Car finance advice odd financial situation

NP_ME

Hi there,
Looking for some advise as I have never been in this type of situation before.
I currently drive a 14y old car I bought from new. It is due to be replaced soon and I'm looking into finance advice. I can't buy the car without a loan, but am afraid of extremely high APR or rejection.
Financial situation:
Me: work full time, have mortage (joined), personal loan and some Credit card debt. Was out of work for a while and Virgin Credit Card (MBNA) decided to sell on my debt and default me. I set up a direct debit for the amount agreed with this company and have not missed a payment (although it still shows up as default). This is my only black spot on my credit record, but it seems a biggie as all free reports rate me badly.
Partner: I am married with my partner, she has own company, but went back to study at uni, so little income and very erratic. Some credit card debt, but no missed payments. Close to her lending limit though. Free reports rate her really good.

The first question is, would it be best to move my defaulting debt to a credit card that she has space on (talking about £1400) before applying for anything? Issue: currently not paying interest on this, but would do when moved to card. Should I apply (as I have steady income, but bad credit report) or should she (good credit report but no fixed income).

We're looking (hoping) for a recent 2nd hand vehicle around £9k or a new one around £15k if possible. What car finance would be best? Try the dealer offered one first (motorpoint for 2nd hand or HP car finance at a dealership for new one) or is there a better way to get a decent APR rate? I tried the moneysaving eligibility calculator, but mainly get rejections or 'not enough data'. Would my own bank HSBC be a better start point (came up as good chance before, now not enough data), I thought it would be unlikely, but they also recently increased my overdraft limit, so maybe there is a chance?

Thanks for any help.

NP

ratrace

Welcome to the board

Dont want to sound like im lecturing sorry, but what is up with the car you already own? is it on its last legs or can you get a few more years out of it, if you have had it since new then surely you no the history of it in regards to service's etc....

I dont think its a good idea you shifting the debt to your partners cc due to the fact her income is up and down as she is a student, I would keep paying the debt off with some overpayment's as and when I could as the debt is not incurring interest

All you are doing is adding more debt on to your plate to buy a car thats going to lose value over time (sorry not you want to hear) there are plenty reliable cars out there for around £2500

As you have said above the debt accrued due to job loss/out of work

It could happen again or (god forbid) health issue's you never know what's around the corner - this is somthing just to mull over

Sorry op if I was you I would try to clear the debt you have as soon as

This is MSE afterall

NP_ME

Thanks for the advice,I'd love to say it can work, but it's not really an option. Here's a bit more detail:

* Current car has been a great runner, but we know it will need some expensive repairs (probably topping £2k in the next year or so)
* I know nothing about cars, but we have a great local independent mechanic who's done some magic on our car in the past. I trust him fully when he says: start looking for a car now.

I don't know where you would find a reliable car for £2.5k unless you know quite a bit about cars yourself. Cars of that price are extremely likely to need some major repairs in the near future and can break down at pretty much any time. We really need a very reliable car due to the nature of my wife's work. If it breaks down when on a job and we can't get a replacement in time, it can literally cost us £2k that very day.
We had a car in that price range before and ended up spending another £4k within the next 3 years in repairs no-one was expecting (but everyone knew a car that age could start having one issue after another), then we had enough. It was a false economy.
Also, with current road tax system and the price of petrol/diesel and the mpg of a newish car versus one that's over 5 years old, we calculated that conservatively the running cost would be £80 cheaper per month! That's nearly £1000 per year and we'd like to keep a car at least 5 years...

So although I'd love to cut down on my debt (and we have done so quite a bit in the last 2 years), the car is essential. We might be able to get something a little cheaper, but not a lot. (There's a lot of equipment involved for both our jobs as well, so we need a bit of space).

I know it's not a great situation, hence the question which one of the options I listed would be best. Also around the time we need to buy (September), we would have gotten rid of £210 worth of costs per month, add to that the savings a newish car would have in running costs and we should hopefully not end up worse at the end of a month if our APR is not ludicrous.

Thanks for reading this far and any advice tips you might have.

andyfromotley

I would imagine you have little to no chance of getting credit other than at suicidal interest rates. Your partner may fare better but i'm doubtful. I would think your best bet would be via a dealer as ime they have a somewhat lower barrier to lending than high street banks. That will give you an indication.

I dont agree with your assesment about older cars. I haven't spent over 2.5k on a car for many years and have hardly ever had any problems. I buy japanese models that have a service history and find them really reliable. (this is through choice, i have enough available credit on my CC's to go and buy a very nice new car if i was minded but i'm not). My current car, a Honda Civic, transports me and my family in comfort and luxury cost £1.5k.

