Newbie introduction / finance question!
Discussion
There wont be too much help here, everyone is a well built company director who pays cash 
If you want to just borrow the money and end up owning the car, then why not speak to your bank - they will likely do just as good a deal, and then you have finance that isnt linked to the car making changing it unhindered, and you can shop about dealers as a cash buyer without the complication on finance.
If you want to just borrow the money and end up owning the car, then why not speak to your bank - they will likely do just as good a deal, and then you have finance that isnt linked to the car making changing it unhindered, and you can shop about dealers as a cash buyer without the complication on finance.
It's perfectly normal to move cars and old finance around to finance a new car. Find an RS you like, go to the dealer and ask what they can do. Almost all of them will have met someone in your position before and have a plan.
Don't let your heart rule your head though, don't rush. Make sure you find a car you're very happy with and at a price you're comfortable with, don't compromise.
Also, don't necessarily rely on the dealer organise finance for you, find companies yourself to find good rates. Though be careful of them running a lot of searches, I hear it reflects badly on your credit profile.
Don't let your heart rule your head though, don't rush. Make sure you find a car you're very happy with and at a price you're comfortable with, don't compromise.
Also, don't necessarily rely on the dealer organise finance for you, find companies yourself to find good rates. Though be careful of them running a lot of searches, I hear it reflects badly on your credit profile.
I believe a PCP has a lighter touch on your credit file than a HP agreement - says the man who took a PCP out while we where in the process of moving house as my previous car hit the unexplained intermittent fault that could cost £XXXX or £.x to repair but no one could say for certain either way.
With a decent credit score, you should be fine for the sort of deal you describe.
Vehicle finance approval is often easier to obtain than a personal loan from your bank if your credit rating is not optimal because it is secured against an asset that can be repossessed in the event of default. I've never found it more or less easy to get a customer approved if the product is PCP or HP, where somebody i sdeemed s lightly higher risk, the finance company may stipulate a higher rate of interest be applied or that a minimum deposit of X be paid, so their exposure of debt to vehicle value is lessened.
PXing a car with some finance outstanding is perfectly normal (known as "contra-settlement"), dealers do it more often than not. It only gets difficult when the amount of outstanding finance is more than the value of the vehicle, i.e. "negative equity". This is still possible to overcome if you are contributing a cash amount sufficient to cover the amount of negative equity, or if it's not too much, can be added to the price of the car you're buying.
Best thing would be to obtain a settlement letter from your current finance company, detailing the exact amount that must be paid by the dealer in the event of PX to clear the finance. Doing this also shows to the dealer that you are seriously considering the transaction, not just idly shopping around for figures as many do.
Vehicle finance approval is often easier to obtain than a personal loan from your bank if your credit rating is not optimal because it is secured against an asset that can be repossessed in the event of default. I've never found it more or less easy to get a customer approved if the product is PCP or HP, where somebody i sdeemed s lightly higher risk, the finance company may stipulate a higher rate of interest be applied or that a minimum deposit of X be paid, so their exposure of debt to vehicle value is lessened.
PXing a car with some finance outstanding is perfectly normal (known as "contra-settlement"), dealers do it more often than not. It only gets difficult when the amount of outstanding finance is more than the value of the vehicle, i.e. "negative equity". This is still possible to overcome if you are contributing a cash amount sufficient to cover the amount of negative equity, or if it's not too much, can be added to the price of the car you're buying.
Best thing would be to obtain a settlement letter from your current finance company, detailing the exact amount that must be paid by the dealer in the event of PX to clear the finance. Doing this also shows to the dealer that you are seriously considering the transaction, not just idly shopping around for figures as many do.
Also a little tip.
Don't just accept the finance deal given to you by the garage you buy from, when I did mine I was in the same situation, had a bit from the previous deal left to pay so intended that it would be settled in part of the deal.
Anyway went to change finance companies and thought before signing up I'd see if my previous company could compete, in total over the 4 years of repayments I saved almost £575 in interest by sticking with my previous company. Best phone call I ever made, it also makes the whole process of getting finance much simpler.
However the garage I bought from was an indie, I don't know if a main dealer would be so flexible about who you go with.
Don't just accept the finance deal given to you by the garage you buy from, when I did mine I was in the same situation, had a bit from the previous deal left to pay so intended that it would be settled in part of the deal.
Anyway went to change finance companies and thought before signing up I'd see if my previous company could compete, in total over the 4 years of repayments I saved almost £575 in interest by sticking with my previous company. Best phone call I ever made, it also makes the whole process of getting finance much simpler.
However the garage I bought from was an indie, I don't know if a main dealer would be so flexible about who you go with.
dave7692 said:
However the garage I bought from was an indie, I don't know if a main dealer would be so flexible about who you go with.
Main dealers are usually tied by internal policies to a few lenders, usually the manufacturer finance house, Black Horse, then two or three other "sub-prime" lenders to pick up the borderline cases/declines from the first two. The larger PLC backed dealers tend to have access to more lenders than smaller franchise dealers or dealer groups. An independent usually has to do no more than fax a copy of their Consumer Credit Licence and bank details to a new lender in order to do a deal with them providing funding for a customer. Very few object, so long as there's at least a nominal amount of dealer commission in it for them, usually referred to in agreements as your "Document Fee".
Zwolf said:
Vehicle finance approval is often easier to obtain than a personal loan from your bank if your credit rating is not optimal because it is secured against an asset that can be repossessed in the event of default.
