Financing car - 19 years old

joel491

Hello,

I'm 19 years old and looking to apply for credit on a new car. I started a business over 2 years ago and like many other business owners, I spend well over 8 hours a day, 7 days a week working at my business. I enjoy it and wouldn't have it any other way.

A year ago I saw an advert for the new Mazda MX-5 and fell in love with it. I don't have the funds to buy the car outright so I'm looking to try and finance one. Currently I'm living with my parents and have very little overheads. I'm not planning on moving out within the next year or two either. So, with that in mind I think I might have an opportunity to reward myself with my all time favourite car. The car's on the road value is around £20k, and I'd look to put a £5k deposit down which would leave me with monthly payments of around £300 for 42 months.

Currently I'm paying myself £16k per year and this would only bring my overheads to just over a quarter of my monthly income. I can appreciate that it's a decent argument to say "you could save that money for a house deposit", or that it's just not a very good investment of my money, and I fully understand that. But, for once in my life I'd like to live in the moment and treat myself. I love cars and would really like something to show for my efforts.

I am mainly posting this thread to ask whether it would be physically possible for me to have the remaining £15k financed at my age or whether it's just completely unreasonable. I have checked my credit score at Experian and it is in the excellent category. I have also financed before (not a car), and am actively financing a rowing machine with monthly payments at £80 per month (I appreciate that's not quite the same as the car, but it's something). It's also worth mentioning that towards the end of the year I will likely be paying myself nearly double my current salary.

Thanks!

Joel

New_Me

Have you considered a 2nd hand one? Just over £11k at 2 years old - http://www4.autotrader.co.uk/classified/advert/201511028357916. Also shows how much value the new one will lose in 2 years.

Check the insurance by running a dummy quote as well, just so you can build that into your budget.

joel491

I have indeed had a look at 2nd hand. The problem for me is that the 4th generation design (the latest MX-5) is a new design that I really like. For me the previous generations look a little feminine. I guess I could wait a year until some second hand-latest generation models start showing up, but currently this isn't my preference (unless financing a new one is completely unfeasible).

andyfromotley

Hi Joel,

you are unlikely to get a personal loan for that amount given your age, income and employment status.

You may be approved for manufacturers finance as these generally have a lower qualifying criterea. (however i do not consider them to be a good deal for the borower) So if you are determined to do it this will be your likely route.

However having given you advice on that i really cant go without saying, dont do this! You are rewarding yourself with a treat that you havent earned yet. Worse than that it is going to be a depreciating asset. Given your low overheads and busy worklife you should be saving for things like rowing machines and cars. You are setting a pattern that will likely stick with you for life of buying things that you cant afford. Given that you are likely to double your wages soon then you could probably save for this car in a year to 18 months.

joel491

andyfromotley wrote: »

Hi Joel,

you are unlikely to get a personal loan for that amount given your age, income and employment status.

You may be approved for manufacturers finance as these generally have a lower qualifying criterea. (however i do not consider them to be a good deal for the borower) So if you are determined to do it this will be your likely route.

However having given you advice on that i really cant go without saying, dont do this! You are rewarding yourself with a treat that you havent earned yet. Worse than that it is going to be a depreciating asset. Given your low overheads and busy worklife you should be saving for things like rowing machines and cars. You are setting a pattern that will likely stick with you for life of buying things that you cant afford. Given that you are likely to double your wages soon then you could probably save for this car in a year to 18 months.

Thanks for your reply. Actually, I could afford the rowing machine, it was just more convenient to pay monthly (0% APR) and was looking to boost my credit rating!

I follow your points and certainly see them as fair, but I would not look to purchase this car on finance unless I am sure I am going to be able to repay all the payments, which I am.

Makalu

Just a thought. I have read the posts above and would like to say that although I cannot offer you any financial advice you seem to have given this a lot of thought and have worked out whether you can afford the repayments if required. I think you should go for it. This might be the only time you can really afford something you want. The vehicle will most definitely depreciate in value!! However, as you get older you may have mortgage payments, loans and children to provide for. I wouldn't be writing this if I thought you were not taking this seriously or if you were unemployed. Good luck whatever you decide to do.

etienneg

Am I missing something here? £20,000 less £5,000 deposit leaves £15,000 to finance. £300 x42 months only comes to £12,600. What about the other £2,400 and interest payments?

tidds

I purchased a £43,000 Audi a couple of years ago on finance to reward my hard work. I lost a lot of money when I came to sell it as I wanted to buy a bigger house - but, my point here is, I did it in a time of my life where I was able to buy a brand new car, yes I lost money, but the time driving that car was incredible. If you really want to do it and know you can afford it - then do it.

davetrousers

joel491 wrote: »

I'm 19 years old and ... for once in my life I'd like to live in the moment and treat myself.

So how are you any different from other 19 year olds?

smithers1981

One of the best pieces of advice i've heard on here is: buy the most expensive house you can, and buy the cheapest car you can.

Wise words IMHO only wish i'd heard them when i was 19.

Pay_me

At your age and if you can afford it and you are not expecting things to change dramatically (i.e. for the worst) financially in the next couple of years, then, I'd agree that this is the time of your life you should have some fun. Really crunch down on the sums and if it works go for it but work in the contingencies etc. Never stretch yourself to far though.

The fact that you are 19 started a business and already paying yourself a wage, which hopefully will grow shows that you have what it takes to sort your finances and make the right decision for you.

I always wanted to buy a Land Rover ever since I was a kid. I couldn't afford one when I passed at 18 so I purchased a used Astra then at 23 I had the opportunity to buy the Land Rover lots of disposable income and I didn't take it, I bought a used Peugeot instead because life started to get in the way...i.e. relationship, wanted a house etc etc.

Roll forward 12 years and I will never buy that Land Rover. Life got in the way, 2 redundancies later, several significant pay cuts and a failed and expensive relationship later including significant reduction in savings paying of the debt from the relationship etc etc.

Luckily I was savvy enough to have enough savings to buy myself out of the financial mess of the relationship but how I wish I was 23 again and taken the opportunity to have treated myself back then. I now earn less than I did when I was 23 so don't take it for granted that things always improve as life goes forward it doesn't!!

Like I say crunch the sums, build in the contingency and if it still works financially..then make your choices.