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My experience with car finance
- Thread starter AlexHealy
- Start date
Barge
TBF, if finance is sold correctly then there are no problems. Where you read the agreement and don't understand it yet sign it anyway, there is your mistakes. You could afford it from what I read... But you just couldn't then afford to do anything else.
It's a good post, yes. But errors were made, and not all these errors apply to everyone. At the time I'm taking it you were a student, you knew you were earning £300 quid, therefore you should've realised that pretty quickly with all your car outgoings you'd be left with zip.
I don't think the finance was the problem here, it works perfectly well for loads of people, the problem is you weren't realistic with what you could afford. That is the problem people face, they live in cloud cuckoo land and don't think about all their other outgoings.
It's a good post, yes. But errors were made, and not all these errors apply to everyone. At the time I'm taking it you were a student, you knew you were earning £300 quid, therefore you should've realised that pretty quickly with all your car outgoings you'd be left with zip.
I don't think the finance was the problem here, it works perfectly well for loads of people, the problem is you weren't realistic with what you could afford. That is the problem people face, they live in cloud cuckoo land and don't think about all their other outgoings.
So true about thinking you can actually afford something.
My other half and I have a huge excel spreadsheet which lists all out outgoings every month, factors in birthdays, holidays, anything that we dont expect, like when our sofa payment is up etc etc.
if you dont budget properly by looking at everything you will be screwed.
Im currently taking finance up on my new 182.
reason being is that all my cash is being saved and going towards our new house, however i hope i have budgeted enough to make sure we are ok and enabling me to still save #700 per month for our house deposit.
My other half and I have a huge excel spreadsheet which lists all out outgoings every month, factors in birthdays, holidays, anything that we dont expect, like when our sofa payment is up etc etc.
if you dont budget properly by looking at everything you will be screwed.
Im currently taking finance up on my new 182.
reason being is that all my cash is being saved and going towards our new house, however i hope i have budgeted enough to make sure we are ok and enabling me to still save #700 per month for our house deposit.
Steve
ClioSport Club Member
ST3 8.5
Good read but really it's basic personal finance issues. 
Paying minimum payment, think there is a calc somewhere that shows something like 7 yrs to pay off a couple of hundred at miniumum payment.
Like on RS etc some have had 7 or 8 new cars in the past few yrs i'd love to see there statements :rasp:
Paying minimum payment, think there is a calc somewhere that shows something like 7 yrs to pay off a couple of hundred at miniumum payment.
Like on RS etc some have had 7 or 8 new cars in the past few yrs i'd love to see there statements :rasp:
BMW 323i Coupe
I completely agree with you. At the time I was a student, and that year I had also had student loans and student grants, which led to another £3,600 of debt for myself.
My biggest mistake was that I knew I could afford it, because of my overtime that I worked. One thing I have realised is that working overtime is not good because you adapt to living the lifestyle of money you're getting in, when truth is as soon as it's not available, you're in trouble.
I was lucky to get out of that job, as promotions were very hard, you couldn't get full time work there unless someone left. I'm fortunate that I now work for the NHS, I'm only on £15k a year, but which how unfortunate some people are, that's still a lot of money.
I take home £1k after outgoings, and at current £800 of that are bills, if I take my debt payments out, I would be a lot better off.
I do this now aswell, I'm very organised with it, and I also go to the extra effort of letting my girlfriend keep my bank card. That way I know I cannot spend a penny that I don't need to spend. I do my weekly food shop for work, so I don't buy junk at lunch time, and I used to be really bad at popping to Tesco just to get something to eat because I didn't fancy what was in the house.
A lot of really good replies to this thread, I know that I would have wanted to read a thread like this before I did what I did, so hopefully another will.
Iain C
ClioSport Club Member
I was about 11k in debt at one point. Got my 172 cup new and that had a 8k bank loan on it plus i was already in debt.
I ended up working 2 jobs and doing cash in hand print jobs to get it sorted. Worked my ass off for 9 months to clear it. I hardly went out and cut right back.
I still went and got another car of finance tho later. Im debt free now (apart from a morgage) and its a better place.
