Applying for a loan at 19
Discussion
Personally, ignoring all the details of the car (rather high cost for 19) and your trade in (much cheaper to fix your current car) it doesn't sound like too bad a deal in terms of the finance. I paid 8% at the age of 22 for a car I really wanted (albeit it was older and held its value). So long as you can easily afford the repayments.
Plus it might be possible for you to secure more 0% finance in a year or so and use that to pay off a portion of the loan managing things better.
My two main concerns is say after halfway through your finance, the car would be worth less than the value of the loan and if your circumstances changed would you be able to cover the shortfall if you had to sell for any reason? It could be several thousand pounds...
The other is that you already say you're chopping and changing on finance, third car at 19 and all - just have a reflect on it as I know a few people who have spiralled down the finance ladder, and find themselves owing 30 grand 5 years later with nothing to show for it. I think the fact you've asked rather than just done it does show intellect and I'm sure you know your own finances, basically if I was 19 again and had the monthly readies for this kind of transaction knowing what I know now I'd certainly be happy driving a decent ds3 and spending a few months touring Aus or asia, saving for a house deposit, doing a year driving in a race championship etc.
Plus it might be possible for you to secure more 0% finance in a year or so and use that to pay off a portion of the loan managing things better.
My two main concerns is say after halfway through your finance, the car would be worth less than the value of the loan and if your circumstances changed would you be able to cover the shortfall if you had to sell for any reason? It could be several thousand pounds...
The other is that you already say you're chopping and changing on finance, third car at 19 and all - just have a reflect on it as I know a few people who have spiralled down the finance ladder, and find themselves owing 30 grand 5 years later with nothing to show for it. I think the fact you've asked rather than just done it does show intellect and I'm sure you know your own finances, basically if I was 19 again and had the monthly readies for this kind of transaction knowing what I know now I'd certainly be happy driving a decent ds3 and spending a few months touring Aus or asia, saving for a house deposit, doing a year driving in a race championship etc.
Hammy98 said:
I can get the mini with 3 years warranty and servicing for the 400 a month, and the only other costs would be insurance, petrol, mot and tax. Then when its paid off in 2 years I'll have a paid for car with a years servicing and warranty still left over. I'd rather spend this kind of money on a car now while my outgoings are low and I'm living at home, than in a few years when I'm looking to move out.
Just for comparison, majority of people my age have A1s, Polo Gtis, BMWs, Merc A classes - all leased. At least in this situation I'll pay maybe £100 a month more than them, and get to keep the car.
Frankly, that's a terrible deal and to go for it is flat out stupid. Whatever car somebody else has is irrelevant, paying £400pm for a 3 year old Mini is retarded.Just for comparison, majority of people my age have A1s, Polo Gtis, BMWs, Merc A classes - all leased. At least in this situation I'll pay maybe £100 a month more than them, and get to keep the car.
My 2 pence worth.... don't do it. It's all too easy to get sucked into a spiral of debt at a young age, which will then haunt you for years to come. It may only be a 2 year loan, but that can still be a long time if your circumstances change significantly (I went from being single/living with my parents to married/renting in the space of 20 months). And once the loan is paid off you'll have the temptation of trading in a 5/6 year old car for something newer/better and the cycle will start again.
I have a relative who about 15 years ago bought a car for around £10k on HP, but then also got a personal loan for a similar value to modify it, go on holiday, buy some 'stuff', etc. They also had a few credit cards which were constantly being added to. Long story short, they nearly ended homeless as they couldn't afford the rent. Currently have about £20k of debt hanging over them in the form of an IVA, no realistic prospect of paying it off. And what do they have to show for it now - nothing... car is long gone (they now drive a ropey old shed), the expensive furniture they bought has seen better days, and they struggle to make ends meet each month. An extreme example I know, but they never thought it would turn out how it did.
I have a relative who about 15 years ago bought a car for around £10k on HP, but then also got a personal loan for a similar value to modify it, go on holiday, buy some 'stuff', etc. They also had a few credit cards which were constantly being added to. Long story short, they nearly ended homeless as they couldn't afford the rent. Currently have about £20k of debt hanging over them in the form of an IVA, no realistic prospect of paying it off. And what do they have to show for it now - nothing... car is long gone (they now drive a ropey old shed), the expensive furniture they bought has seen better days, and they struggle to make ends meet each month. An extreme example I know, but they never thought it would turn out how it did.
