Help with zopa loan to buy car

Hannah1991 · 19 March 2014 at 11:36PM

Hi guys,

First time poster after some advice with regards to loans.

I do shift work and need my car to get too and from work travelling around 100 miles (there and back) 3-4 times a week (public transport isn’t a viable option unfortunately). However, it’s nearly 10 years old and I am having quite a few problems with it, not too mention it is far from economical.

I also have around £2k of student debt which is in a halifax bank account that will start to charge £2 of interest a day (at around end July this year).

So my plan is to take out a loan for around £9k which I will use to buy a much newer car and pay off my student overdraft.

Car wise I am thinking something like a Fiat 500 that should be much more reliable, far more economical and hopefully retain it’s value.

I have been offered a load with the Halifax which seems like a good rate. I would be paying back £131 a month over 7 years.

But someone I know has recommended a company called Zopa which I had not heard off before but they sound like they offer much better rates. However, as i’m not familiar with Zopa I am worried that it maybe riskier than using the Halifax.

Does anyone have any experience with them or intact if anybody has any other good ideas I would be grateful to hear them.

Thanks in advance!

Hannah

PheoUK · 20 March 2014 at 12:01AM

Fiat 500 is expensive - I'd be looking at something more like a Hyundai - managed to get one for the Fiancee for 5k with 2 yrs warranty remaining and 22k on the clock.

RE The loan, I would be concerned taking something on that long a period - the overall interest will be quite high, and by the end of the loan, you are likely to be in the same position but with a loan to service as well.

Apples2 · 20 March 2014 at 12:29AM

The car will be a distant memory way before the 7year loan has been repaid, you will need another loan to replace it whilst still repaying this one.

I always consider 3years plenty for a car loan.

Don't get bogged down with the economy aspect, saving 10p a day on fuel will take a very long time to cover the thousands you have spent on a new car.

27col · 20 March 2014 at 12:47AM

Absolutely no risk using Zopa. It is a person to person lender. They are lending the money of small savers like myself. Their lending criteria are very strict as it is not their money they are lending. You may or may not get a loan, depending on your credit file. The only risk is to the lenders, not to the borrowers. So if you get a loan, make sure you pay it back.

forgotmyname · 20 March 2014 at 3:06AM

The 500 is expensive now, But by the time you come to sell the market will be awash with them.
They seem to be milking it at the moment with new variations coming through fast.

£9000 loan. How much is that in relation to your income and spare income? How much do you save regularly each month?

MPG and car Tax are only a small portion of the running costs.

PeacefulWaters · 20 March 2014 at 7:58AM

The risk is on the side of the people lending the money.

Not the borrower.

Nebulous2 · 20 March 2014 at 9:02AM

zopa provides very competitive loans, but they are very fussy about who they lend to.

I agree that 7 years is far too long for a car loan, and see 3 as my maximum. Try to match your debt to a conservative lifecycle for the asset, if you need debt at all.

In the bad old days when people ran up debt on credit cards, they then remortgaged to pay it off, then started the whole thing again. People were effectively paying for cars over 25 years. You could be 5 or 6 cars further on and still paying for that one.

19lottie82 · 20 March 2014 at 11:09AM

Hi Hannah, the F500s are very "cute" cars, but there are plenty of cars that are much better in terms of economy, reliability and sell on ability.

You'd be much better looking for something else, especially if you'll be doing a reasonable mileage. I'm sure others will be able to advise on some ideas, but I'd be thinking along the lines of a VW Golf (Diesel). My partner has used a 2000 model for a few years now, with 150k miles on the clock, and it's still going strong without any major work.

I wouldn't advise you to tie yourself in to a 7 year loan. That's a really heavy weight to have on your shoulders!

BillJones · 20 March 2014 at 11:23AM

19lottie82 wrote: »

I wouldn't advise you to tie yourself in to a 7 year loan. That's a really heavy weight to have on your shoulders!

I'd agree with this part. A three year loan, on a car that you plan to keep for three years, would seem about right, but if you are the sort of person who likes a newish car, you are very unlikely to want to have the same car for seven years, so you'll find yourself before too long wanting to get something newer or better while still having years to run on this loan.

At that point, you'll very likely regret what you've done. You'll not be able to service a second loan in the same size, so won't be able to upgrade to a similar car, and may well end up with a car that you don't like on vastly increased monthly payments.

My fist (and only) motorbike loan was a one-year one. After using the bike for work for that year, it was getting a bit the worse for wear (it was quite well used when I bought it), but the ending of the loan meant that I have the choice of starting a fresh one and upgrading, or just using the spare money to keep the old bike running for a while longer while I saved for the next one.

Hannah1991 · 25 March 2014 at 5:14PM

Thank you everyone for all the excellent advice, its appreciated.

I have been offered a smaller loan around £5000 over 4 year with repayments i can afford monthly to buy a newer car with low tax mileage etc with the aim that i shouldnt incur to many problems. Open to suggestions on cars, have been recommended to look at ford ka's, vauxhall corsa and suziki swift.

However i am also looking into the option of buying an older car with a few more miles on the clock for a price of around £3000. I am only worried about running into possible expensive problems happening further down the road.

I am unsure which option would be best, am not overly fussed about the car, would just like something economical and reliable, so any advice would be fantastic !!!

Many Thanks.

heartbreak_star · 25 March 2014 at 6:02PM

I've been using a 54 Corsa for about 2.5 years now. Bought it for £1600 and have probably spent <£1000 on it in that time.

HBS x

Help with zopa loan to buy car

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