Advice needed for private sale car finance

UnknownSpecies

Thinking of changing my car but I'm absolutely lost when it comes to finance and how it works. Currently driving a '04 2.2 petrol which I'd imagine won't fetch more than €2500 when I go to sell. With insurance being the way it is, I'd like to get something newer and nicer which leaves me looking into finance. The problem is, I'd most likely be buying privately with a budget of €15k. I have a few questions about what I should or could do.

1. If I want to finance a car at €15k, how much of this should be savings and how much should be financed? Is there any rough rule that people use here? I don't have much savings to use on a car at the moment but my salary would allow me to pay a decent bit every month.

2. How does car finance work with a private sale? Would it have to be a loan for the full amount? Is it only dealers that can do PCP and such (probably a stupid question, but I'm just interested in hearing alternative ways of buying private).

3. In general, what % of annual income do people think is reasonable to spend on a car? Just curious as to what other people think about this, I have a fair idea of what I think myself.

4. The cars I'm looking for are '08-'09 and I see that PTSB won't do a car loan on a car this old. Is this typical? Are there any big disadvantages to taking a personal loan for a car as opposed to a specific car loan?

4. Any advice or information that might be useful to a newbie!

Thanks in advance for any advice or info, it's much appreciated.

bazz26

Banks will not approve car finance on a private sale. They will insist on it being a registered dealer and pay them the amount directly. Also banks generally only offer finance on cars aged up to 5 years old because if the loan goes south and they need to reposes the car they need it still to have some sort of value to offset some of the bad debt on the loan.

If you want to buy privately then you will either have to borrow from a credit union or apply for a personal loan rather than a car loan from your bank. Unfortunately personal loans usually command a higher interest rate than car loans or hire purchase loans.

The other option is PCP on a brand new car. But you would need to bone up on how PCP works. It's designed to look very attractive at getting someone into a brand new car who normally wouldn't or couldn't buy one. Your basically renting instead of buying and have 3 options at the end of the 3 year term - 1.hand the car back and walk away with nothing, 2. buy it at the agreed guaranteed future value (GFV) setup when you first sign up or 3. go with another PCP agreement again and take another car. If you go with option 3 then you will need to stump up a deposit of a certain amount to retain similar monthly repayments unless you have equity in the original car where it's trade in value is higher than the (GFV)of the first car you are handing back. This equity could go towards your deposit on a second new car. This all only works though if you are happy with changing to a new car every 3 years that you never actually own. Suits some people while it doesn't others.

Personally from readying your thread I think a credit union load or personal bank loan are your best options. Both will probably have higher interest rates but at least the car is yours from the start and you keep it for how long or short you decide.

UnknownSpecies

Thanks a lot bazz. I don't think PCP is the way to go for me. I'm looking at older cars because I want something well speccd and powerful and that only comes into budget around that age. I hate the idea of not owning the car too. Personal loan will probably be the way to go after all is said and done.

bazz26

Makes sense. Do a bit of shopping around as interest rates even on personal loans can vary. The likes of bonkers.ie will allow you to do a comparison between some of the different lending institutions.

Jack lemmon

bazz26 wrote: »

Banks will not approve car finance on a private sale. They will insist on it being a registered dealer and pay them the amount directly. Also banks generally only offer finance on cars aged up to 5 years old because if the loan goes south and they need to reposes the car they need it still to have some sort of value to offset some of the bad debt on the loan.

If you want to buy privately then you will either have to borrow from a credit union or apply for a personal loan rather than a car loan from your bank. Unfortunately personal loans usually command a higher interest rate than car loans or hire purchase loans.

The other option is PCP on a brand new car. But you would need to bone up on how PCP works. It's designed to look very attractive at getting someone into a brand new car who normally wouldn't or couldn't buy one. Your basically renting instead of buying and have 3 options at the end of the 3 year term - 1.hand the car back and walk away with nothing, 2. buy it at the agreed guaranteed future value (GFV) setup when you first sign up or 3. go with another PCP agreement again and take another car. If you go with option 3 then you will need to stump up a deposit of a certain amount to retain similar monthly repayments unless you have equity in the original car where it's trade in value is higher than the (GFV)of the first car you are handing back. This equity could go towards your deposit on a second new car. This all only works though if you are happy with changing to a new car every 3 years that you never actually own. Suits some people while it doesn't others.

Personally from readying your thread I think a credit union load or personal bank loan are your best options. Both will probably have higher interest rates but at least the car is yours from the start and you keep it for how long or short you decide.

Any car finance(bank car loan, hp) that's taken out on a specific car means the car isn't yours till the finance is cleared, as is Pcp. Pay the Gfv in 3 years if you want and the car is yours or clear the outstanding finance within the 3 years and the car is yours.

bazz26

Very few do though. PCP is not aimed at people who want to pay the GFV at the end of 3 years. It's aimed at people who normally could not afford a new car and offers them one for low monthly repayments or people who are quite happy to just have a new car every 3 years. Most of the these people would not be in a financial position to pay off a large balloon payment after 3 years so they go again or hand it back.

UnknownSpecies

Sorry, what I meant by 'own the car' is that once I finish my repayments, I own the car, no GFV etc. For example, I could pay €300 p/m on PCP for 3 years for a 2015 bog standard car or I could pay that amount on a loan for 3 years for a nicely speccd older car and then own it as soon as I finish the payments. I don't care for owning a newer car which is the main reason PCP doesn't interest me.

George Dalton

For your set of criteria the credit union is the best option.

UnknownSpecies

George Dalton wrote: »

For your set of criteria the credit union is the best option.

It always seems to be the answer. I regret not opening an account years ago.

bazz26

Jack lemmon wrote: »

Any car finance(bank car loan, hp) that's taken out on a specific car means the car isn't yours till the finance is cleared, as is Pcp. Pay the Gfv in 3 years if you want and the car is yours or clear the outstanding finance within the 3 years and the car is yours.

Yep I know but my comment below was in reference to a personal loan which is unsecured:

bazz26 wrote: »

Personally from readying your thread I think a credit union loan or personal bank loan are your best options. Both will probably have higher interest rates but at least the car is yours from the start and you keep it for how long or short you decide.

Jack lemmon

bazz26 wrote: »

Yep I know but my comment below was in reference to a personal loan which is unsecured:

I agree pcp is a different type of finance and it needs to be right for the purchaser. But you can buy a new car with very low interest on money borrowed(as low as 0%). Refinance the gfv( normally about 30% of the purchase price) and you have a car you actually know the history of, unlike buying 2nd hand. Granted most ppl will just hand the car back and if they've balanced the original deposit with their monthly payments properly they should have the equity in the car to pay the deposit and drive away in a new car keeping the same repayments. It's not a fit for everyone but it can be very cheap finance when buying new.