Car Finance advice from Car Loan 4U

[fwaggie]

Hi Dani, good to see you're fielding the questions politely and factually.

I think companies like yours are aimed at a lot younger buyer market, as I simply won't do business with any company with such a horrible name, anything that includes any "txt speak" such as "4U".

I doubt you were there at the formation of the company, but "Car Loan 4U"? Didn't they realise that a name like that is marmite? And that it will put off some people from using the company?

[beko1987]

£2k minimum loan amount? Too high for me, I'm oot!

[Mr Whippy]

alistair1234 said:

Mr Whippy said:

Sainsburys do 4.5% for loans right now which should cover 90% of purchases ok. Much better rate than your lowest rate APR too.

I'm not sure it's the most ethical approach for PH to be selling PH members who probably shouldn't have credit, to buy cars via their classifieds section.

How low can you stoop.

Dave

How the hell do you know which members should or shouldn't have credit?

If they can't qualify for half reasonable rates like Sainsburys offer, which is well below Car Loan 4U's lowest rate, then you have to assume that Car Loan 4U is more for getting you credit when other mainstream lenders probably won't give it to you.

Unless of course people are happy to pay an extra 2% APR or so because it's easier to apply for a loan via Pistonheads

Yes, that must be it.

[Mr Whippy]

Dani from CL4U said:

Mr Whippy said:

Sainsburys do 4.5% for loans right now which should cover 90% of purchases ok. Much better rate than your lowest rate APR too.

I'm not sure it's the most ethical approach for PH to be selling PH members who probably shouldn't have credit, to buy cars via their classifieds section.

How low can you stoop.

Dave

Hi Dave,

Sainsbury's offer personal unsecured loans not car loans. This means that the loan is against the individual and not secured against the car/vehicle being purchased. Since unsecured loans are higher risk for the lender they are very selective about who they offer loans to. If you're too young, you're not a homeowner or if you've ever missed payments on a loan or credit card then the likelihood is that you'll struggle to be accepted. Interest rates are also sometimes increased after application and the actual loan interest rates offered are usually higher. If you default on a personal loan then the risk is not limited to the car purchased and is transferred to your other assets.

Personal loans can be best for:
- People with good/excellent credit
- Homeowners
- People who want to own their car outright and don’t mind transferring the credit risk to other assets

I'm not sure what you are referring to regarding Sainsbury's loans “should cover 90% of purchases ok” since being accepted for a personal unsecured loan depends on each individual's personal circumstances.

Car Loans are Hire Purchase or Personal Contract Purchase loans. Hire Purchase and personal contract loans are secured against the car/vehicle being bought. Therefore, the risk to the lender is lower meaning that most people can be accepted. The rates offered will simply reflect personal circumstances. When you finish paying off the car loan, the car’s legally yours.

Car Loans can be best for:
- Tenants
- Homeowners with less than perfect credit
- People who want to limit the credit risk to the car
- People who are self employed

Car Loan 4U are a trusted car loans broker. Because we have the biggest panel of lenders in the UK we can find customers competitive car finance deals . Since we have car loan options available for most credit circumstances we cater for a broad range of people. When accepted, car loans can then be used to buy any car from any UK dealer (subject to any individual lender criteria). Just to confirm, PHers are not restricted to buying cars via PH classifieds.

If you want to buy a car/vehicle, consider the different financing options available to you so that you can decide which option is right for you.

Thanks,
Dani

I don't own a home, or have a large steady PAYE income, but I managed to get their lowest rate when I did an application.

Perhaps missing loan payments or other bad credit things cause issues, but as I said, if you struggle with other credit then should you be getting more of it at higher cost?

The ethics of giving people bad for credit, more expensive credit for something they probably don't need, seems to be associating PH with the same brush as Pay Day Loan companies... from my perspective it does any way.

[Andehh]

Liking the never-ending patience Dani, you will need it here!

[Mr Whippy]

It's a slippery slope and PH picking a point on that slope they want to sit on is something they have to judge.

How close they will get to the likes of Wonga or Kneecap Finance in order to make their money is another thing.

[Dani from CL4U]

fwaggie said:

Hi Dani, good to see you're fielding the questions politely and factually.

I think companies like yours are aimed at a lot younger buyer market, as I simply won't do business with any company with such a horrible name, anything that includes any "txt speak" such as "4U".

