Are car loans bad news for a 19 year old?

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The rate used to calculate the repayment value would have been representative which means it is given to 51% of the successful applicants.

With so little on your credit file I think you'd struggle to make the successful applicant list with most banks let alone be able to get their representative rate which is really reserved for the very best customers which being so young and with so little history I really think you would not be.

Just save and see whether you can part with £5k of your own money, its easy to spend other peoples but spending what takes almost a year of diligent saving will show how really "into" cars you are. You may find you realise they are just expensive modes of transport and you are happy maintaining a smaller, cheaper car and having your hard earned behind you.

Worst case scenario is you lose your job and screw your credit file for the next 6 years of your life so is it really worth the gamble for a little youthful impatience?

Grimezy

ChopperST wrote: »

Also check if your car insurance provider is charging you for the privelidge of paying monthly. If they are get some money put aside every month for your insurance and pay it off annually from your savings (again borrowing from yourself). Even better if you could use a cash back credit card. If you have minimal history you could get an AQUA credit card and use it to build a payment history by repaying in full every month and earn cashback on what you buy anyway.

Please heed the advice you are being given, 10 months isn't too long to save and you will own your own shiny new car rather than a finance company, you will also not be wasting your income on interest leaving you more to spend in the future.

If I had adopted this ethic back in my youth I reckon I would have nearly been mortgage free by now (aged 32).

(I know what you mean about looking at Autotrader every night, try and get a spreadsheet sorted and track your savings instead!) Maybe even go onto the debt free forum (I know you are not in debt) and post a statement of affairs - see what else you could squeeze every month to save that bit more...

Aha I think you may be right, it would be nice to own it myself and I suppose I could just run my fiat into the ground. It's still running fine at the moment but I have persuaded myself that if anything major happens to it, it's a write off. Plus my drive to work can be a bit close to hedges, etc so maybe it's good having a banger at the moment!

And I note your suggestion on insurance. I've noticed that's particularly bad on better cars (obviously). I was in a discussion about insurance on the studentroom forums a while back and some 18 year old said he could insurance a 1.8T audi a4 for £900. I tried and the quotes were ridiculous... £2200 if I paid in one go, £4500 if I paid monthly.. Luckily there isn't really a difference with my Punto so it's either pay £1000 up front or pay £1100 if you go monthly. I like the manageable monthly payments x)

HeadAboveWater

ChopperST wrote: »

The best advice I would have given my former self would have been to have saved for longer and bought my cars outright.

Exactly this!!!!

JimmyTheWig

When I first read the thread title, I read it as taking out a loan for a 19 year old car!
OP, it sounds like you want the car now. I doubt that there is much that we can do to stop you. But I will add my comments...

Grimezy wrote: »

why not be paying for a loan and have the cars 10-11 months earlier to enjoy the benefits?

The difference is that in, say, a year's time you will have a car that is a year older. If you buy this one now then the chances are you'll want another one in a couple of year's time. Where's the money for that going to come from? Another loan? You'll end up paying interest on car purchases all your life at this rate. If you like cars (and it sounds like you do) you'll be spending a fair bit on them. Why pay more than you need to by paying interest on each one?
You've got a car that works now. Use this time to save up for your second car. Then when you buy that, use the time you have it to save up for your next one, etc. If you save enough then you can get better cars each time.

I've used tesco's loan calculator and it's £5300 with interest if I pay back in 18 or 24 months I think.

If you can afford £500 a month, why not take the loan over 12 months?

It's grey with black bumpers, it's ugly

You could always buy yourself a tin of spray paint? You may well halve its value by doing that, but I can't imagine it's worth much now anyway.

and it's starting to become a little less reliable, believe it or not it's been pretty good up to now with only a few niggles but I can feel a storm coming.

Have you considered a policy like the AA's Breakdown Repair Cover? You'll pay a little over the standard cost as the car is more than 10 years old, but still may be worth it.

