Car finance after poor credit history.

bigjl

With respect grey-man, you need to consider reliability issues.

If you buy a car over three years and it has a major problem after a year you are stuck paying for an asset that is broken, not a huge problem of you are in the Bangernomics arena of car ownership, in that case you would simply sell on eBay for spares or repairs get what you can back to put into the next car.

But if it was on finance then you have to fix it, you can't VT and walk away from a knackered car without getting a bill from the HP Company.

Lots of people who have commented on the thread are offering advise based on their experiences or the experiences of people they know.

There is nothing worse than a depreciating asset that you are paying interest on over several years becoming a liability that could risk your credit rebuilding exercise.

What makes you think a £3/4K used car will be much better than what you already have?

At the end of the day you are going to do what is best for you.

But don't ignore advise freely given because it doesn't fit exactly into what you want and then hand out back slaps to those that agree 100%.

They might never have seen somebody stuck with a broken car or unreliable car on finance.

Saving hard every month whilst running your current car until it dies is also not a bad plan as likely been suggested by many, though I seem to have misunderstood your OP as I thought your objective was to kill two birds with one stone, get a better more reliable car and repair your credit at the same time by buying on HP.

bigjl

AdrianC wrote: »

But are they good value compared to places whose raison d'etre isn't flogging sub-prime credit?

Well I don't know AdrianC

I bought a 14 plate Kia Picanto for £5698, when the same car at Kia dealers is a £1000 more on a 13plate and WBAC have valued my car at £5500, which is as everybody agrees usually a very low trade price.

CG is cheaper than any Dealer price when I have been buying there, our old Clio was £2k than an identical car with more miles at a Renault Main Dealer.

CarGiant charge the same price for cars regardless of how you finance.

If you ever got bored and went round CarCraft before they thankfully went to the wall you would have seen a load of tat £2k over book.

Then they would get he unsuspecting buyers to sign up for 5yr deals at massive interest rates based in a monthly budget.

I went in there for a laugh in late 2005, was considering selling my Legacy as increased commuting miles meant I was thinking of going diesel.

With just over 12k miles they offered £7000 trade in!

For a car with a retail price new of £17.5k and with similar at Subaru dealers for around £13k.

That was when I realised they were a bunch of con artists.

As an aside that Subaru was stolen in early 2008 and I got paid out £8000. (- excess)

I have seen the guaranteed finance specialist garages, and noticed how expensive the cars are, some of them pop up in Facebook Adverts.

Do you think that Picanto was a good deal?

I do personally. Nearly bought a Corsa diesel on a but I was concerned that it was an ex hire car or driving school car, it was a bit more expensive, was around £6500 when I looked at it. And being a 13plate the manufacturers warranty was about to run out.

I looked at the CG site and it sold today.

https://www.cargiant.co.uk/car/vauxhall/corsa/DX13KHZ

For £6098. Not a bad deal to be fair. But a DPF was obviously another concern. I would have bought some decent diagnostics to allow me to do an Active Regen myself if I had bought it.

I doubt a "guaranteed finance" type dealer would have sold that Corsa for that price.

Do you consider that Corsa a decent deal?

The_grey_man_2

bigjl wrote: »

With respect grey-man, you need to consider reliability issues.

You are of course perfectly correct Bigjl but you seem to have me wrong.

Reliability will of course be an important factor and one that as a mechanic I feel I am more than capable of addressing. I was looking for advice about the financial aspects of taking out finance. Such as:-
1.Who are the good companies for someone in my situation (I know I can Google it but a personal recommendation is so much better).
2. Will taking out a secured loan and paying it off actually improve my credit score (the end game here is to repair the damage done so that one day I can get a mortgage).
I have considered the implications of being stuck with a car that I have to pay off and also the extra cost of using finance and I am happy that the risk is reasonable (again there is little mechanically that I couldn't deal with) and I am happy to pay the extra cash if it improves my credit score.

I apologize if it seems like I am ignoring all the good advice given here. I am not ignoring it, I have considered the risks and I am happy to take them, but my concern is that these are clouding the issue of my original question.

Please don't think me an arrogant fool, perhaps my original post was just badly phrased and I didn't communicate my needs clearly.

The_grey_man_2

bigjl wrote: »

Saving hard every month whilst running your current car until it dies is also not a bad plan as likely been suggested by many, though I seem to have misunderstood your OP as I thought your objective was to kill two birds with one stone, get a better more reliable car and repair your credit at the same time by buying on HP.

That is exactly what i would like to do! But so far the advice has been stick with my current car and not to buy a second hand car in my price range because they are potentially unreliable.

So is the point that one should never buy a second hand car in the price range I have specified? Is this just about the potential unreliability of a car that age on finance or am I missing something else? Are these kind of finance deals always a bad idea?