I doubt you were there at the formation of the company, but "Car Loan 4U"? Didn't they realise that a name like that is marmite? And that it will put off some people from using the company?

Hi fwaggie,

No our services aren't aimed at a particular age bracket. We currently have customers ranging in ages from 18 to 82 years old.

I understand what you're saying in regards to our name, since everyone's opinion is subjective, but we do "what it says on the tin" so to speak. We're called Car Loan 4U because we offer car loans directly to buyers.

Here's a bit of background which I hope explains our services and choice of name further:

Car Loan 4U was founded in 2006 by 2 entrepreneurs, James Wilkinson and Ryan Dignan, who continue to lead our company today. The pair noticed the trend towards car buyers shopping online and identified a gap in the market, to improve car buyers shopping experience, by providing car finance directly to buyers online. So, they developed the Car Loan 4U website.

Our service means that customers can apply for car finance through our website (or by phone if preferred) before choosing the car/vehicle they want to buy. This means that buyers are informed of the best car finance deal available from 15 of the UK's top lenders. Our panel of lenders accept people from most credit circumstances, which means that most people can be offered a loan. Buyers then don't have to rely on personal finances or the deal offered by the dealership that they want to buy a car/vehicle from. Essentially, buyers can choose the car/vehicle they want in the same way they would if they had the cash in the bank (subject to any specific lender criteria).

Except, buyers also have a personal Car Loan 4U advisor who's on hand throughout the car buying process. Once approved, customers choose the car they want to buy from any reputable Uk dealer or online seller and inform their advisor. The advisor then completes a vehicle history check on the car to make sure there are no hidden issues, a dealer check to make sure they're reputable and a car valuation to make sure the price is fair.
After all checks are completed the advisor informs the buyer of findings and if there's no problems then arranges directly with the seller for the loan to be paid to them on behalf of the buyer. The advisor sorts all of the paperwork taking the hassle out of buying a car/vehicle on finance for buyers. Buyers are not charged any fee for these services.

In summary, we are an internet-based company, leading the way in the UK online car finance industry, with old-fashioned personal customer service values.

On a separate note, I do also think there is a lot to be said for Marmite though - They've been around for 112 years meaning there's been 11 decades of enough lovers who've kept on buying it

I hope that having explained our name and our business that should you need car finance in future you'd reconsider using our service.

Thanks,
Dani

[nct001]

Car Loans can be best for:
- People who want to limit the credit risk to the car

Please can you elaborate upon this point as I really need understand what you mean by this... as you are in danger of misleading consumers.

Under the consumer credit act, the liability of the loan / HP is not limited to the car / vehicle. That is if a vehicle is repossessed the borrower is liable personally for any shortfall in disposal and charges associated.

Or are your limits to liability to credit risk relating to the ability to do a voluntary termination which is something not in the interests of your financiers.

[Mr Whippy]

Who'd want to limit the risk to the car unless they were worried they couldn't pay at some stage and would be at risk to start with?

Ergo, is credit right for them, and should that type of credit be pushed via PH of all places?

Dave

[Leon19841]

Some people's situation (not poor credit history, or lack of income/ability to repay) puts them in a position that half decent finance rates aren't available unless the finance is attached to an asset. The fact sainsbury's wouldn't lend dirt cheap money to them doesn't mean they shouldn't be getting finance.

It is too idealistic to say "if you can't get low rate finance because you are an A1 credit risk" you shouldn't be getting finance on a car.

Everyone's situation is different, and that is for the finance company to asses, end of the day - they are the one's that have to get their money back so let them worry about it. Car forums are full of people that get on their high horse about finance and borrowing money, funny how many there are online yet you meet very few in real life buying £20/30/40k cars cash isn't it? Go figure.

Mr Whippy said:

Who'd want to limit the risk to the car unless they were worried they couldn't pay at some stage and would be at risk to start with?

Ergo, is credit right for them, and should that type of credit be pushed via PH of all places?

Dave

[Mr Whippy]

If you can really afford a £20,000 to £30,000 car on credit any way, rather than cash, that is ~ £4,000 to £5,000 annual depreciation to maintain, so about £400 - £500 a month for a mid-level interest rate loan just to pay off depreciation... give or take.

I'd argue that if you can afford £500+ a month just for a car loan for 3yrs+ then you probably should have a good credit rating?!

