Loans for cars

Uke

My wife and I both suddenly need new cars (the old cars have been paid off for a while but need replacing).

HP and PCP interest seems far too much so I have been looking at a cheaper option. I wanted to try and get a 0% credit card but most dealers will not accept a credit card (even for part of the payment), so I have looked at loans.

I am worried that I won't get the advertised rates (which are currently about 2.9% rep APR), but am hoping that I because I have a good credit history that won't be a problem (fingers crossed).

I would like to know what is the best way to go about this for buying two cars? Lets say each car is £10,000 - am I best asking for a loan for £20,000 and try and pay it off over 3 years (about £600 a month?) or we both get separate loans for £10,000 each (and we both pay about £300 a month for 3 years)?



Maybe for £20,000 we might not have an option to pay it back within 3 years, might be longer so the interest might work out higher?


I know this is probably way more complicated than I understand it which is why I thought I better ask for help

[Deleted User]

If depends on your circumstances - especially both credit history and income.

Can either of you support a 20k loan? Or even a 10k one?

Have you tried an eligibility checker?

dealer_wins

Look in to leasing as an option too, maybe it would work out cheaper overall, especially if you like to upgrade cars every few years.

Samsung_Note2

Car dealer not accepting credit card...im looking at buying a run around and whilst its cheaper than your budget (im looking at 4-6K) all dealers ive looked at take credit card.

DCFC79

You say you suddenly need new cars like it's crept up on you, if it were me I would have been planning for the point they need changing by saving X amount per month.

ratrace

Uke wrote: »

My wife and I both suddenly need new cars (the old cars have been paid off for a while but need replacing).

HP and PCP interest seems far too much so I have been looking at a cheaper option. I wanted to try and get a 0% credit card but most dealers will not accept a credit card (even for part of the payment), so I have looked at loans.

I am worried that I won't get the advertised rates (which are currently about 2.9% rep APR), but am hoping that I because I have a good credit history that won't be a problem (fingers crossed).

I would like to know what is the best way to go about this for buying two cars? Lets say each car is £10,000 - am I best asking for a loan for £20,000 and try and pay it off over 3 years (about £600 a month?) or we both get separate loans for £10,000 each (and we both pay about £300 a month for 3 years)?



Maybe for £20,000 we might not have an option to pay it back within 3 years, might be longer so the interest might work out higher?


I know this is probably way more complicated than I understand it which is why I thought I better ask for help

from an mse point of view whats wrong with the old cars surely they dont need £10,000 spending on them do they to get them working again

personally if i was you i would look at ways to keep the cars going even a low mileage engine is cheaper to buy and fit than buying new, im not trying to put you off but going into debt for cars that lose they value very quick is not worth it

PixelPound

Headline rates are given to 51% of applicants. Do you bank with any that are offering the rates? Most times you can overpay loans without penalty (i.e. pay a 4 year loan off in 3 years by paying higher) but check first

Uke

To answer a few things

* Yes, I wanted to save for a new car for a while so that it did not cost interest, but because of circumstances in our lives the past few years that was not possible, will aim to do it next time as I hate paying unnecessary interest!
* The two cars we are swapping are 10 years old and keep developing faults, so it is time to change them! Plan is to buy 2nd hand, pay them off asap and then keep them as long as possible.

* The dealer is fow (fords of winsford), who so far have been good to us, but I asked two different people and they don't take credit card at all though I just realised I might have been able to pay the deposit on credit card (doh!)



I have had an interesting afternoon learning about loans, hopefully it will help someone else.


Mostly, you won't get the loan rate you are shown, its possible, but there a lot of factors against you.



We applied for the cheapest rate and it would have taken a few days to get the paperwork through and then a few business days more to send it back and even then it might not be at the desired rate... not good when you want a loan sorted in a week!



We tried a few other places, one of them was a bank I do use - but only to save money into (not where my wages go), they were very helpful but they did say to me I would not be getting 3.3% but would probably get 5.9% as they don't have enough of a history of my spending.



So my wife tried a bank we both have an account in where her wages go, they offered an extremely high rate to her despite her wages going in and always having money at the end of the month. Just to be sure, I tried the same bank (my wages go into it as well) and I was offered the lowest rate they did! The only thing we can think of is that I have more activity on my account and I have a credit card with them. It took less than 5 minutes to get approval for the loan and the money in my account. It is a bit crazy though that my wife was offered such a high amount!



So... you might have a better chance to get a good rate if the lender has a good history with you and you have a credit card that you always pay off. And it is possible to get a loan approved straight away and not wait for paperwork to be sent through the post.

bigisi

The two cars we are swapping are 10 years old and keep developing faults, so it is time to change them! Plan is to buy 2nd hand, pay them off asap and then keep them as long as possible.

This comes up time and again across the boards on here. Spending thousands to save a few hundred in repairs is ludicrous and 10 year old cars are (or should be) nowhere near the end of their useful lives (if well looked after).

What happens when you buy these second hand cars and they "develop faults"? Do you just keep borrowing more and more to replace them? All cars are susceptible to faults, new and old

If you want new cars rather than needing them just say that, don't try dressing it up as some sort of money saving exercise.

YorkshireBoy

Uke wrote: »

I have had an interesting afternoon learning about loans, hopefully it will help someone else.


Mostly, you won't get the loan rate you are shown...

Incorrect. "Mostly" you will. That's because at least 51% of successful applicants will receive the representative rate. The other (max) 49% of successful applicants will get a different rate.