Motorloan - Fixed or Variable in this climate?

justindublin · 13-10-2008 11:59am #1

So i'll be taking out a €15k motor loan later this week from Bank of Ireland, am i mental lol?

I've already been pre-approved, but with the way things are going at the moment what do you guys reckon I should get fixed or variable rate?

Fixed rate is: 9.8%
So cost of credit would be: €3,049.33

Variable is: 11.9%
So cost of credit would be: €3,712.58

I'm just worried with varible that interest could rocket! :eek:

biko · 13-10-2008 12:01pm

Fixed for 2 years with option to change it after <-notactuallyadvice. Termsandconditionsapply.
Btw, you could get a smaller car for <5K and have less to worry about.

Anan1 · 13-10-2008 12:20pm

justindublin wrote: »

So i'll be taking out a €15k motor loan later this week from Bank of Ireland, am i mental lol?

I'd have to say yes, TBH.:)

-Chris- · 13-10-2008 12:33pm

I'm no economist, but I'd expect interest rates to go down from the ECB for the next while as they want to get as much money into the economy as possible.
Not sure if the banks will pass on the reduction or will keep it to try and shore up their losses.

bazz26 · 13-10-2008 12:47pm

Probably depends on the term of the loan too. If you have a 3 or 5 year term then you have to ask could the variable rate drop over 2% over the next 3 or 5 years to match the current fixed rate?

Nobody can tell really, we may not be in a recession in 2 or 3 years time and interest rates may climb or we could be deeper than we are now.

A crystal ball would be great about now.

copacetic · 13-10-2008 12:51pm

interest rates will likely come down again soon, fixed rates give you a known payment though. One thing I would say is that the fixed rate you are being offered seems very high. Would have thought you could get less that 7% by shopping around.

Eoin · 13-10-2008 1:07pm

justindublin wrote: »

Fixed rate is: 9.8%
So cost of credit would be: €3,049.33

Variable is: 11.9%
So cost of credit would be: €3,712.58

Wow - I think they were offering cheaper credit card rates than that not so long ago.

If an increase in the interest rates could be a big factor for you, then there's a good possibility you're getting a bigger loan than you should. I don't subscribe to the idea that any car loan is living beyond your means, but this sounds like it could be a stretch.

PaddyFagan · 13-10-2008 1:20pm

copacetic wrote: »

interest rates will likely come down again soon, fixed rates give you a known payment though. One thing I would say is that the fixed rate you are being offered seems very high. Would have thought you could get less that 7% by shopping around.

Tesco are offering 6.9% fixed! See http://www.tesco.ie/finance/personalloans/loans_home.html

Paddy

justindublin · 13-10-2008 1:47pm

eoin_s wrote: »

Wow - I think they were offering cheaper credit card rates than that not so long ago.

If an increase in the interest rates could be a big factor for you, then there's a good possibility you're getting a bigger loan than you should. I don't subscribe to the idea that any car loan is living beyond your means, but this sounds like it could be a stretch.

Its not so much a big factor, its just I don't wanna be screwed over if bank decide to jack things up. Noting wrong with wanting to find the best possible deal.

MarkN · 13-10-2008 4:17pm

I'd hazard a guess to go variable too with the rates dropping theory.

I logged on 365 Online today to find flashing red text asking me to apply for a bigger overdraft next to my current account balances, couldn't believe my eyes.

copacetic · 13-10-2008 4:19pm

MarkN wrote: »

I'd hazard a guess to go variable too with the rates dropping theory.

I logged on 365 Online today to find flashing red text asking me to apply for a bigger overdraft next to my current account balances, couldn't believe my eyes.

had the same thing today, thought they had stopped this after the last 'pre-approved' fiasco on credit cards and overdrafts

justindublin · 13-10-2008 4:32pm

BUT... at the same time, Can we really expect even variable rates to drop below 9.8% within the next two years?

I'll have no real intentions of paying this loan off early so maybe fixed is my best option.

MarkN · 13-10-2008 4:37pm

You'd be surprised what could happen. This time last year what normal person saw this all coming?

Biro · 13-10-2008 4:40pm

MarkN wrote: »

You'd be surprised what could happen. This time last year what normal person saw this all coming?

No one was listening, that was the problem!

seclachi · 13-10-2008 4:41pm

Judging by the media you should get a bike and rifle to fend off the communists (well the communists is more my fathers opinion). Personally id almost be inclined to go for the fixed, it`ll give some you peace of mind (unless the economy does a massive rewind and interest rates plummet)

Eoin · 13-10-2008 4:43pm

seclachi wrote: »

(unless the economy does a massive rewind and interest rates plummet)

The ECB, US and UK have already cut rates, and I doubt it will be the last cut we see soon. It takes a pretty severe turn in the economy for the ECB to lower their rates.

bazz26 · 13-10-2008 7:41pm

MarkN wrote: »

You'd be surprised what could happen. This time last year what normal person saw this all coming?

Eddie Hobbs told us plenty of times but then again you did state "normal" people...:pac:

Motorloan - Fixed or Variable in this climate?

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