P.S. I guess I should have said that the most important factor here is the repair to my credit rating. Getting a newer car is secondary because if it does become unusable I can always buy a £500 banger to get me to work (I know that means there is a risk that I will be stuck paying finance on a car that is now worthless but I have considered this implication).
So is taking out finance against a car a legitimate way to build my credit score, and if so who should I use and who should I avoid?

AdrianC

The_grey_man wrote: »

2. Will taking out a secured loan and paying it off actually improve my credit score (the end game here is to repair the damage done so that one day I can get a mortgage).

It might improve your score slightly - but nowhere near as much as clearing that outstanding credit card balance will. Clearing that more quickly will also be cheaper, especially if it then enables you to get non-sub-prime finance sooner.

Until you've cleared your existing debt, thinking about taking on new debt "to rebuild your credit score" seems to me to be the wrong way about things.

The_grey_man_2

Oh no I will definitely do that. my balance is only about £200 and the only reason I haven't cleared it so far is because I have been absentminded. Good point though.

Thank you Adrian.

jimjames

The_grey_man wrote: »

You have made quite a few assumptions here Adrian. I appreciate that my post doesn't give you much detail but that doesn't mean you should jump to conclusions.

I can't see anything in Adrian's post that was judgemental, just good, sensible advice. Don't borrow for a car, get what you can afford and especially now you've said you're a mechanic then you can easily find one for low price that is decent.

My current VW Golf cost me £500, minor work needed to bring it up to scratch but it's now worth £2000. Surely with your skills that sort of thing would make more sense?

jimjames

bigjl wrote: »

There is nothing worse than a depreciating asset that you are paying interest on over several years becoming a liability that could risk your credit rebuilding exercise.

What makes you think a £3/4K used car will be much better than what you already have?

They might never have seen somebody stuck with a broken car or unreliable car on finance.

Ordinarily I might agree about another car but for someone who is a mechanic it's a perfect opportunity to get something that they can add value to. Having run £4000-£500 cars for the last 10 years I can say there has been no difference or issue with reliability. I've just had to replace suspension on my car but coil springs break and need replacement. It's a routine service item, doesn't mean the car is unreliable.

xHannahx

The_grey_man wrote: »

Really? That's an aspect I hadn't considered. You make a good point about buying a cheap car and adding value to it, but the problem there is that I need a reliable car from day one in order to get to work, living in rural Cornwall means there is no other way for me to get there.

Maybe you're right, maybe I should think again about what I need, not what I want.I guess I figured that as I was going to change my car anyway why not get something a little bit newer and perhaps build a little credit score at the same time.

Maybe this is not the best option for me.

Thanks guys, I'll have another think about it.

We also live in Cornwall. We bought a £800 2003 Seat Toledo 2 years ago. It's been faultless since with 35k done in that time, now showing 125k on the clock. Knowing your cars there are plenty of decent older cars about locally.
We had already done finance before this one, but due to change in circumstances couldn't carry on with finance payments. Won't look back or consider finance again now.

bigjl

The_grey_man wrote: »

That is exactly what i would like to do! But so far the advice has been stick with my current car and not to buy a second hand car in my price range because they are potentially unreliable.

So is the point that one should never buy a second hand car in the price range I have specified? Is this just about the potential unreliability of a car that age on finance or am I missing something else? Are these kind of finance deals always a bad idea?

P.S. I guess I should have said that the most important factor here is the repair to my credit rating. Getting a newer car is secondary because if it does become unusable I can always buy a £500 banger to get me to work (I know that means there is a risk that I will be stuck paying finance on a car that is now worthless but I have considered this implication).
So is taking out finance against a car a legitimate way to build my credit score, and if so who should I use and who should I avoid?

As long as the interest rate is reasonable and the car not an overpriced junker polished to sell to the unwary who are just happy to have got HPnon a newer car than they could afford to pay for cash.

Lots of dealers do what CarCraft did, sell overpriced turds based on a monthly budget whilst extended the period of the loan to 60 or 72 months. Which 5/6 yr old car is going to last that long without fault? And let's not forget negative equity.

I would not have been upset to buy my Picanto on a high APR to repair my credit.

Did some checking online and if the interest rate was say 30% or so the payments would only have been around £180, higher than I am paying but not horrendous when you consider it has cheap Insurance, decent economy and free RFL.

If you don't borrow and service the loan spot on then you can't repair your credit rating.

Buying an old banger might be great for the monthly budget but it won't repair your credit.

Even your high interest credit card will make little difference.

I have checked my Credit Score on Noddle and haven't missed or been late on a payment in over 3years.

As soon as I got accepted for the loan my credit score jumped up by 40 points, I will have a check again in a few months.

I know Credit Scores are not the be all and end all but it is the first positive change for 3years.