Are car loans bad news for a 19 year old?

sterlingstash

There is a great article on Monevator which reminds us that taking a loan is basically making your future self poorer. OP - what you said about the way you'd feel about handing over £5k you'd worked hard to save up is exactly right! You re-evaluate how much you really want something when you've slogged to save up. But taking a loan is costing even more!

http://monevator.com/the-really-obvious-thing-we-all-forget-when-borrowing-money/

Grimezy

DCFC79 wrote: »

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.

The 1.6 leon I'm looking at is group 6, I think my punto's group 4. I have already checked various websites for quotes and really, there isn't a huge difference. Insurance is not an issue for the cars that I am looking at. I'm well clued up on what insurance is like for a young person, trust me.

CLAPTON wrote: »

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.

I agree, however, my first year I was quoted £2000 up front or £2200 if I paid monthly. As you can imagine I did not have the money to pay for this in one go, therefore the extra £200 was an acceptable condition.

Again last year, I did not have £1000 up front to pay for it, therefore I would rather pay £93 a month and get used to it coming out of my bank monthly as opposed to having more disposable income and having to worry about saving for it.

This year, my insurance will go down to around £600 (for my punto) or £700 if I got this new car. I am likely to pay this off in one go although if there isn't a huge difference, I would rather pay it monthly as it's not an issue for me to pay that small premium to have it coming out in small monthly amounts. This may seem stupid and irresponsible if I have the money sat in my savings, but I'm going to have to wait 12 months to see the benefit of paying it off in one go, and if it's only for the sake of £80 or something over those 12 months then why bother? That £600 could be put towards a new car straight away, whereas I am unlikely to see the benefits of saving £80 over the course of a year.

JimmyTheWig

Grimezy wrote: »

my girlfriend of 3 years lives 90 miles away (a rather tasty trip up the M5 + M6 - Gold star to whoever can work out where I live and where she lives).

You live in Gloucester and she lives in Stoke-on-Trent?

DCFC79

Grimezy wrote: »

The 1.6 leon I'm looking at is group 6, I think my punto's group 4. I have already checked various websites for quotes and really, there isn't a huge difference. Insurance is not an issue for the cars that I am looking at. I'm well clued up on what insurance is like for a young person, trust me.

Was just saying, not everyone is aware there are certains that are cheaper than others.

You seem to be going about it in a methodical way which I dont imagine other people dont.

Grimezy

JimmyTheWig wrote: »

You live in Gloucester and she lives in Stoke-on-Trent?

So close! Not quite though.

Herzlos

Think about it this way; every month you keep the Punto going is another £500 less you'll need to borrow on a new one.

You might be best waiting until your insurance renews anyway, or you'll have to deal with admin fees and risk being stuck on a poor deal. If that means having to borrow a small amount it may still work out better.

In reality, anything that'll need done to the Punto except total failure will probably only cost a few loan repayments anyway.

ChopperST

You've got a resounding answer Sam. Take the advice :cool:

Clive_Woody

Another thought is that you may pick up a Skoda for cheaper than the SEAT (all part of the VAG group), have a look at the Fabia or an Octavia if you really need a larger car. Same engines as VW and SEAT.

I've got an Octavia vRS which is a lovely car to drive, well put together and a decent turn of pace but not recommended for somebody still building up their no claims. I pay less than £300/year on insurance but I am a few years older than you.

I've just been out to lunch with a mate who's just picked up his new company car, a lovely shiny 5 series. It's a great car but there's no way I would use my own money to buy one.

My point is don't feel rushed to get the 'dream car', get the experience in a smaller car, build up the no claims discount, build up a savings pot, do you research (Top Gear subscription) then when the time is right hit the shops.

Grimezy

Clive_Woody wrote: »

Another thought is that you may pick up a Skoda for cheaper than the SEAT (all part of the VAG group), have a look at the Fabia or an Octavia if you really need a larger car. Same engines as VW and SEAT.

I've got an Octavia vRS which is a lovely car to drive, well put together and a decent turn of pace but not recommended for somebody still building up their no claims. I pay less than £300/year on insurance but I am a few years older than you.

I've just been out to lunch with a mate who's just picked up his new company car, a lovely shiny 5 series. It's a great car but there's no way I would use my own money to buy one.

My point is don't feel rushed to get the 'dream car', get the experience in a smaller car, build up the no claims discount, build up a savings pot, do you research (Top Gear subscription) then when the time is right hit the shops.

I have looked at Fabia's and Octavia's. I'm a huge fan of the vrs versions (saw a few at Edition 38 - 'VDub' fest) but as you say they're well out of my budget. I'm not massively keen on the standard versions as they can look a tad plain and plastic'y.

And I agree with you, I wouldn't spend a silly amount on a car or buy new. I think £5k-£10k is reasonable though if you know what you're looking for.

Unfortunately Top Gear is too upper class for me I don't mind a cheeky Auto Express though. Or Fast Car if I'm desperate (it's not my fault it's the only one that isn't focused purely on new cars that all cost £20k+!)

~Brock~

I have just read this thread and although I have got nothing constructive to add to the general subject matter, I just wanted to mention how refreshing it has been to see such a mature, sensible and pleasant conversation taking place between a clearly literate and intelligent 19 year old and the forum regulars.

If only it was like this all the time eh guys?

All credit to the OP for restoring some of my faith in the younger generation!