how on earn do they get away with this?

mtm81

Hi All,
I've a tesco's loan (outstanding amount £5200).

I've saved up enough to pay this off outright.

However in the last week my 8 year old has started to play up so need to buy a new one..

Cutting a long story short - the car I want is £13000..

I have £3000 from my old car, plus around £2000 in savings...

Leaving me around £8000 needed...


This leaves my plan to pay off the loan a little out of whack...



So I had three options (1) - "Top-up" my loan with tescos to the amount I need. and not pay off the existing loan leaving me that extra £5300 I have sat in my bank. (2) Pay off the loan and take out a totally new loan for the amount I need with tescos again, or (3) - same as (2) but with a different company.

I rang tescos' the enquire which of (1) or (2) would be the best option for me... - the women said that a top up would be better, however when she sent through how it works.. it's basically (2) - They pay off the amount you have outstanding on the existing loan with the new loan and also give you the "extra" bits to get what you need...

So a "Top-up" is actually paying off one loan with another and giving you the extra you need..

All fairly straight forward.. however the new "top-up" is at the current rate...

And that's not just the "extra" bit you've added on.. it's the whole existing loan plus the small new amount.. so you end up paying more again..

How on earth do they get away with that?

fififofum

mtm81 wrote: »

However in the last week my 8 year old has started to play up so need to buy a new one..

!!:rotfl: where are we buying children these days??

Only jokin.

Seriously tho do you really need a £13K car, can you seriously not buy a cheaper one?
Mine is a £1000 banger that has done me proud for last 3 years.

The moneysaving way would be to pay off your loan. Then look at other ways not debt/credit of getting another car/lift/whatever.

mtm81

I know what you're saying about a cheaper car..

but I do a LOT of driving (both for my work and also it's my only source of enjoyment in life !!)..

The car I have is little two seater and I'm going for a newer one simply because it's the only car type I like and I want one that I won't have to spend quite so much time under the car fixing it...

I could get something more "sensible" but I already have a little focus as a work horse and this is more a daily "toy".

But anyway - my post was more about this tesco "top-up" load rubbish they spout!

:-)

regularsaver1

most loan companies/banks do this

unless you look for a separate loan for the new amount you need and keep the other loan as it is, meaning 2 loans

CLAPTON

sadly, the main reason they get away with it is that people just want that fun little car (or whatever) but dont want to save for it.

hearts

I have a cracking flash car and it only cost me 9k. You should look around. If you have to get into debt to buy it then 13k is far to much ;-)

mtm81

hang on people- I won't be borrowing 13k.

I have £2k- plus the 3k from my car.. that's 5k..

the car I want is 13k.. so I'll be borrowing 8k.

if I didn't have to pay off this existing loan, I'd only need a further 3k which would only take me about two months to get together.

Even with the 8k loan I'd be paying that off within 18 months (as I am doing for this existing loan)..

in both cases, I am aware that just saving up (as I have done to pay off this existing loan) is the best way to be,. however my car is costing me more and more each month to run and the payments on a 8k loan compared to the existing 5k loan PLUS the cost of running this old motor are more..

I mean the in last 18 months I've had to spend nearly 8k on top of the actual payments just keeping the car right...

Phantom_Flan_Flinger

The car you're after for £13000, is that a new price, or are you buying it second hand?

Can you tell us what particular car you're after?

You might want to have a look at the Car Supermarkets. A lot of them sell pre-registered and nearly new cars and you can make some good savings.
I bought a 10 month old car last October. The best my main dealer could do was a 6 month older car with another 10,000 miles for £1500 dearer.

As for the loan, I think it's normal practice that companies don't actually top-up, they close one loan down and re-open a new one for the greater funds. Northern Rock do the same as I've done it in the past.

mtm81

albertross wrote: »

If you are spending 5k+ pa on maintaining an eight year old car worth 3000, I'd find a new cheaper hobby.

haha I know.. but it#s something I'm really into ...

The car I'm after for the other poster - A Lotus Elise

gastfo

I admit to not quite understanding.

Most people on this forum are trying to escape the banksters game of keeping you in debt. The banks are making you pay interest on money you created with your signature and they pulled out of thin air.
How come banks can make such profits and where's all the money coming from?

I'd leave the banking game asap as only the banks can win and all this for a toy costing 13k?

No, can't quite see the reason of that.

mtm81

My OP was to do with the in's and out's of how something descrived as a "top=up" loan is in fact just the same as taking out a brand new loan.. not as I would expect a "top-up" of the existing loan...

However as it seems to have changed into "should I get the loan or not"..

Here is my reasoning.
1) I Love driving
2) I drive every day - varying amounts of distances - mostly for work, sometimes for pleasure
3) As as consquence of the above I want a nice car to play with.
4) the existing car I have is starting to get to the point where it's needing more and more looking after. Although I don't mind getting my hands dirty, the simple fact of the age of the car means that I need something younger with a better chance of being more reliable (yes before anyone says - I am aware of the reliability of a lotus - but it would be better than my curent drive - trust me!)


5) The current payments on my existing loan (the one I can now pay off) and the payments on a new loan would be a very similar amount (few tens of pounds per month more)


So all in all, I'll end up with a better car, a younger car, and more reliable car, a car that's easier to work on, and car that's better to look at, a car that's better to drive - all for a few tens of pounds per month more - something I can afford without problems.


So although I agree getting into debt is not something that this site is about, and also that not having a loan is the best bet... to achieve what I, it is the only option considering when I need the new car for.


In any case, as with this current loan, I will more than likely have saved up th extra cash within around 12 months to pay the loan off outright again. Yes sure I'll pay that bit extra and yes the better option would be to save up and wait. .but as I need a car now.... there isn't an option...

Hope that clears up that!