NP_ME

Thanks for the advice. So moving the default to a credit card is not a good idea? I thought it would have made a difference. Oh well.
As far as the older cars go, please do let me know where I would be able to find a reliable car for £2.5k or less. I only had bad experiences with cars in that price range as do my neighbours. I had one from a local car dealership, the neighbours bought through auto trader. Both of us had more than £1000 costs within one year. As I don't know anything about cars I assumed my chances of finding something reliable under £5k would be close to zero. I did have a fairly reliable £5k car (few years back so possibly more expensive now), but in the 5 years we had it (2nd car next to our still going 14y old one) it did cost £3k in repairs.
Even with no extra costs, the mpg of a £2.5k car is likely to be around 28-35 for an urban cycle vs 60-80 for a newish one (at least for the ones I checked). As we drive more than 10k miles a year I calculate the running cost difference (taxes included, the cars we are looking at have a £0 road tax) would be up to £80-100 a month. After 5 years that is a difference of £4800-6000, which, assuming the older car does not need anything major in repairs in those 5 years, brings it at a similar price range.
I have nothing against older cars, honestly. I'd love to be able to just spend £2.5k on a reliable car, but I really don't think I would be able to get one (or at best have a 50-50 chance). Having had bad experience with it in the past (it made us very late to a job and almost cost us £2k as well as damage to reputation), I would just worry all the time and fear the littlest of noises.
Is there a place where you can buy a £2.5k car with some guarantee that it won't break down or need a big repair (more than £500 in a garage) within its first year? I looked around in the area, but can only find a few weeks warranty at best. Please do tell me where to look as I might be looking in the wrong place. I just really don't know anything about cars.
Thanks.

Nebulous2

New cars are attractive to us, because we are magpies at heart and we like nice shiny things. It is then easy to convince ourselves that it makes sense.

New cars are expensive because they depreciate. It's quite easy to lose £4000 in your first year and half its value in three.

I paid £800 for a Nissan Primera about two months ago and have done over 2500 miles. It has a computer which tells me it has been averaging 38.7 miles per gallon. That does depend on getting lucky, but I'm almost at the point where scrapping it and buying another £800 car would still be less expensive than running that new one!

It is easy to argue about merits of new cars / old cars, especially if it isn't critical as yours appears to be. I do it because I want to, we have another car and I also cycle a lot of the time.

However I cannot see you getting the finance to buy a £9k or £15k car. You are then faced with a few hard choices around keeping your current car or getting another as cheaply as possible.

The point I'm making, and the other poster may be making as well, is that it is certainly possible to do that.

Patchwork_Girl

I bought my first and only car for £900 (at ten years old) and it's been fantastic ever since (4-5 years now). I know less than nothing about cars but asked reliable friends and family and sourced one from a trusted local garage.

I know this is still not answering what you asked but just wanted to add to the others here that good cars can be picked up at a low price - often in my experience - I have known several family members do the same over the years.

Have you asked your trusted mechanic if he/she knows of any cars for sale? Or even for some tips about decent makes/models that you might look out for?

I hope you manage to figure it out - I know what a pain odd work/hours can be for getting finance!

Edited to add - if you do end up getting an older car out of neccessity would it help to research a couple of local car-hire places and their costs - just in case? (Or is there insurance that does this?) It might put your mind at ease as a backup plan should you ever need it and buy you time if you're unlucky enough to need emergency expensive repairs!

27col

For someone who confesses to knowing very little about cars. You seem to think that you know a lot about the reliability of older cars. If you have a reliable mechanic then get him to sort you an older car that is in reasonable condition. It would be worth paying a reasonable sum to get his advice.
If you have had a car 14 years from new. I would have thought that you might have saved something towards its eventual replacement. If you haven't saved because you could not afford to, then that does not bode well for you being able to afford the repayments on an expensive replacement.
I apologise in advance if you think that I am being harsh.But hard facts have to be faced at some stage.

heartbreak_star

Pootle over to the Motoring board and ask them too. They're pretty savvy


HBS x

SilverSaloon

can your mechanic expand on what needs doing for £2,000....

it would need to be a hell of a lot of problems.

NP_ME

Thanks for the advice so far, even though most people seem to favour getting an old car.
Just once more: I have nothing against an old car, but due to our circumstances it's not the favourable option. I need a reliable runner short and long distance (including continental Europe for which AA or similar coverage is expensive or impossible on cars 10 years and older).
I seem to have the wrong friends as all my 'motorheads' tell me after 7-9 year a clutch, gearbox,... Can just suddenly fail. I've been there and don't want to be there again as we can't easily gain emergency vehicle.
Yes I know there's loads of great little runners out there, but you don't know for sure .
No one seems to answer to the difference in running cost either, which was quite major for us when trying to figure out what to do.
The main reason for not having the savings for a car at this moment is just bad luck. My old employer went bust, but lied for a while so we used emergency funds longer than wanted. Insurance company weaselled out of a mortgage PPI (yes I am fighting that), 3 clients of my wife's company went under due to recession,...
Things are back to stable now and within a year or so we will start saving again, unfortunately we probably can't wait that long for car. Current one needs all break assemblies replacing, the gear box and clutch will go soon, ... It's a great little runner but it will be a money pit soon. Plus running a more recent car is a lot cheaper in petrol, tax and insurance.
Anyway thanks for the advice, I will look at older cars again, but it is unlikely to be the outcome unless it's the only thing possible.