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Car finance

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  • 24-04-2008 6:44pm
    #1
    MSporty
    Closed Accounts Posts: 236 ✭✭


    Good evening all,

    Have been recently been thinking about buying a new car, dont know whether to go down the finance route or not. In a good position of having a good bit of money left over at the end of the month. Are many people here paying finance/ motor loans on cars? And what is the maximum monthly installment most of you would be willing to pay? Any comments would be much appreciated


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    #2
    Captain Slow IRL
    Registered Users Posts: 3,651 ✭✭✭Captain Slow IRL


    You might be better off getting a loan from a bank or credit union and trying for a cash purchase - I think there is a pretty high apr with the finance offered with car purchases.


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    #3
    MSporty
    Closed Accounts Posts: 236 ✭✭MSporty


    Thanks Land, the car dealership I was talking to had an interest rate of 6.9, that wasnt too bad. Thing is I might get a balloon payment built in to keep the payments down and allow me to get more money. I usually trade a car in after two years anyway, i would also make sure the repayments are high enough to avoid negative equity.


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    #4
    HashSlinging
    Closed Accounts Posts: 3,413 ✭✭✭HashSlinging


    If your worried about negative equity you really shouldn’t be thinking of buying a car. Maybe a lease for a couple of years would be a better option.


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    #5
    mickdw
    Registered Users Posts: 23,357 ✭✭✭✭mickdw


    HashSlinging wrote: »
    If your worried about negative equity you really shouldn’t be thinking of buying a car. Maybe a lease for a couple of years would be a better option.


    He was referring to negative equity in the car itself not his house. He is being wise by keeping the payments up and paying it quicker so that in a couple of years it will be worth more than he owes.


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    #6
    Oilrig
    Closed Accounts Posts: 727 ✭✭✭Oilrig


    You need to look at the total cost of the transaction, balloon payment etc all built in to your calculations.

    Finance sourced through a dealer traditionally was the most expensive way to buy a car, given the mess that finance is at the moment I couldn't guess at where you'd get the best deal.

    My advise would be to sit tight & stick with what you've got for a while, very unstable times ahead. Everyone seems to be working off the worst case scenario at the moment. Let the dust settle at least then you'll know what you're dealing with.


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    #7
    Cyrus
    Registered Users Posts: 20,098 ✭✭✭✭Cyrus


    lads 6.9 apr is about as good as you are going to get at the moment, the finance is obviously competitive

    @OP i would go with whatever montly repayment you are comfortable with taking into account the other motoring costs you will incur incl servicing/tyres&consumables/fuel/tax and insurance etc.

    i presume you will be using a year end bonus or something to make the balloon payment?


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    #8
    eamon234
    Registered Users Posts: 1,924 ✭✭✭eamon234


    OK there are basically 2 ways of financing your car - HP through the garage or a term loan from a bank

    HP is a ripoff (I worked for a major finance company for many years) - although it is much easier to be approved for HP finance than a bank loan as the car is security and can be repossessed by the finance company if you default (under certain and specific circumstances) - this is not the case with a bank loan it is unsecured.

    The other downside to HP is that the dealer is also cashing in - they get a big commission from the finance company and ultimately you are the one paying for this - they also get extra if they flog you payment protection.

    Another issue arises if you try to settle the loan early - with a term loan you are not penalised too heavily - with HP the settlement penalties are huge. Also you cannot legally sell the car if it's on HP as it is the property of the finance company.

    So the long and short of it - bank loan - just get the cheapest APR you can!


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    #9
    jason31
    Closed Accounts Posts: 43 ✭jason31


    agreed bank loans way the best, only be a bit careful as some banks are offering bank loans but they are really HP deals!!!!


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    #10
    HashSlinging
    Closed Accounts Posts: 3,413 ✭✭✭HashSlinging


    Thought the best way to buy a car was cold hard cash, that way you dont pay any interest. The whole loan for a car thing to me is just so crazy.


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    #11
    Steve
    Moderators, Category Moderators, Entertainment Moderators, Sports Moderators Posts: 22,584 CMod ✭✭✭✭Steve


    HashSlinging wrote: »
    Thought the best way to buy a car was cold hard cash, that way you dont pay any interest. The whole loan for a car thing to me is just so crazy.

    Thats my thinking on it.

    Interest rates are rising so it makes more sense to get the 7.5% thats now on offer on a savings account and buy for cash in a year or 3.

    I had this conversation with someone recently who wanted to buy a merc - would have ended up costing 18k/year for 3 years, I personally can't justify that.


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    #12
    mcbads08
    Closed Accounts Posts: 20 ✭mcbads08


    MSporty wrote: »
    Good evening all,

    Have been recently been thinking about buying a new car, dont know whether to go down the finance route or not. In a good position of having a good bit of money left over at the end of the month. Are many people here paying finance/ motor loans on cars? And what is the maximum monthly installment most of you would be willing to pay? Any comments would be much appreciated

    Bought a car a couple of months ago and would never have considered taking finance.
    When I chose the car and was talking to the salesman and mentioned I'd come back in a few days when I'd sorted out the finance he asked what the bank interest rate which was (6.9%) and put me on the phone to their finance company (Ford Finance - organised through Lombard Ulster) and they offered to match the rate on a fixed basis for the term of the finance! I was still a bit skeptical but checked the T&C's pretty carefully and couldn't see any issue with them so went ahead with it!

    The only 'hidden' cost was a "paperwork handling cost" of ... wait for it... €64!!! But to be fair to the finance company that was the dealers responsibility! The dealer also managed to send in the DD details wrong so the first months payment didn't come out but when I contacted Lombard directly they sorted it really easily and quickly which was re-assuring!

    So after doing it once I wouldn't write it off as an option - it was no better or worse than going through the bank! Just make sure you check the T&C's - Lombard are pretty established but newer finance companies may have dodgier T&C's


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    #13
    MSporty
    Closed Accounts Posts: 236 ✭✭MSporty


    There are some good finance APR rates out there at the moment alright, ive been quoted 6.7 % Apr if I want to take finance. Personally I think sinking all of your cash into a car is not the way to do things. Better off holding onto as much cash as possible and using someone elses cash to buy the car!! Paying interest is a necessary evil in life these days, as any one who has a mortgage will tell you, especially these days! At least the depreciation on a car can be quantified once its not crashed etc. The same cant be said for "bricks and mortar" at the moment.


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