Loan or finance?

[tigro]

Hi all,

bit of advice needed, I have saved half the money up I need for a car, I need another 8k to get the car I want, I have heard mixed reports about finance, but the only loan I can get is at 23% even tho I do not have bad credit scores, the only reason I can think is due to me not having a high credit score.

Is finance such a bad thing? Or is a loan a better option even at a higher interest rate?

[Q-Ball]

i am a little confussed here - arent loans and finance essentially the same thing. with finance, you just get a loan from the credit agency used by the people selling you the car. You need to find out the rate on the finance, and how much you end up paying back over the finance period. see if overpayments etc are applied. If you put down the figures, we can work out which is cheaper.

[ka$h]

QBall, Is finance not secured against the vehicle whereas an unsecured loan is well, unsecured?

two ways to look at this one. If you fail the repayments on an unsecured loans, it's you and your credit rating that gets it, you still have the car (or whatever you bought with the loan money) If you use finance secured on the vehicle and default, you can lose the car as well as getting the same kick in the balls on the credit rating. finance 'should' be cheaper, but it all depends on what term you are looking to take the payments over.

I can borrow back off my mortgage at the moment which gives me some of the cheapest lending around, it might be worth checking if you have the same facility available to you rather than starting another loan agreement.

[tigro]

Ka$h, brilliant response, I cant claim any extra on my mortgage as I am currently in negative equity.

I applied for a loan of 8k with Tesco Finance a little more than 30 minutes ago and they accepted me at 6.1% £155.04 per month over 5 years, I will pay rougly £300 back per month to get the loan paid off quicker tho.

[BigBrand]

If you're adding £8k onto a finance, I'm guessing it's a fair amount. In that case, what ever you do TAKE GAP INSURANCE it may cost you another £400 or so but for what you get it's worth it.

Personal experience 8 years ago.

£10k motor on finance from Ford. No gap insurance.

4 months of owning the car, written off by the wife on ice. Insurance paid out market value on the car. Car had a sickening depreciation value, and as such I was left trying to find £4k to pay off the finance for the shortfall.

[tigro]

I have 7.5k saved up in a bank account, I need another 8 to get the car I want.

What exactly is gap insurance?

[TAR]

Gap insurance will cover any shortfall you may have as a result of the car being written off. So if u pay 15k for a car , 6 months later you smash it up, beyond repair. that car is worth 15k minus 6 months depreciation. But u will still owe the finance company 15k. 6 months later thae car is wortk 13k for example, u got to find the remaining 2k to pay the finance off.

[rIKmAN]

What car is it mate, just out of interest?

[BigBrand]

I have 7.5k saved up in a bank account, I need another 8 to get the car I want.

What exactly is gap insurance?

Gap insurance will cover any shortfall you may have as a result of the car being written off. So if u pay 15k for a car , 6 months later you smash it up, beyond repair. that car is worth 15k minus 6 months depreciation. But u will still owe the finance company 15k. 6 months later thae car is wortk 13k for example, u got to find the remaining 2k to pay the finance off.

Also you can get a gap cover insurance which guarantees you to get back what you paid for the vehicle. But these are under strict terms and harder to find.

[stevo25]

think it may be an Audi a5 3.0 tdi

[BigBrand]

think it may be an Audi a5 3.0 tdi

hehe

[hoponbaby]

Source the gap/rti insurance yourself, don't take it from the dealer as it should be far cheaper

[Roach-Rampino]

I am a great believer in quality insurance. I have got a new motor for the missus coming on Thursday. Cheapest insurance quotes were Elephant (£625). Bell (£630) and Diamond (£635). All 3 of these are essentially the same company (owned by Admiral I think). I spoke to a broker who pointed out that in their small print these companies, in the event of a write off (50% or more of the car's value), will only pay out for the basic car and not any extras that you spec'ed up and paid for when it was new. For this reason I am paying £1250 for a quality policy with a lower excess but also guaranteed full value paid for the car up to 12 months from date of purchase. Cheap insurance is a very false economy.

My accountants told us to stop tying up our capital in cars a long time ago so we finance them (privately). Put down a deposit, specify a term (e.g. 36 months) they then give you a monthly repayment figure and a guaranteed minimum value at the end of the term. At the end of the term you can pay the GMV and keep the car. Trade the car back and use any excess over the GMV against a new car, sell the car privately, pay off the GMV and keep any excess, or give the car back and walk away.

PM if you want to speak to my guy who my brother and I (and quite a few friends) have used for our past 4 or 5 cars.