Car Finance Hire/Purchase - Please explain!

The_Offside_Rule

I want to get a newer car (second hand) but I'm concerned about the rates charged.

Firstly, due to my credit history, I can not get a bank loan.

This week I went down to a used car superstore in my area where I found a car that I liked. The car cost £8200. After doing credit checks etc on me, they told me that my credit would only reach to £7000

So, I went around their cars and had another good look and found a lovely motor for £6000. Sure enough, I got accepted and the car got prepared for me and had all the things I bartered for.

I went back on the agreed day to sign for the car and they had added £5k for the cost of credit!

Essentially they wanted me to pay 11k over five years for a car worth 6k!

I told them that I was no longer interested and had my deposit back.

The monthly payments they wanted was £177, which is just within my budget but its the fact that I'd have to pay that for five years that got me, and the fact that they didn't mention that.

Did I do the right thing?

The reason why I looked for a new car is that my new job will require travelling into rural areas and I will also be required to travel with clients, so I needed something reliable and respectable.

I was thinking of trying Black Horse Finance - Are they likely to try the same trick?

Also, I would be prepared to pay a little more and perhaps get a used, or even new car from an official dealer. Is this plausible in my situation?

Thanks to all.

CherlokHomes

You've defiantly done the right thing!! Damn 5k interest on a car that won't be worth no more then 2 or 3k in a couple of years.


Forget finance and save up for a run about until your credit history improve.

Apples2

What were you expecting?

You can't get a loan due to a poor credit file so will only get a finance agreement carrying a large interest rate.
With a poor credit file everyone you apply for finance with is going to assume you aren't going to make payments reliably so offer you a rate based on the risk they will be taking by lending to you.

Clive_Woody

rdf1988 wrote: »

I want to get a newer car (second hand) but I'm concerned about the rates charged.

Firstly, due to my credit history, I can not get a bank loan.

This week I went down to a used car superstore in my area where I found a car that I liked. The car cost £8200. After doing credit checks etc on me, they told me that my credit would only reach to £7000

So, I went around their cars and had another good look and found a lovely motor for £6000. Sure enough, I got accepted and the car got prepared for me and had all the things I bartered for.

I went back on the agreed day to sign for the car and they had added £5k for the cost of credit!

Essentially they wanted me to pay 11k over five years for a car worth 6k!

I told them that I was no longer interested and had my deposit back.

The monthly payments they wanted was £177, which is just within my budget but its the fact that I'd have to pay that for five years that got me, and the fact that they didn't mention that.

Did I do the right thing?

The reason why I looked for a new car is that my new job will require travelling into rural areas and I will also be required to travel with clients, so I needed something reliable and respectable.

I was thinking of trying Black Horse Finance - Are they likely to try the same trick?

Also, I would be prepared to pay a little more and perhaps get a used, or even new car from an official dealer. Is this plausible in my situation?

Thanks to all.

What period were you wanting to repay the loan over? DId you mention this to them?

What was the APR they quoted? What sort of APR are you hoping to receive?

Tixy

That looks like an APR of around 25%. Which is very high for secured finance but whether you would likely to be able to find cheaper depends on your credit history and financial circumstances.

I was thinking of trying Black Horse Finance - Are they likely to try the same trick?

They will still want to charge you interest yes. Whether they'll accept you and at what rate isn't possible to guess.

chalkie99

rdf1988 wrote: »

found a lovely motor for £6000. Sure enough, I got accepted and the car got prepared for me and had all the things I bartered for.

I went back on the agreed day to sign for the car and they had added £5k for the cost of credit!

Essentially they wanted me to pay 11k over five years for a car worth 6k!

I told them that I was no longer interested and had my deposit back.

You cannot seriously mean you agreed to buy it, "had it prepared for you" and "bartered" without even finding out the cost to you first?

Sales people in car superstores make payday loan companies look like the Samaritans. You need to really have a strong word with yourself before entering another showroom.

These sales people are trained to make them look like your friend but they are only going to fleece you for every penny they can. That £6k car was probably bought in very cheaply and I reckon you would still be paying for it after it was scrap.

With a bad credit record I wouldn't be looking at spending that much on a car. Buy something you can save for and get yourself on the straight and narrow.

Tixy

If a car is required for work and needs to be 'respectable' would your employer be prepared to offer you a loan to buy something a little better than what you could afford outright? That you could maybe pay back over a year direct from your salary.

The_Offside_Rule

Chalkie, please don't treat me like a child. The car was near enough 6k. I bartered with them to take £450powder coat one of the alloys that had a deep scuff, service the car and include mats.

They told me that a finance plan would add £1200 to the cost.

The cost had miraculously shot up to £10,900 with payments of £177 over five years

They originally told me that the bill each month would be £117

Tixy, that really is a good idea but I'd feel a bit embarrassed asking. Word gets around fast in my place of work too.

CherlokHomes

rdf1988 wrote: »

Chalkie, please don't treat me like a child. The car was near enough 6k. I bartered with them to take £450powder coat one of the alloys that had a deep scuff, service the car and include mats.

They told me that a finance plan would add £1200 to the cost.

The cost had miraculously shot up to £10,900 with payments of £177 over five years

They originally told me that the bill each month would be £117

Tixy, that really is a good idea but I'd feel a bit embarrassed asking. Word gets around fast in my place of work too.

You only need to ask your workplace or family for a grand which will get you a reasonable car until later on.

BillJones

rdf1988 wrote: »

The reason why I looked for a new car is that my new job will require travelling into rural areas and I will also be required to travel with clients, so I needed something reliable and respectable.

You can get that for £3-4,000 pretty easily. The sort of place that you are looking at probably jacks up the price by a couple of thousand before they start loading finance charges on top.

Next time that you go somewhere to enquire about a deal, make sure that you get your quote written own; don't risk the same happpening again, but please, try to find a way of doing this without a loan.

CherlokHomes

BillJones wrote: »

You can get that for £3-4,000 pretty easily. The sort of place that you are looking at probably jacks up the price by a couple of thousand before they start loading finance charges on top.

Next time that you go somewhere to enquire about a deal, make sure that you get your quote written own; don't risk the same happpening again, but please, try to find a way of doing this without a loan.

Totally agree they'll sling 2k on a it as their clientele I presume are of those who are not the best with past financial dealings.