That does depend on the size of the deposit though, OP's post suggests he's got about £2k to play with so over 10% which would be fine, worst case he might need to save for another month to up the deposit a bit.As others have stated it should be fairly simple to sort the finance at a dealer... getting a decent finance rate from the dealer will be the hard part or getting a bank loan as many of them have criteria such as age, home-owner,etc as part of their acceptance criteria/to get the low APR they advertise.
I would avoid PCP (finance with a baloon payment at the end) as the interest tends to be a lot higher over the term and it effectively means you are stuck at the end of the agreement unless you a) re-finance (meaning you may aswell have extended the term in the first place) or b) save enough to pay the lump sum off. Unless of course you intend to just hand the car back.
Im guessing most car dealers will offer you finance and most will initially try and offer you it at 10%+ APR i'd be aiming for sub 8% over 36 months absolute max unless they are super generous with your px. The cost to change figure and the charge on finance will be most important.
I purchased a Focus ST Mountune for a similar price new when i was 23 earning slightly more than you and had no problems. The fact that i got it on PCP soured the ownership experience a little when i wanted to keep the car but was only offered (what i deemed to be) silly rates on finance at the end of the term so i sold it to clear the finance and kept the rest towards my next car instead.
I would avoid PCP (finance with a baloon payment at the end) as the interest tends to be a lot higher over the term and it effectively means you are stuck at the end of the agreement unless you a) re-finance (meaning you may aswell have extended the term in the first place) or b) save enough to pay the lump sum off. Unless of course you intend to just hand the car back.
Im guessing most car dealers will offer you finance and most will initially try and offer you it at 10%+ APR i'd be aiming for sub 8% over 36 months absolute max unless they are super generous with your px. The cost to change figure and the charge on finance will be most important.
I purchased a Focus ST Mountune for a similar price new when i was 23 earning slightly more than you and had no problems. The fact that i got it on PCP soured the ownership experience a little when i wanted to keep the car but was only offered (what i deemed to be) silly rates on finance at the end of the term so i sold it to clear the finance and kept the rest towards my next car instead.
As far as the finance is concerned - the fact you are replacing one car finance deal with another is a big plus with the car finance companies. Any reputable dealer will have no problem taking in a car with outstanding finance - the can settle it as part of the package.
Can't comment on whether you'd obtain the finance but assuming your credit history is good like you say then I can't see a major problem - the finance company will want to show affordability so *might* ask for bank statements to bolster any proposal
Assuming you take a car finance agreement then this will be regulated by the consumer credit act which gives you certain rights - you can now pay off additional lump sums during the course of the agreement if you wish and either lower your remaining payments or shorten the term, and you can settle the agreement early at any time and benefit from a regulated settlement figure (with a rebate of interest charges in all cases)
Feel free to PM me if you'd like a competitive quote - car finance is my field (broker for 19 years.)
Cheers, Richard.
Can't comment on whether you'd obtain the finance but assuming your credit history is good like you say then I can't see a major problem - the finance company will want to show affordability so *might* ask for bank statements to bolster any proposal
Assuming you take a car finance agreement then this will be regulated by the consumer credit act which gives you certain rights - you can now pay off additional lump sums during the course of the agreement if you wish and either lower your remaining payments or shorten the term, and you can settle the agreement early at any time and benefit from a regulated settlement figure (with a rebate of interest charges in all cases)
Feel free to PM me if you'd like a competitive quote - car finance is my field (broker for 19 years.)
Cheers, Richard.
Edited by rfoster on Monday 13th January 15:53
Personal loan will be a lower APR than finance i imagine.
Bank loans are worked out on ability to repay taking in to consideration the cost of the loan, your monthly expenditure and then your disposable income remaining.
Go to a branch of your local bank and speak with a member of staff there. They will tot up all your monthly outgoings and then work out your repayments based on size and duration of loan and as long as your disposable income is within their agreed limits they can provide the facility pending credit checks.
Stu
Bank loans are worked out on ability to repay taking in to consideration the cost of the loan, your monthly expenditure and then your disposable income remaining.
Go to a branch of your local bank and speak with a member of staff there. They will tot up all your monthly outgoings and then work out your repayments based on size and duration of loan and as long as your disposable income is within their agreed limits they can provide the facility pending credit checks.
Stu
Zwolf said:
dave7692 said:
However the garage I bought from was an indie, I don't know if a main dealer would be so flexible about who you go with.
Main dealers are usually tied by internal policies to a few lenders, usually the manufacturer finance house, Black Horse, then two or three other "sub-prime" lenders to pick up the borderline cases/declines from the first two. The larger PLC backed dealers tend to have access to more lenders than smaller franchise dealers or dealer groups. An independent usually has to do no more than fax a copy of their Consumer Credit Licence and bank details to a new lender in order to do a deal with them providing funding for a customer. Very few object, so long as there's at least a nominal amount of dealer commission in it for them, usually referred to in agreements as your "Document Fee".
Another useful point to note is that should you go for a Hire Purchase loan as opposed to a personal bank loan, the halves and thirds rule applies.
This means that once you have paid 50% of the TOTAL amount owing ypu are able to hand the car back to the finance company, subject to wear and tear, with nothing further to pay.
It's a useful clause to have to cover you if your circumstances change for whatever reason and whilst you typically pay more for HP than a simple bank loan, you are covered more.
Horses for courses and all that...
This means that once you have paid 50% of the TOTAL amount owing ypu are able to hand the car back to the finance company, subject to wear and tear, with nothing further to pay.
It's a useful clause to have to cover you if your circumstances change for whatever reason and whilst you typically pay more for HP than a simple bank loan, you are covered more.
Horses for courses and all that...
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