That's true.
I have gone through the cycle of credit cards etc too.
It's very hard to stay on the right side. I had around £8k on one card and 3k on another.
0% finance it's hard to argue if you are impatient.
I now luckily been able to clear my credit cards down to 0 only have 1 loan paying off which I am meeting quite easily. Once that's paid off I don't think I'll touch credit again unless it's for a very expensive car or mortage etc.
I'm 25 and fairly stable employment over the last 5 years but at 19 it can be harder and things can move a lot more quickly.
As long as you are in a decent job and have your wits about you, it's fine.
ETA: PS avoid finance arranged by car dealers. Always a con. Use Moneysupermarket or similar.
Look at leasing - New cars can be had for very good deals , some great deals on Minis at the moment as well.
I have gone through the cycle of credit cards etc too.
It's very hard to stay on the right side. I had around £8k on one card and 3k on another.
0% finance it's hard to argue if you are impatient.
I now luckily been able to clear my credit cards down to 0 only have 1 loan paying off which I am meeting quite easily. Once that's paid off I don't think I'll touch credit again unless it's for a very expensive car or mortage etc.
I'm 25 and fairly stable employment over the last 5 years but at 19 it can be harder and things can move a lot more quickly.
As long as you are in a decent job and have your wits about you, it's fine.
ETA: PS avoid finance arranged by car dealers. Always a con. Use Moneysupermarket or similar.
Look at leasing - New cars can be had for very good deals , some great deals on Minis at the moment as well.
Edited by xjay1337 on Friday 21st April 12:52
xjay1337 said:
ETA: PS avoid finance arranged by car dealers. Always a con.
That's an awfully big ol' generalisation right there...Just done a deal with a 21 year old customer who had been offered finance from the bank @ 12.9% APR. We did him 6.9% APR. No fees either. What a con right?!
Anyway, OP, it's your life. PH members will berate you for borrowing money, you're doing it the right was by paying it off ASAP, 26m finance at 8% APR is actually a pretty decent deal. By my workings it's costing you about £850 to borrow £9500 over 26 months, not the cheapest in the world but hardly a fortune in the grand scheme of things!
At your age you are (whether you like it or not) a credit risk and getting money from anywhere is a bit of hard work. I did laugh that your parents though 8% is high but won't lend you the money themselves
Parents are odd!
Appreciate all the replies.
With regards to the car cost, 14500 was one I found with the exact spec I wanted. If I cut out things that arent dealbreakers then there a few examples around a couple of grand cheaper. I'd also considered a Polo Gti, however considering most of these have bigger spec than minis of equal price as well as lower mileage gives me the impression depreciation seems to hit them harder. Another cheaper option was abarth 595. I've yet to try one but the interior puts me off a bit considering the mini would be a couple of grand more and have a lot more kit.
Without meaning to sound like a tosser, I get paid well for my age. At the moment my total car bills are 500 a month, however like I said in an earlier post my current car is now paid off. I've been on a lower wage than I am currently for the past year and still managed to pay the 500 required for my current car. I'm sure a few of you on here can relate - cars and driving are more of a hobby to me than anything else, so I do hear your critisims about paying so much but I've decided to go down this route already.
If anything, this should work out cheaper than my current situation as my insurance has came down a bit, and I wont be shelling out for repairs throughout the year since the car will be under warranty.
And yes, parents are stuck in their ways! Think they're just trying to force a bit of responsibility onto me.
With regards to the car cost, 14500 was one I found with the exact spec I wanted. If I cut out things that arent dealbreakers then there a few examples around a couple of grand cheaper. I'd also considered a Polo Gti, however considering most of these have bigger spec than minis of equal price as well as lower mileage gives me the impression depreciation seems to hit them harder. Another cheaper option was abarth 595. I've yet to try one but the interior puts me off a bit considering the mini would be a couple of grand more and have a lot more kit.
Without meaning to sound like a tosser, I get paid well for my age. At the moment my total car bills are 500 a month, however like I said in an earlier post my current car is now paid off. I've been on a lower wage than I am currently for the past year and still managed to pay the 500 required for my current car. I'm sure a few of you on here can relate - cars and driving are more of a hobby to me than anything else, so I do hear your critisims about paying so much but I've decided to go down this route already.