I ended up working 2 jobs and doing cash in hand print jobs to get it sorted. Worked my ass off for 9 months to clear it. I hardly went out and cut right back.
I still went and got another car of finance tho later. Im debt free now (apart from a morgage) and its a better place.
Clio 172, Clio 200
This post really makes me think. I'm probably one of the worst for this, unexperienced and naive. I will explain why quickly...
First car: Clio 1.2 Grande R Reg
brought for £1200 from my mum who had it orginally from her mum. Paid monthly for this (obviously interest free) and it took about a year to pay off while I was working during college.
Second car: Clio 1.2 TCE 100 09 Reg
Decided it was time after 1yr and half to change the car when it was due for an MOT. This is where I got finance. Traded it in for a new clio 1.2turbo at £201 a month over 3 years. I then decided after only 3 months I wanted something faster and this is where I seriously went wrong.
Third Car: Mazda MX-5 2.0 Sport 06 Reg
I traded the clio only 3 months old at a loss of £2,500 which went straight on top of the 10,200 mx-5. This meant I was financing nearly 16,000 on a car worth only 10 due to all the negetive eq. I was now paying £268 a month finance and £148 a month on car insurance for the mx-5. I then decided a further 3 months later I couldn't afford all this, sold the MX-5 for a big loss during the winter and got a loan for 4,500 to pay off all the money I owed. It is now 4 months since I sold the MX-5 and my loan is down to £2,400. I then made the biggest mistake of all.
Forth Car: Clio Sport 172 52 Reg
After being 4 months without a car and getting round with lifts from my gf I decided I needed a car. I brought a clio sport 172 for £4000 at £118 a month. If you want to know how that went just read on the clio general discussion: "is this normal for a 172".
I 100% agree if you can't afford to pay cash, you can't afford to finance so don't. But it's just too tempting when you don't have £4000 in your bank to just pay £116 a month and have a lovely clio sport.
First car: Clio 1.2 Grande R Reg
brought for £1200 from my mum who had it orginally from her mum. Paid monthly for this (obviously interest free) and it took about a year to pay off while I was working during college.
Second car: Clio 1.2 TCE 100 09 Reg
Decided it was time after 1yr and half to change the car when it was due for an MOT. This is where I got finance. Traded it in for a new clio 1.2turbo at £201 a month over 3 years. I then decided after only 3 months I wanted something faster and this is where I seriously went wrong.
Third Car: Mazda MX-5 2.0 Sport 06 Reg
I traded the clio only 3 months old at a loss of £2,500 which went straight on top of the 10,200 mx-5. This meant I was financing nearly 16,000 on a car worth only 10 due to all the negetive eq. I was now paying £268 a month finance and £148 a month on car insurance for the mx-5. I then decided a further 3 months later I couldn't afford all this, sold the MX-5 for a big loss during the winter and got a loan for 4,500 to pay off all the money I owed. It is now 4 months since I sold the MX-5 and my loan is down to £2,400. I then made the biggest mistake of all.
Forth Car: Clio Sport 172 52 Reg
After being 4 months without a car and getting round with lifts from my gf I decided I needed a car. I brought a clio sport 172 for £4000 at £118 a month. If you want to know how that went just read on the clio general discussion: "is this normal for a 172".
I 100% agree if you can't afford to pay cash, you can't afford to finance so don't. But it's just too tempting when you don't have £4000 in your bank to just pay £116 a month and have a lovely clio sport.
Clio 182 Cup.
Hi,
I have to say, if you dont know what your doing car finance can be the wrong route.
When negotiating car finance you want to focus on getting a low base rate, this is the rate upon the apr is generated, the lower the base rate the better the lending. Generally 6 or below is considered 'good lending'.
Please remember that your taking finance because you cant afford to buy the car out right, therefore don't expect to get the money for nothing!
If you take products such as gap or paint protection make sure you pay for them 'off pad' i.e. before the loan agreement (so you dont pay interest on them)
Finance has benefits over a bank loan, namely the ability to make overpayments without penalty and the halves and thirds rule (look it up).
