Question regarding car finance

dgtazzman

Hi all,

I have a question regarding possible car finance we might be looking at next month.

We are looking at buying a new family car. After driving around in old rust buckets for 10 years, it would be nice to own a nice new, hopefully far more reliable family car. We're not going crazy and looking at luxury makes/models. The car we are looking at is the Dacia Sandero Stepway, priced at 10k for the version we want.

The car has a lead time of 2 months, but we'd be looking to order it next month for delivery in October. Thing is, next month at the point of purchase, we will not have enough money to pay for the car outright as we're in the process of buying a house, so most of our money is getting sunk into that right now. From what I understand however, is that at point of sale, they will only require a few hundred pounds deposit from us and the rest will follow when the car is ready for delivery.

I was thinking of securing the car on a finance deal when purchasing, but in all likelihood, by the time we want to pick it up in October, we will possibly have enough money to pay for it outright and do away with the financing, this is not 100% guaranteed though, as some of the funds I am expecting to receive are from a tax rebate, which usually is received at the beginning of July, but can be delayed as it does come from the government and we all know what they're like.

Would it be a problem to reserve the car on a finance deal and then just cancel said deal before the actual purchase and pay for it outright without incurring any penalties?

Buying the car on finance itself isn't an issue, we can well afford the payments, just would rather not pay the interest if we're in a position to avoid it and for argument's sake, my wife and myself have clean credit files and a joint income of 50k a year. Only adverse thing would be the house move, thus also having to change our electoral roll information next month, which should be up to date by the time we pick up the car.

Edi81

The car finance isn't signed up until the car is ready for you to drive away.

The car dealership may get an application submitted at the time of ordering the car. That might not be the best thing if you are in the process of buying a house as your mortgage provider may see the application for credit and ask further questions etc.

dgtazzman

Don't worry, not taking any action till the mortgage completes and in no need of other credit, just wanted to clarify when the credit agreement is actually signed. If this isn't till delivery, that keeps our options open.

poppasmurf_bewdley

Have you really investigated the prices of these cars? I've just looked on the Autotrader website and seen a 2014 5-door 1.2 with one mile on the clock for £5995. Or a 2014 5-door manual with five miles on the clock for £7k.

These cars are cheap and not so chearful, Rather a modern day Lada, and within a couple of years will be worth not very much at all.

You may be better advised to look at a one or two year old Fiesta or Corsa. They have better price retention, cheaper servicing and much cheaper and better available spares.

dgtazzman

Yes, I have and I am aware at this time they don't retain their value very well, simply as they aren't very popular. Under the hood, they are Renaults and they have quite decent reviews across the board and are gaining in popularity. They aren't particularly the best in the market performance wise, but all the reviews I've read agree that they are are pretty much unbeatable in value for money. What do I care they only go 107 mph, the speed limit on the motorway is still only 70.

Same idea as Kia when they first launched, they need to make a name for themselves. As for maintenance, they offer a 7-year extended warranty for £900 and as the mechanics are simpler than most modern cars, faults will most likely be easier, thus likely cheaper to fix.

Also, that 6k car you are on about is the normal Sandero most likely, which retails at, wait for it, 6k.

I have been lurking around owner forums for Dacia and everybody there seems rather positive about their cars. If you can't trust the people who drive them, then who can you trust?

Anyway, leave the car choice to us, it has little to do with the question I had.

P.S. Lada's weren't actually bad cars, they were just built for a different market than the UK.

Nebulous2

dgtazzman wrote: »

Same idea as Kia when they first launched, they need to make a name for themselves.

It's entirely up to yourself what you buy, though on an open forum people may very well comment. It would be a strange world if we all drove the same cars. I'm sure there is a film like that??

Kias are interesting. Despite throwing the kitchen sink at it, including a 7 year warranty, they still depreciate faster than most things. I thought that meant effectively they became good value at some point, but it doesn't appear that way, they continue to lose money at a fair rate until they are effectively worth nothing.

I once bought a Kia Sedona very cheaply and it did reasonably well. Due to a change in circumstances I sold it less than a year later and had to sell it even more cheaply to get it to shift. So I still lost a chunk of money. From memory I bought it for £3500 and sold it for £2300.

I've just bought a 2004 Kia Rio for £400, with full MOT, 6 months road tax and with 60,000 miles on it. A Ford Focus at similar age, mileage and MOT doesn't leave much change from £2000 - I know because I've been looking for the last two months.

So don't count on anything other than it being difficult to recover any value from, however long you keep it.

dgtazzman

This will be a long term car for us, so retention of value isn't as important. A similar car from another make would run at 16k-17k (using Juke for the pricing as they have been compared to each other). Say we keep the car for 7 years. The Nissan might retain a value of 5k (model hasn't been around for 7 years yet, but based on current second hand values it should be around this), the Dacia 1k, meaning over 7 years the Dacia will have lost value to the amount of 9k, the Nissan will have lost at least 11k.

We also like the Dacia as my wife is rather tall and it offers her plenty of room, something quite a few other cars in that price class don't.

Value retention is largely based on popularity, not on more practical reasoning. We now have a 2004 Clio we bought for 500 pounds with MOT 2 months ago, cars that age generally don't have much value, bar a few exceptions.