I thought people only got a poor credit rating by not repaying debt?

[Leon19841]

Mr Whippy said:

If you can really afford a £20,000 to £30,000 car on credit any way, rather than cash, that is ~ £4,000 to £5,000 annual depreciation to maintain, so about £400 - £500 a month for a mid-level interest rate loan just to pay off depreciation... give or take.

I'd argue that if you can afford £500+ a month just for a car loan for 3yrs+ then you probably should have a good credit rating?!

I thought people only got a poor credit rating by not repaying debt?

I see your point RE if you can afford £400-500 per month you would expect your CR to be spot on. I think the thing to factor in here is not all car finance is £400-500 a month. If you flip it on it's head, imagine someone who is on moderate income and has a mediocre credit rating (bear in mind this doesn't mean payment history like it used too. Credit scoring is much more sophisticated nowadays)

They may be able to comfortably afford £200 a month to get into a new car (fixed costs, warranty, service inclusive, reliable to hold down their work/job etc) but almost definitely can't afford £10k up front, or £2000 if an engine goes bang on a used car. They may not have the cleanest track record (things aren't easy when your income isn't that much higher than your outgoings, people on more money forget this) but it does IMO make financial sense to use finance at the cheapest rate they can get for their circumstances to get a reliable car.

[Leon19841]

BTW this year my credit score went from Good on Experian to Poor. The reasons? I changed jobs and moved house which meant I financed my own car (£30k new car) and also did all the bills for the new place in my name

Experian said I had a poor score as I have lots of new credit agreements (gas, virgin, mobile bill, car insurance, car load) And I was now in debt to the tune of £40k (they include the interest of the car payment over the term)

My personal outgoings are no more than they were, and I haven't missed any payments for 5 years with the same bank! So if my score can go backwards just by sorting out utilities and car transport imagine someone that misses a few payments and gets behind etc...

[Mr Whippy]

If I fell into that category I wouldn't buy a new car on a loan.

I'd just run what I had for longer or get a car for half as much money. Why live life on the ragged edge to the point you might miss payments on a loan if something goes awry?

Maybe it's just me, but if you might struggle to pay debt to the point debt is needlessly expensive then you are probably better off swallowing your pride and buying something older and less flash, or not at all.




Like I say the issue is a sliding scale. How far will PH support increasingly dodgy loans companies that are eventually not in the interests of those taking out the loans getting what they 'want', but in the interests of loan companies selling their bad products to people who would be better off without them.


PH can do what they like but from my perspective it cheapens their brand and makes them come across as desperate for revenue when they are pushing these kinds of products.

A forum I once respected is just slowly swirling down the drain of corporate irresponsibility to make a quick buck on behalf of it's 'members'

[Leon19841]

Mr Whippy said:

If I fell into that category I wouldn't buy a new car on a loan.

I'd just run what I had for longer or get a car for half as much money. Why live life on the ragged edge to the point you might miss payments on a loan if something goes awry?

Maybe it's just me, but if you might struggle to pay debt to the point debt is needlessly expensive then you are probably better off swallowing your pride and buying something older and less flash, or not at all.

Don't listen very well do you mate? Interest rates or your credit score are not 100% linked to being able to afford the debt or payment. Stop turning your nose up at stuff you clearly don't understand.

1) "running what you have for longer".... And if this is an old banger that is costing fortunes to maintain and fix? You are missing work shifts due to it breaking down? False economy.

2) Debt isn't needlessly expensive, but it is a fact that some with have higher credit score than others. Meaning for some people a low interest load unattached works, others will get a better rate fixing that debt onto the car to give the finance company some security.

3) "older and less flash" You are making wild assumptions that people financing cars are going into dealerships signing themselves up for the latest hot set of wheels for some sort of status.

There is a huge difference between different credit scores resulting in different APR rates available, and the sub prime market which is lending to people that shouldn't be lent too. If you don't know the difference, and are too ignorant to understand when people tell you then fine but getting all disappointed as if PistonHeads has just bought in Welcome Car Finance with open arms then you only make yourself look silly.

[B3ALP]

Leon19841 said:

Don't listen very well do you mate? Interest rates or your credit score are not 100% linked to being able to afford the debt or payment. Stop turning your nose up at stuff you clearly don't understand.