Blackjack_Davy

£750 to spend? Wow I wish I was a teenager again, I'm lucky if I have £50 after I've paid the mortgage, insurance, utility bills, TV licence, council tax, food, etc.

At your age your largest regular expense is likely to be insurance and the bigger/faster the car the higher it becomes.

I've driven a Fiesta for years, great little car.

A 19 year lad near my mothers place had a sports car and lost control of it on a bend, crashed through a wall into a stream and was killed. You could still see the skid marks last time I was there. I'd think about a sensible car for now and when only you're older and more experianced a driver I'd consider getting something bigger/faster.

Not what you want to hear, I know. :cool:

nathand_2

JimmyTheWig wrote: »

If you can afford £500 a month, why not take the loan over 12 months?

I'd imagine the OP wants to hold onto some of their disposable income. If they have £6k/pa and the loan is £5.3k that means they'd have £700 spare over 12 months (I'm aware that would actually be higher when you alter the interest they pay over 12m instead of 24 but not by all that much). Over 24 months they'd have £3350 spare per year.

Grimezy

Thanks Jimmy, I do think my mind may have been changed into saving up as I agree with what everybody has said and take their advice on board. I thought about paying one back in 12 months but I thought I really would be leaving myself short where as £500 into a savings account is still accessible for emergencies.

I do have breakdown cover in my insurance bundle which I added as an extra but have not had to use it yet. It's just small things like I can't really drive with more than 2 people as there is a terrible clanging noise at the back (suspected shock absorbers), a leak has appeared in my passenger side footwell (guttering all clear, had hosepipe on car and can feel no area of where it could be coming from), powersteering is electrical and is known to work intermittently (hasn't happened for a few months but bound to come back, very common punto problem). I could go on but I won't. Basically there's a lot of niggles that are already present but not terrible enough to effect it's driving ability (yet!).

Like you said though, I do want this car as I've been looking for at least 6 months and have not seen an example as good as this one that is of a reasonable price. I may be best waiting until my insurance renewal in July and think about switching then.

Another option is what are £2000 loans like? I could easily pay one back in a year and I could save half the money by July and then pay for the rest by loan?

Grimezy

Blackjack_Davy wrote: »

£750 to spend? Wow I wish I was a teenager again, I'm lucky if I have £50 after I've paid the mortgage, insurance, utility bills, TV licence, council tax, food, etc.

At your age your largest regular expense is likely to be insurance and the bigger/faster the car the higher it becomes.

I've driven a Fiesta for years, great little car.

A 19 year lad near my mothers place had a sports car and lost control of it on a bend, crashed through a wall into a stream and was killed. You could still see the skid marks last time I was there. I'd think about a sensible car for now and when only you're older and more experianced a driver I'd consider getting something bigger/faster.

Not what you want to hear, I know. :cool:

It's great isn't it! I still appreciate the value of money though and I've always helped my parents out and paid my way. I have friends that don't pay a penny, sit on their parents insurance and get their cars paid for them even though they're bringing in £500 a month.

And a 1.6 leon isn't too sporty (although I won't deny the fact I've looked at the 2.0 16v version)! It's the entry level engine and I believe it's only 102bhp, 8v with a max of about 120mph I think. I wouldn't be modifying it or boy racing, I only drive my car to work, up to my girlfriends and to the shops, I don't hang out on morrison's car park! I just think a 1.6 would be perfect for my motorway journeys and for getting around country lanes without having to rag it (as opposed to my 1.2 60bhp Punto)! I learnt to drive in a 1.6 focus and it wasn't bad at all, definitely wouldn't break any landspeed records.

DCFC79

If you want to keep insurance costs down you might have to consider getting a car that isn't asociated with boy racers by the insurance firms.

CLAPTON

Grimezy wrote: »

monthly.. Luckily there isn't really a difference with my Punto so it's either pay £1000 up front or pay £1100 if you go monthly. I like the manageable monthly payments x)

Actually £100 interest on £1,000 over 12 months works out at about 19% APR.


little things like that add to to quite big things.