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Car finance on benefits

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NKdyNKdy Forumite
2 posts
First Post
MoneySaving Newbie
Hi all, wondering if anyone can help me out.
A few weeks ago I had a horrible ordeal. 
Basically I am sick of costly second hand 10 year old cars. I managed to get a desposit together and looked at newer cars with low milage, I found that one of these new cars on finance would of saved me over £700 a year compared to what I'm already paying out for old second hand cars. 
Anyway I applied for one on finance and the finance was approved. 
I drove over an hour to view the car, test drive and started signing all the documents. I then get a phonecall from the finance company who asked me questions and I answered them all fine, they seemed happy. Then they spoke to the manager of the dealership via phone. The manager came to me and asked me to breakdown my income. I broke it down on paper, income support, housing benefit, child tax credits, child benefit and it all added up fine just like I put on the application form and answered on the phone previously.
I waited longer while the manager went down to relay my income and after being there for 2 hours the manager came out and told me he was really upset and infuriated on my behalf because the insurance company changed their mind after approving me in the first place and making me drive for over an hour. He said the finance company wouldn't accept 2 of my benefits as income and he said in his opinion it was b******t. I was so so upset as it seemed like a prejudice simply because it was benefits, even though I could more than comfortably afford it and I was 100% honest through the whole process. 
The manager said that most finance companies would think that way, giving me no hope. 
Has this happened to anyone else?
I feel like just because I'm on benefits I'm not allowed to be given a chance or have something that will actually save me a lot of money! 
I've looked up companies that claim to accept benefits but they take the absolute mickey in repayments- more than double what I would of been paying!! 
What can I do? 



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Replies

  • NKdyNKdy Forumite
    2 posts
    First Post
    MoneySaving Newbie
    *finance company changed their mind*

    Not insurance  :# sorry! 
  • zx81zx81 Forumite
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    It's not prejudice.  It's risk and unfortunately it's their money, not yours.

    You'll be better off paying cash for an older car. A new one will cost you far, far more and you're not in a position to weather that sort of expense.
  • MalMonroeMalMonroe Forumite
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    NKdy said:
    *finance company changed their mind*

    Not insurance  :# sorry! 
    OP said, "what can I do?"   How on earth is your answer helpful?
  • MalMonroeMalMonroe Forumite
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    You say that you have managed to get a deposit together. Can you perhaps save up some more and get a decent car for cash? I definitely think that other finance companies would consider you but as you say, at very high interest rates. I don't think that this is a great time to be buying cars anyway, if I'm honest because of the coronavirus. My car's been sitting outside for three months and I've been out in it only twice in all that time. If you can wait a while and save up more in the meantime, you'd be able to get a better car. Wouldn't you?
  • macmanmacman Forumite
    45.3K posts
    Part of the Furniture 10,000 Posts
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    Is there someone who can give you better advice on buying a decent used car? You can't expect a ten year old vehicle to be without issues and repair costs, but there are still plenty around that should be a lot cheaper to run than anything bought on finance. What sort of car are you looking for, and what is your cash budget?
    No free lunch, and no free laptop ;)
  • JamoLewJamoLew Forumite
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    MalMonroe said:
    You say that you have managed to get a deposit together. Can you perhaps save up some more and get a decent car for cash? I definitely think that other finance companies would consider you but as you say, at very high interest rates. I don't think that this is a great time to be buying cars anyway, if I'm honest because of the coronavirus. My car's been sitting outside for three months and I've been out in it only twice in all that time. If you can wait a while and save up more in the meantime, you'd be able to get a better car. Wouldn't you?
    Now is actually a really good time to buy - dealer prices are very low if you know where/how to look as they are trying to shift masses of stock and get some income rolling in.
    OP - nothing much you can do apart from save a bigger deposit of get a loan from another source/instituition
  • edited 12 July at 12:37PM
    MinuteNoodlesMinuteNoodles Forumite
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    edited 12 July at 12:37PM
    They did right not to accept two of the benefits as income. Child benefit and child tax credit are the ones most likely not accepted as that money is to provide for your children.
    Not sure how you could have saved £700 on finance over repairs on a car you own. You can buy a car for £500 with a long MOT which you can run into the ground and scrap and get £100-£200 back when you do so. You could change your car every 6 months if it came to it doing it that way and that would still work out much cheaper than getting a car on finance, especially at the interest rates you're likely to be offered as you're a high risk so it's sub-prime double digit interest rates as you're finding out.
    The simple fact is that your income does not support buying a car for £1000s on finance because the benefits you get are only really enough to meet basic living costs and that's how finance companies look at it too.
    You need to look at what is around for the money you have but take your time when looking. KEEP AWAY FROM LOW MILEAGE CARS - anything that's done less than 10,000 miles a year for it's age needs to be treated with suspicion if it's more than a few years old. They may seem a bargain but a 10 year old car with 50,000-70,000 miles on or less has spent a lot of time doing short journeys such as the school run, or long periods stood which will kill a car and a 10 year old car with 150,000 miles on would actually be in better condition. Go for a car with the lowest number of keepers. If people keep a car a long time they tend to look after it. 3 years ago my sis in law bought a 2006 Corsa for £250. It cost her £250 for it's first MOT in her ownership, nothing for the second, £250 for the third. She never services the thing and it just keeps going.
  • bonkersbonkers1bonkersbonkers1 Forumite
    57 posts
    10 Posts
    OP Can you not see it from the finance company's point of view?
    Housing benefit for example is to pay your rent not buy a car.
    In this day and age they have to be seen as responsible lenders - there are tons of forum posts on here about ''irresponsible'' lending with people trying to get their money back.
  • Brock_and_RollBrock_and_Roll Forumite
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    At the moment there are some absolute bargains on autotrader for private sales! I presume this is because of covid etc.If you have a couple of grand, you can absolutely get yourself a low mileage and very reliable car  - been looking at several myself. Utter nonsense to think a new car is a better bet, and madness for someone reliant on benefits.
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