If anything, this should work out cheaper than my current situation as my insurance has came down a bit, and I wont be shelling out for repairs throughout the year since the car will be under warranty.
And yes, parents are stuck in their ways! Think they're just trying to force a bit of responsibility onto me.
I was once 19 and with hindsight wish I had not spunked so much money on loans. I was not desperately skint but lived for many years pay check to pay check, with about £6k on credit cards and similar in loans. (this was a few years back 
)
With hindsight and in your shoes I would keep the DS3 for another two years. Save £400 per month for your next car. I bet the repairs on the DS3 will not cost greater than the depreciation on the MINI plus the loan interest.
It is boring, but the DS3 is hardly a slouch.
Alternatively, I would also recommend shedding for a couple of years - it provides the 'need' to change cars every so often, can be cool, will provide a variety of driving experiences. Just don't get too emotionally attached!!
I went shedding a few years ago and had some great little motors over a five year period (mk1 Eunos, Alfa 156 2.4 JTD SW, MINI Cooper S R53). So not complete shedding but plenty of variety and saved almost £10k, had very few issues and minimal - negative depreciation. Now I crash round in an E92 330i, but without a loan and I also have money in the bank for repairs/ the next move.....
'Boring' Mike
)With hindsight and in your shoes I would keep the DS3 for another two years. Save £400 per month for your next car. I bet the repairs on the DS3 will not cost greater than the depreciation on the MINI plus the loan interest.
It is boring, but the DS3 is hardly a slouch.
Alternatively, I would also recommend shedding for a couple of years - it provides the 'need' to change cars every so often, can be cool, will provide a variety of driving experiences. Just don't get too emotionally attached!!
I went shedding a few years ago and had some great little motors over a five year period (mk1 Eunos, Alfa 156 2.4 JTD SW, MINI Cooper S R53). So not complete shedding but plenty of variety and saved almost £10k, had very few issues and minimal - negative depreciation. Now I crash round in an E92 330i, but without a loan and I also have money in the bank for repairs/ the next move.....
'Boring' Mike
mike9009 said:
I was once 19 and with hindsight wish I had not spunked so much money on loans. I was not desperately skint but lived for many years pay check to pay check, with about £6k on credit cards and similar in loans. (this was a few years back )
With hindsight and in your shoes I would keep the DS3 for another two years. Save £400 per month for your next car. I bet the repairs on the DS3 will not cost greater than the depreciation on the MINI plus the loan interest.
It is boring, but the DS3 is hardly a slouch.
'Boring' Mike
I appreciate where you're coming from, and running a cheaper car and changing more often has crossed my mind however insurance is a bit of an issue with that kind of thing at my age. )With hindsight and in your shoes I would keep the DS3 for another two years. Save £400 per month for your next car. I bet the repairs on the DS3 will not cost greater than the depreciation on the MINI plus the loan interest.
It is boring, but the DS3 is hardly a slouch.
'Boring' Mike
And just for reference, my DS3 as the non-revised THP engine, it chugs like a diesel due to carbon buildup and a stretched timing chain which is gradually destroying the engine via knock. My pal is an apprentice at the local dealer and says they regularly have cars in for new engines due to the problems listed above. Mines is a 2011 with 46k. To have everything put right will be nearly 2k, the cars worth 5k ish so I'm kind of set on changing before it ends up worth nout. My young man maths may vary with everyone elses though!
Hammy98 said:
Without meaning to sound like a tosser, I get paid well for my age. At the moment my total car bills are 500 a month, however like I said in an earlier post my current car is now paid off. I've been on a lower wage than I am currently for the past year and still managed to pay the 500 required for my current car. I'm sure a few of you on here can relate - cars and driving are more of a hobby to me than anything else, so I do hear your critisims about paying so much but I've decided to go down this route already.
