Trying to find the best way to finance a car , insurance for it and overdraft (IRE) H

Finanacenewbie

This may be little long so my apologies if it is.
Here is my story: I work full time (30K per year) I have an outstanding overdraft of 1500 euro which is due to expire on the 31 December. It has not been paid off, I have lived in it for a year. I have a driving test coming up ( 300 euro after I pay for the remaining lessons) Rent is 650 euro a month Christmas is coming
I was looking to borrow some money to cover my overdraft, spend 5000 euro on the car, and since I am a first time novice driver the insurance companies will probably cover me on a 07 car for 2000 euro.. SO altogether I think that I will need 10K to organise it all. Before December 31st.
I'm freaking out because I have never taken out any kind of loan before and the overdraft is my only debt. I was looking at Ulster Bank ( 9.9 APR) vs the Credit Union ( 11.7 APR) and I honestly don't know what to do. Am I shooting myself in the foot with this decision? Who is better to go for and will they even give me a loan? How long do I borrow the money for and what happens if I decide to move countries or do a masters?
Any advice would be greatly appreciated. Thank you in advance! Stuck, confused and perplexed 25 y/o

Nody

Drop the idea of the car for starters; you clearly can't afford running costs as it is and then add car, insurance and running costs and repayments on top of it is quite frankly stupid esp. as you're blowing way to much on the car (your first car should be in the 1k to 2k range at most and be a very boring, very small and cheap car which is the only thing that will get you a 2k quote as well). Once you've paid of your overdraft, saved up 2k EUR then you can consider the idea of getting a car but clearly you're not going to afford it as it stands today.

NIMAN

What he said.

Start off small and cheap.

Finanacenewbie

Nody wrote: »

Drop the idea of the car for starters; you clearly can't afford running costs as it is and then add car, insurance and running costs and repayments on top of it is quite frankly stupid esp. as you're blowing way to much on the car (your first car should be in the 1k to 2k range at most and be a very boring, very small and cheap car which is the only thing that will get you a 2k quote as well). Once you've paid of your overdraft, saved up 2k EUR then you can consider the idea of getting a car but clearly you're not going to afford it as it stands today.

Thank you for your advice. But I got the imprssion that if I get a really old cheap car I will not get insured on it

colm_mcm

15 years old is generally the point where insurers load premiums if at all.

Very bad idea financing insurance by sticking it on a loan over a few years now when it's an annual cost.

Sleeper12

Finanacenewbie wrote:

Thank you for your advice. But I got the imprssion that if I get a really old cheap car I will not get insured on it

Some insurance companies won't take on new business where the car is over 10 years old. Add to this a young inexperienced driver. I can see where you are coming from

Nody

Finanacenewbie wrote: »

Thank you for your advice. But I got the imprssion that if I get a really old cheap car I will not get insured on it

You need a 1.0 or at most 1.2L car from 2006 forward that cost less than 2k EUR; you can not and will not get insured on anything bigger at any rate close to 2k EUR. And even that car will still cost you thousands of euros a year in running costs on top of your loan.

Please explain how you with your 30k salary can't pay of a 1.5k EUR overdraft yet is suppose to pay for the running costs of the car AND loan repayments AND the overdraft? That's why I said you can't afford a car in the first place but if you're going that way it's not going to be 5k for it. Btw to put that in perspective your net salary at 30k would be €2,109.00 monthly, about 1450 after rent yet you can't manage to pay off a 1500 EUR overdraft; that points towards you having more serious and pressing issues to resolve than buying a car in your economy.

Finanacenewbie

Exactly. I'm afraid that if I don't start now it'll also get harder to do it in future. doubt that insurance is going to get cheaper. That's why perfectly fine older cars are out range for me now because I won't get insured. I got quoted 4K to get insured on an opel astra with my partner... How do people do this stuff without loans?

SCOOP 64

Its getting ridiculous now trying to run a car now with insurance and thats any age and experience.

NIMAN

OP, would you say you are bad with money?
If so, perhaps you need to ask yourself do you really need a car, could I not use public transport?

Car itself, tax, petrol, insurance, servicing, maintenance (often unexpected) are all expensive these days. I'm closing in on 50, driving nearly 25yrs and my insurance went up nearly 100% this year.

Have a good think about it.

Finanacenewbie

The overdraft I didn't bother getting out of because it was interest free. The reason that I got it is I had a student account and needed it a year ago as I started a new job and needed to put down a deposit on a house. Every month I came out of the overdraft and than slowly fell back into it, as the house is in my name (1300 euro per month) and I am paid half the rent the other 650 by my housemate half way though the month. My partner lives with me also so we share some expenses but he's in college so he can't afford to contribute a lot...

I know I can afford to pay 300 euro per month so long that it comes out of my account at the start of the month.

In a year's time my premiums should decrease and I'll have the car. If I pay less for it I think it might be more expensive in the long run. So yes , than I will be paying off the car loan, and next year's insurance. But I should also get a pay increase.