Dealerships get finance commission for you taking finance, the higher the rate you accept, the more commission they get, so remember that when you are negotiating. as a general rule of thumb a base rate of 5 will mean the dealership has to give a bit of their commission back to you in order to gain a sale and your business. (this is the sort of deal you should be aiming for)
Hope this helps.
I have to say, if you dont know what your doing car finance can be the wrong route.
When negotiating car finance you want to focus on getting a low base rate, this is the rate upon the apr is generated, the lower the base rate the better the lending. Generally 6 or below is considered 'good lending'.
Please remember that your taking finance because you cant afford to buy the car out right, therefore don't expect to get the money for nothing!
If you take products such as gap or paint protection make sure you pay for them 'off pad' i.e. before the loan agreement (so you dont pay interest on them)
Finance has benefits over a bank loan, namely the ability to make overpayments without penalty and the halves and thirds rule (look it up).
Dealerships get finance commission for you taking finance, the higher the rate you accept, the more commission they get, so remember that when you are negotiating. as a general rule of thumb a base rate of 5 will mean the dealership has to give a bit of their commission back to you in order to gain a sale and your business. (this is the sort of deal you should be aiming for)
Hope this helps.
1 of 19 Recaro'd 182 Cups
I personally dont see what the problem is, i know people who have for example bought a brand new mini, finance over three years with only £500 deposit, minimum gaurenteed value at the end meaning the car is worth £2000 more than the outstanding loan. Do this a few times and you'll own a car outright at the end.
You pay a lot less interest on PCP than straight forward finance(sometimes 0%) and you dont have to worry about being in negative equity. You also get to drive a £14-15k car with 3 years warrenty.
People who say if you cant afford the car you cant afford the finance are talking rubbish. Save £250 a month for 3 years and buy a car outright, or buy the car now and pay back £250 a month WHILST having the enjoyment of the car.
You pay a lot less interest on PCP than straight forward finance(sometimes 0%) and you dont have to worry about being in negative equity. You also get to drive a £14-15k car with 3 years warrenty.
People who say if you cant afford the car you cant afford the finance are talking rubbish. Save £250 a month for 3 years and buy a car outright, or buy the car now and pay back £250 a month WHILST having the enjoyment of the car.
clio sport
Personally, i think that the risk of finance are there for all to see. I don't think that its a bad idea to buy a car on finance - that's not the issue. It seems the issue is more to with the fact you let your heart rule your head when you buy things. Trust me when i say that i am not trying to upset you in anyway, just merely pointing out to people that finance is only dangerous to people who don't think it through and act responsibly about it. Sorry if it frustrates you, its not my intention
At the end of the day, a car is a depreciating asset. If I was to tell you, your house will be worth half as much in two years time, would you buy or rent the house? You would definitely rent it and the same should be applied to a car. You're looking to purchase a £13000 car on a pcp with a guaranteed minimum future value at £200 per month. Over two years you pay £4800 on finance, you can guarantee the car will have lost more than £4800 in value. Also you can change your car in for a new one, best years of a cars life is in the first 2 years, always in warranty, no MOT's, one service every 2years and the same for the road fund licence because you will change for a new one just before the 2 year point. A great way to get yourself into a brand new car every 2 years.
Bluebeard
ClioSport Moderator
Whichever has fuel
Utter b****cks.
My main gripe is not so much with car finance, as it can often be a necessity, but with credit card debt which has much higher interest rates. The problem is that manageable debt can sometimes become unmanageable debt due to changes in circumstances, it can then cause huge family and personal problems. If it is 0% or low % car finance fine but most consumer debt has high APRs and compound interest is said to be the 8th wonder of the world. The rich know how to use it to get richer and the low / middle classes don't understand it or ignore its effects and the cycle of continuous consumer debt keeps them from becoming more wealthy. I volunteer in a debt advice charity and see the effects all the time. Well done to the OP for bringing up this topic. I'll shut up now!
Stuiemc
ClioSport Club Member
Audi RS3, Clio 172
Seems lyk you made the same mistake more than once. Credit cards and overdrafts :S. I would recomend people if they were to take on a car on finance go with someone who has experience and knows what there doing.
