning anything like the value of your debt.

I learned a long time ago the value of money and dug myself out of a fairly deep hole without borrowing (2007 I became debt free). Before buying anything now I work out how long it will take me to replace that money, it's a key fact in my spending.
It takes such a long time to earn and takes seconds to spend.

Cars always come with bills, all cars are money pits. You either spend it all up front by commiting to a new car with warranty, or spend less and save up for when those bills arrive (because you aren't making monthly repayments to anyone).

If you can't save, something needs to change or you're heading for a fall....or a life on credit paying over the odds for everything you own.

I do recognise the logic in your car buying method but do you not wonder, if you bought a banger (and it didn't go wrong) how much of that debt in your sig you could clear by using those monthly car repayments?

I do see what you're saying and I would love to be in your situation and hope to be in a few years. At the moment, I am saving, in as much that my debts are reducing and I spend less than I earn (including minimum repayments on debts) The "savings" are overpaid on the debts to reduce faster. Once I am debt free, the money I used to use to pay off debts (both minimum payments and overpayments) will become savings. Each month my debts come down.

Yes, I do wonder what would happen if I had an extra £215 per month to pay off my debts and bought a banger instead. Yes, I would be debt free much quicker. However, its the bit you put in brackets which worries me "and it didn't go wrong". Given my recent history with car problems, that really does worry me. I've probably saved as much in repair cost as I've spent in interest, give or take a few hundred quid. Also, as you state, you work out how long it would take you to replace the money you spend, so in essence you have the same (or similar) monthly costs as me, minus interest obviously. And in my position I would have to have that banger for longer as I have to clrear the debt before saving for the next slightly less of a banger (even longer without warranty!).

Hopefully, in a few years, I'll be able to buy a new(ish) car outright and keep it til the warranty runs out while saving for a new one and using your method of car buying! :)