Car finance seems so easy nowadays?

Legacy_user

I'm curious as to how so many people I know with credit problems are managing to get hold of car finance these days? It's seems so hard to get bank loans and mortgages, even hp on things like electrical goods and sofas but car finance companies seem to be giving loans away. Everywhere I turn there are adverts for 'bad credit history accepted' 'no deposit' etc etc. Is it just me?? My brother has a terrible credit history - even I wouldn't lend him money - yet a few months ago he came home with a nearly new car. He didn't even have to pay a deposit!

We are thinking of going down the finance route in the next year or so but I'm worried about getting sucked into a scam or something.

Deadbeat

Agreed, it seems a bit of a disaster waiting to happen.

Our friends across the Atlantic owe over $1T on vehicle finance.

bengalknights

Its usually because its secured against the vehicle which they can sell if you default (albeit at a loss)

iolanthe07

Many of these deals are at extremely high interest and sometimes a little box is fitted which will immobolise the car if you don't keep up payments.

foxy-stoat

MissSJL wrote: »

We are thinking of going down the finance route in the next year or so but I'm worried about getting sucked into a scam or something.

Rule number 1 - Just read the finance agreement and understand the terms - a lot of folk post on here never seem to get this bit right.

If the deal is little or no deposit, low monthly payments and a balloon payment at the end or give the car back then you cant afford the car - you want to own the car outright after 3 years, if the finance offered doesnt achieve this then choose another one.

CLAPTON

MissSJL wrote: »

I'm curious as to how so many people I know with credit problems are managing to get hold of car finance these days? It's seems so hard to get bank loans and mortgages, even hp on things like electrical goods and sofas but car finance companies seem to be giving loans away. Everywhere I turn there are adverts for 'bad credit history accepted' 'no deposit' etc etc. Is it just me?? My brother has a terrible credit history - even I wouldn't lend him money - yet a few months ago he came home with a nearly new car. He didn't even have to pay a deposit!

We are thinking of going down the finance route in the next year or so but I'm worried about getting sucked into a scam or something.

why not save up?

Nasqueron

Bank loan = they're stuffed if you spend the money and can't repay
Home loan = massive commitment and they are required to do affordability checks + hard to throw you out and sell the house if you don't repay

Car finance = they just take the car back and sell it and hopefully the payments + interest you made will cover the difference and depreciation

System

Well we are also saving for other things and a reliable car is invaluable as we have children and live in a rural location.

So if would you ever actually own the car whilst you are still paying the finance? Could you put a personal plate on the car for example? Is it yours or no different to a lease car really?

Nearlyold

If it's HP or a PCP (which in most cases is a form of HP) you don't own the car until all payments have been made, you are hiring it from the finance company hence the name Hire Purchase. As far as I know you can put a personal plate on the car but you would need to liaise with the finance company.
Not all car finance offers are HP based some are Fixed Sum/Term agreements essentially personal loans where you own the car from outset

lewishardwick

Surely car finance is no different than a mortgage.

Stop paying, they reposses and destroy your credit rating.

PCP is popular because we live in a culture that demands the very latest. Car, phone, tablet, laptop etc. It makes it easy for the manufacturer to quite rightly tell you "you can have a new car every three years!" Then sting you for excess mileage, or a 2cm scratch. Easy money!

Nearlyold

lewishardwick wrote: »

Surely car finance is no different than a mortgage.

Stop paying, they reposses and destroy your credit rating.

PCP is popular because we live in a culture that demands the very latest. Car, phone, tablet, laptop etc. It makes it easy for the manufacturer to quite rightly tell you "you can have a new car every three years!" Then sting you for excess mileage, or a 2cm scratch. Easy money!

Hmmm isn't it not paying that destroys your credit rating.
You don't get "stung" for excess mileage you know right from the outset how much you will be charged for any excess, so either don't do the excess miles or take out a PCP in line with your expected mileage (the payments will be higher) or pay up.