Car finance does work out some times in my case it has. I saved for my first car managed to get £1000 as i was only on EMA at the time. The choices at £1000 werent massive so i ended up getting a punto which looked mechanically sound. A week after i bought it it needed a new exhaust and this is when the trouble started, by the end i had the car 9 months and i went through two head gaskets, sump, full exhuast system, Clutch, inlet and exhaust mani. So in 9 months i ended up spending £900 on the car. It got to the point when i was scared to drive it incase it broke down so i was getting the train up to see my girlfriend.
I decieded to hang on until i turned 18 so i could get a newer car on finance i went to a dealer with my mam and we went through the process of buying my car in all i think i spent a month settling the deal out to make sure it was what i wanted. The sad thing about it all was i only got £200 back for my punto and it put me through some hard time e.i head gasket blown on the 10th of december. Anyways av had my clio for 5 months and had no problems with it and av paid back £500. So my point being is some times it works out cheaper paying the finance on a car then buying a cheaper car and constantly forking out for parts and getting nothing back for it. Not to forget you know when the payments are coming out.
Just speaking of my experience.
Car finance does work out some times in my case it has. I saved for my first car managed to get £1000 as i was only on EMA at the time. The choices at £1000 werent massive so i ended up getting a punto which looked mechanically sound. A week after i bought it it needed a new exhaust and this is when the trouble started, by the end i had the car 9 months and i went through two head gaskets, sump, full exhuast system, Clutch, inlet and exhaust mani. So in 9 months i ended up spending £900 on the car. It got to the point when i was scared to drive it incase it broke down so i was getting the train up to see my girlfriend.
I decieded to hang on until i turned 18 so i could get a newer car on finance i went to a dealer with my mam and we went through the process of buying my car in all i think i spent a month settling the deal out to make sure it was what i wanted. The sad thing about it all was i only got £200 back for my punto and it put me through some hard time e.i head gasket blown on the 10th of december
. Anyways av had my clio for 5 months and had no problems with it and av paid back £500. So my point being is some times it works out cheaper paying the finance on a car then buying a cheaper car and constantly forking out for parts and getting nothing back for it. Not to forget you know when the payments are coming out. Just speaking of my experience.
Motorbikes
I think one of the issues lies with young people taking out expensive car finance whilst still living at home etc, before they really consider what they will inevitably want in the future i.e. a house. All of a sudden they realise they can't afford a mortgage as they still have two years left to pay off on their car finance so havent saved enough for a decent deposit and can'tmmanage to pay finance plus a mortgage at the same time.
As mentioned already, finance can work out well for a lot of people. At the end of the day you are buying money and as usual, nothing is free.
As mentioned already, finance can work out well for a lot of people. At the end of the day you are buying money and as usual, nothing is free.
Good thread.
You just have to go in with your eyes wide open. Ask for all the details behind it. %APR and total cost of borrowing is key. 9/10 you could get a bank loan, not secured to the car, for far less.
As you look to buy more expensive cars, saving may not be an option, and this is where finance can help as long as you can afford the repayments. You can haggle as well.
We've had a quote on a new discovery. The first cost of borrowing (over 4years) was £12k they revised it down to £9k but it's still making a £47k car £56K
There are also new EU rules on finance; once you're half way through the loan period you can literally hand the car back and walk away. This means it can pay to put a lower deposit down, although the monthly repayments will go up.
You just have to go in with your eyes wide open. Ask for all the details behind it. %APR and total cost of borrowing is key. 9/10 you could get a bank loan, not secured to the car, for far less.
As you look to buy more expensive cars, saving may not be an option, and this is where finance can help as long as you can afford the repayments. You can haggle as well.
We've had a quote on a new discovery. The first cost of borrowing (over 4years) was £12k
they revised it down to £9k but it's still making a £47k car £56K There are also new EU rules on finance; once you're half way through the loan period you can literally hand the car back and walk away. This means it can pay to put a lower deposit down, although the monthly repayments will go up.