You don't sound like a tosser 
at the end of the day only you know what you can afford and it's your money so you're entitled to enjoy it however you wish. 8% interest is a little high, but not unreasonable for an unsecured loan.I can (sort of) relate to your position, when I was in my early 20's I saved up £10k (lived at home) and bought a year old Mk1 Focus (at the time it was pretty impressive, heated leather, cd player, electric mirrors, etc). Loved the car, but in hindsight wish I'd used that money for a deposit on a flat, it took me another 10 years before I got on the property ladder.
5k buys you a S2000/350Z/330i/Z4, and I bet the depreciation on the Mini + loan interest will exceed the extra insurance/fuel/repair costs of any of the above over the course of 3 years.
And if they're too expensive to run, there's plenty of more interesting cars you can pick up for 5k which won't cost an arm and a leg to keep!
The last thing I would do at 19 is to take out a 10k loan on a car, but that's me
And if they're too expensive to run, there's plenty of more interesting cars you can pick up for 5k which won't cost an arm and a leg to keep!
The last thing I would do at 19 is to take out a 10k loan on a car, but that's me
If you want the car, that's the best interest rate you can get and you can afford it - do it. Why not.
When I was 20ish I bought a car for 11k (I think) and I was only earning about 16k. Served me well for 4.5 years, never went wrong and it meant that when saving for/purchasing/doing up a house I had a reliable car paid off and it was one less thing to worry about.
Everyone has different ways of doing things, so there is no answer, it's up to you.
When I was 20ish I bought a car for 11k (I think) and I was only earning about 16k. Served me well for 4.5 years, never went wrong and it meant that when saving for/purchasing/doing up a house I had a reliable car paid off and it was one less thing to worry about.
Everyone has different ways of doing things, so there is no answer, it's up to you.
MinuteMan said:
5k buys you a S2000/350Z/330i/Z4, and I bet the depreciation on the Mini + loan interest will exceed the extra insurance/fuel/repair costs of any of the above over the course of 3 years.
And if they're too expensive to run, there's plenty of more interesting cars you can pick up for 5k which won't cost an arm and a leg to keep!
The last thing I would do at 19 is to take out a 10k loan on a car, but that's me
Honestly, see if I could insure any of those I'd jump at the chance. I went and viewed a 200sx but the age put me off, I rely on my car for getting to work and meeting up with mates at the weekend. It probably would be a cheaper alternative, but as an example, I had a rattly exhuast hanger on my car last month which took me 3 weeks to have repaired as I just couldn't be without the car for any real length of time. And if they're too expensive to run, there's plenty of more interesting cars you can pick up for 5k which won't cost an arm and a leg to keep!
The last thing I would do at 19 is to take out a 10k loan on a car, but that's me
How I managed before I had it I don't know...
Have a think about it. All I can say is that at 19, I wanted to take out all sorts of credit like this for cars, fancy watches or whatever.
I didn't and I can say honestly that I'm very, very glad. I did manage to get myself quite a few grand into a 0% credit card when I was 21 (I didn't pay any interest between building up the debt and paying it off), and I wish that I hadn't. It hung over me for a while.
That said, it made me much better at managing my own finances later on. I'm not tight but I'm more cautious than I need to be when spending on myself, I think as a result of that. Hence I'm quite a bit older than you and drive a 12 year old Astra SRi Turbo 200 with quite a few miles on it and the odd rust spot, while most of my friends in my age group and similar income level have something like a Golf R or BMW 340i or M3 or Range Rover Sport or whatever.
Just think. Obviously do what you want and I don't mean to patronise you, but it is a significant amount of money at the end of the day.
I didn't and I can say honestly that I'm very, very glad. I did manage to get myself quite a few grand into a 0% credit card when I was 21 (I didn't pay any interest between building up the debt and paying it off), and I wish that I hadn't. It hung over me for a while.
That said, it made me much better at managing my own finances later on. I'm not tight but I'm more cautious than I need to be when spending on myself, I think as a result of that. Hence I'm quite a bit older than you and drive a 12 year old Astra SRi Turbo 200 with quite a few miles on it and the odd rust spot, while most of my friends in my age group and similar income level have something like a Golf R or BMW 340i or M3 or Range Rover Sport or whatever.
Just think. Obviously do what you want and I don't mean to patronise you, but it is a significant amount of money at the end of the day.
Edited by Jimmy Recard on Friday 21st April 17:58
Edited by Jimmy Recard on Friday 21st April 18:05
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