1) "running what you have for longer".... And if this is an old banger that is costing fortunes to maintain and fix? You are missing work shifts due to it breaking down? False economy.

2) Debt isn't needlessly expensive, but it is a fact that some with have higher credit score than others. Meaning for some people a low interest load unattached works, others will get a better rate fixing that debt onto the car to give the finance company some security.

3) "older and less flash" You are making wild assumptions that people financing cars are going into dealerships signing themselves up for the latest hot set of wheels for some sort of status.

There is a huge difference between different credit scores resulting in different APR rates available, and the sub prime market which is lending to people that shouldn't be lent too. If you don't know the difference, and are too ignorant to understand when people tell you then fine but getting all disappointed as if PistonHeads has just bought in Welcome Car Finance with open arms then you only make yourself look silly.

Excellent Post

[Mr Whippy]

I'm not turning my nose up at it.

I think the statistics would be there to show that availability of sub-prime type credit doesn't improve the chances of you not having a breakdown, or losing your job due to failure to arrive for work.

I also think people who use credit end up worse off in the longer run because they are paying a lot of money to borrow money to buy generally heavily depreciating items which they could have probably lived without borrowing money for.



If your car is an old banger, then buy a newer one. But does it have to be a £10,000 car, or a £20,000 one, or a £30,000 one? How about £5000? Or even £2,500 might get you a completely reasonable run-about.


Finance attached to the car is simply saying, chances are that if I won't be able to pay, the lender can get their money back. So then I won't have a banger, or an unreliable car that can't get me to work. I'll have NO car at all.
And I'll have paid a lot of extra money to cover the depreciation in value so the lender is never exposed to significant risk either. This feature isn't there for your benefit, it's there for theirs and it costs YOU more money.



I don't care if I look silly. I still think it's not the thing PH should be associated with and it's changed my perception of them.

Yes if people want this credit fine. But the APR's on offer are not all that competitive.



Just make an example case study to me that makes sense where a customer is better off borrowing money via these means to buy a car, then I can try fathom how this PH/Car Loan 4U offering is a net gain for all involved.

And lets not pretend for one minute there is a black and white line where it's ok to lend, or it isn't and it's 'sub-prime'

These credit options are very very clearly aimed at the less capable end of the market.

Dave

[deadslow]

Mr Whippy said:

I'd argue that if you can afford £500+ a month just for a car loan for 3yrs+ then you probably should have a good credit rating?!

I thought people only got a poor credit rating by not repaying debt?

You seem confused about the credit scoring and very antagonistic towards the credit providers.

I am self employed, so many lenders view me as high risk. I also very rarely use any form of credit, so my lack of credit history makes me more difficult to score, so I get a low score.

I live in a nice house in the country, and make an ok living. I can afford a car loan no problem. But getting one is another matter for lots of people like me. Tescos and Sainsburys wouldn't be interested. If I wanted to change my car and did not wish to tie up a substantial amount of my savings/contingency fund, then these people might provide me with an affordable alternative way to get myself in a decent car.

Horses for courses.

I doubt PH would be introducing unethical/unscrupulous lenders to members. Their own brand/credibility is too valuable to them.

[Mr Whippy]

You'd think statistically if people were good for the money then, and the competition was there which it is if the base rates from Car Loan 4U are so relatively high, that better rates would be available.

Surely to sum up, higher APR requirement = higher real risk?

Or do the lenders just arbitrarily profit based on no statistical trend to support that profiteering?



And if those borrowers are higher risk, then where do you draw the line in lending to them? Wonga appear to be happy to lend to people within the bounds of the existing legal framework. So where does the moral border start for legitimate lenders?


We've seen the *starting* rates from Car Loan 4U are a good chunk higher than main-street lenders will offer for people with good credit ratings, so what are their average rates like? And their worst rates?

Dave

[Simond S]

I think it's a good idea, and unlike most company representatives Dani has been very professional in her replies.

Mr Whippy, maybe from your ivory tower maybe you failed to notice the credit crunch. This meant that lots of people are unable to borrow from traditional banks, hence using car warehouse finance companies. If this service is available for all cars bought through the classifieds here it will open up a market of non cash purchasers to private sellers. Of course, if you don't like PH partnering companies you could always find another free to use forum to show how much better than others you are.

A couple of PH testimonials would be a good idea.

Edited by Simond S on Tuesday 15th April 15:12