Finanacenewbie

I know. I'm not an 18 year old with no job.. I have been working full time for almost two years and still can't get on the road.

colm_mcm

Do you just spend whatever money you have? You'd imagine your overdraft would have naturally eventually cleared if there was money left over before payday.

BreadnBuddha

Finanacenewbie wrote: »

The overdraft I didn't bother getting out of because it was interest free. The reason that I got it is I had a student account and needed it a year ago as I started a new job and needed to put down a deposit on a house. Every month I came out of the overdraft and than slowly fell back into it, as the house is in my name (1300 euro per month) and I am paid half the rent the other 650 by my housemate half way though the month. My partner lives with me also so we share some expenses but he's in college so he can't afford to contribute a lot...

I know I can afford to pay 300 euro per month so long that it comes out of my account at the start of the month.

In a year's time my premiums should decrease and I'll have the car. If I pay less for it I think it might be more expensive in the long run. So yes , than I will be paying off the car loan, and next year's insurance. But I should also get a pay increase.

You can afford 300 if you have that spare at the end of EVERY month and are not creating debt elsewhere.

NIMAN

Have you tried to calculate how much per month a car would cost you overall?

Finanacenewbie

If there was money left over I would usually put it in a savings account. I have a credit union account.
Yes I'm finding difficult to budget my money... Any HELP would be greatly appreciated

beechwood55

Do you know to the last cent what your incomings and outgoings are each month? That is the starting point.
Open up an excel spreadsheet and sit and record everything you have coming it (and the dates) and everything going out. Your outgoings should include every last item you spend money on.
Then look at the outgoings and see where the money goes.
That will give you a starting point for budgeting.

Finanacenewbie

No.. I never had a car and I'm not quite sure what it will entail in terms of everyday expenses.
Tax could be ~300e per year, ~50e per week on petrol, 2K e insurance per year.... ~3600 to pay off that loan.
So in total I'd have to pay 8500 ish...
and I have ~11K a year after my expenses ( rent food bills )

NIMAN

How are you getting around at present and how much does that cost you per month?

Del2005

Finanacenewbie wrote: »

No.. I never had a car and I'm not quite sure what it will entail in terms of everyday expenses.
Tax could be ~300e per year, ~50e per week on petrol, 2K e insurance per year.... ~3600 to pay off that loan.
So in total I'd have to pay 8500 ish...
and I have ~11K a year after my expenses ( rent food bills )

You'll need another few hundred for maintenance and tyres. NCT will be €50 a year, for 10 year olds, and then with cheap cars there are the unexpected items that'll cost more than the car to fix. Pick a few cars you like off Donedeal and get quotes for them, €2k could be way too low for a new licence/no NCD and insurance is on an upward curve so don't be expecting it to be cheaper next year.

Finanacenewbie

I get a lift with my coworker to work, bus home ( 1.80 per journey) DART to town and sometimes a taxi to/from Dundrum/ Carricmines. I get the M7 ( 10e) and DART to see my mam in Limerick ( that takes about 5 hours each way on public transport).
So I would say it's costing me around 100 euro...

Finanacenewbie

Ok... so if I can't afford it this year or next year... Should I get a loan to cover my overdraft instead of paying the high APR that they have set up ?

shineon23

Finanacenewbie wrote:

In a year's time my premiums should decrease and I'll have the car. If I pay less for it I think it might be more expensive in the long run. So yes , than I will be paying off the car loan, and next year's insurance. But I should also get a pay increase.

Sorry if I missed this, but it is your first time being on the road ? (insured on your own or have you been a named driver?)

If this is your first time on your own, i wouldnt take it as a given that your insurance premium will decrease next year (year 2).

I'm 26 been insured in my own me for 6 years and my premium has increased almost every year, especially the last 2 years, where I am paying more than I did when I was 20.

For budgeting would you consider paying off your insurance monthly rather than in one chunk? It may work out more over the year but it spreads out the cost a bit?

Finanacenewbie

Yes it will be my first time on the road.. I was never on any policy.
I would like to pay by month if possible but I don't know how that'll work out at the start. I was hoping that the insurance company might let me do it in yr 2 ...

Scraggs

I would sit the test in your instructors car and prioritise getting the overdraft cleared. Someone here may be better able to advise but perhaps look in to credit union loan? When the o/d is cleared and you have some savings under your belt I would only then consider getting a car. You mention possibility of moving abroad or doing a Masters. How will this be funded? How will you be able to pay the loan off (if you get one) and move?

colm_mcm

Finanacenewbie wrote: »

If there was money left over I would usually put it in a savings account. I have a credit union account.
Yes I'm finding difficult to budget my money... Any HELP would be greatly appreciated

Use these savings to clear the overdraft?

Nody

Finanacenewbie wrote: »

No.. I never had a car and I'm not quite sure what it will entail in terms of everyday expenses.
Tax could be ~300e per year, ~50e per week on petrol, 2K e insurance per year.... ~3600 to pay off that loan.
So in total I'd have to pay 8500 ish...
and I have ~11K a year after my expenses ( rent food bills )

Tax would be closer to 400 per year; 50 petrol a week, 2k insurance IF lucky, budget on 3k to be safer. And you've not included any cost for they yearly maintenance, tires and other parts that will need to be replaced so that will add another 1k to the cost (talking tires, work, NCT, NCT rework etc.). That puts you at 6.500 before the loan repayments in yearly cost for year 1 and about 5.500 year 2. Now add in loan repayments at 325 EUR a month (10k @ 10.5% over 36 months which is the maximum duration you should consider) on top of that and you're looking at 10k EUR year 1; in total cost to own the car of around 825 EUR a month for year 1. Now keep in mind you'll be in a similar number for year 2 and 3 as well so in total you're going to need to have a lot more free money than the 300 EUR a month you talk about; that would not even cover the loan repayments let alone running costs.

Finanacenewbie

I am looking at a credit union loan... See the overdraft is going to be closed on December 31st. So I need to make a decision soon.
I don't know if I want to move ( not necessarily UK) or do a masters, I just want to keep my options open...
Should I save like 8K and than go for the car?
How do other people finance their cars ? and insurance/ running costs.. Surely I can't be the only one that didn't have mammy and daddy pay for their first car and insurance.
It's not like I'm looking to get a house even. Just a cheap ****ty car so it doesn't take me a full weekend of travel to see my mother in another county...It's just so frustrating. I've been putting off and off and I just thought that maybe if I got myself started it would be easier later on but according to you guys that's not going to happen either. How the hell do people afford mortgages and kids and dogs and ****ing holidays...

Nody

Finanacenewbie wrote: »

I am looking at a credit union loan... See the overdraft is going to be closed on December 31st. So I need to make a decision soon.
I don't know if I want to move ( not necessarily UK) or do a masters, I just want to keep my options open...
Should I save like 8K and than go for the car?
How do other people finance their cars ? and insurance/ running costs.. Surely I can't be the only one that didn't have mammy and daddy pay for their first car and insurance.
It's not like I'm looking to get a house even. Just a cheap ****ty car so it doesn't take me a full weekend of travel to see my mother in another county...It's just so frustrating. I've been putting off and off and I just thought that maybe if I got myself started it would be easier later on but according to you guys that's not going to happen either. How the hell do people afford mortgages and kids and dogs and ****ing holidays...

To be blunt if you got 11k in fixed cost outside of rent you really need to sit down and take a long hard look at wtf you're spending money on because that's way over what you should be. Go back and look at your TV program, your mobile phones etc. and ask yourself do you REALLY need all of that or would a cheaper option do? Same for gas, insurance etc. and get those living costs under control because that's what is killing you (going out for a pint might be fun but it's not for free). You should realistically be able to shave off a few thousands on your costs as it stands and small buys tend to be a killer (and if you don't get it under control all your salary increase will do is see you increase your spend on that stuff to match).

Put those savings towards saving up money to buy the car cash and pay first year insurance (so around 5k EUR with a 2k EUR car, see Bangernomnics thread with examples); that also means if you need to move you can sell the car quickly (you might lose a hundred or two) and you're not tied to a loan that you need to keep repaying if you want to move etc. and keep in mind you don't NEED to drive simply because you have a car.

Third and this is a real life lesson; don't try to save the money "that's left at the end of the month" but remove how much you want to save directly when the salary comes in. You'd be surprised how much more you end up saving that way when the money is not there to spend (and increase the amount by your salary increase as you get them as well; after all you don't need to spend that money as you can save).

Oh and for how they do it; well either high enough income or the far more common borrowing money to keep up the appearances and hope that neither person get fired which would mean they lose everything...

Del2005

Finanacenewbie wrote: »

I am looking at a credit union loan... See the overdraft is going to be closed on December 31st. So I need to make a decision soon.
I don't know if I want to move ( not necessarily UK) or do a masters, I just want to keep my options open...
Should I save like 8K and than go for the car?
How do other people finance their cars ? and insurance/ running costs.. Surely I can't be the only one that didn't have mammy and daddy pay for their first car and insurance.
It's not like I'm looking to get a house even. Just a cheap ****ty car so it doesn't take me a full weekend of travel to see my mother in another county...It's just so frustrating. I've been putting off and off and I just thought that maybe if I got myself started it would be easier later on but according to you guys that's not going to happen either. How the hell do people afford mortgages and kids and dogs and ****ing holidays...

A lot of people can't afford holidays because they are paying for the car, house and kids.

How long have you had your licence? If more than 2 years have a look at renting to get to your mother's, strangely enough Ireland has very good value when renting cars. If you need a car for tipping around then have a look at Go Car, or similar car sharing companies, just don't use them for long journeys.

NIMAN

Bear in mind if you buy an old, cheap car, there's a high enough chance that it might need a constant supply of parts simply through its age.

Some of these could be very expensive.

Sleeper12

Finanacenewbie wrote:

Ok... so if I can't afford it this year or next year... Should I get a loan to cover my overdraft instead of paying the high APR that they have set up ?

Just pay it off. You are on a good salary. APR is zero if you pay it off