Should i get a loan?

[mr sideways]

I have been approved a loan from my bank to get a good car but not sure if it would be stupid or shal i just live the dream and be skint?
If i had 15k plus the sale of my e39 i would be looking at something like this

http://www.autotrader.co.uk/classified/advert/201002349886703/sort/priceasc/usedcars/make/mercedes-benz/model/cls/price-from/2000/price-to/20000/radius/1501/page/2/postcode/rg127nj?previous=/search/results/usedcars/postcode/rg127nj/radius/1501/make/mercedes-benz/model/cls/price-from/2000/price-to/20000/sort/priceasc/page/2&logcode=p

but cant decide if i should go for it of just save and get something a bit better than what i have.:confused:

[mr sideways]

I just want to add that it wouldn't be that car but a lower mileage 320cdi remapped and modded to look like that one.

[Doc Matt]

If you have a secure job and the loan repayment won't be a burden and stop you enjoying yourself then why not?

Just try and have the miniumum number or repayment years and look ahead to work out what the condition of the car and mileage will be like in the final year.

[Black Sabbath]

If you get the loan will you have enough to mod the way you do now?you might end up regretting the finance later on and then struggle if you want to sell it :( .Why not compromise ?,buy something less expensive but have enough to do the mods you will want to do.That Merc has a lot of miles as well,you could be buying yourself problems later on,then the dream becomes a nightmare :eek:

[bootyman]

If you get the loan will you have enough to mod the way you do now?you might end up regretting the finance later on and then struggle if you want to sell it :( .Why not compromise ?,buy something less expensive but have enough to do the mods you will want to do.That Merc has a lot of miles as well,you could be buying yourself problems later on,then the dream becomes a nightmare :eek:

I have to agree. It takes nothing to lose your job in this climate and it's not worth it for a car. I went from earning almost £600 a day to nothing in the space of 1 day and i'd made fanancial commitments and and spent thousands on my car and now i'm struggling to keep up. No car is worth getting yourself into trouble for. Buy what you can afford and enjoy not owing anything on it. Dont forget the interest on the loan too and the price of the car would drop as well. Not worth it mate ;)

[MEGA]

Basically, the running costs will PROBABLY be alot higher than you think.

Heres what I did:

Took out finance + loan for 20k.

Spent 15k on car,

Put rest in high interest account.

Sounds stupid? But I was slightly worried about job security etc etc and something going wrong, so this way I knew, I could sell the car, use the banked money plus the car to settle the finance, and end up with say £200/month max outstanding for like 6 months to get rid of the last bit of it.

As it is now, I've paid the loan back, and due to the market my car is worth more than the outstanding finance after just one year :) It also gave me the cash to mod the car as heavilly as I did in the first year, with much lower costs than just credit carding it etc (7.9% apr vs. 16.9% apr, etc)

I've heard horror stories about people financing new cars for 40k, then losing their job 3 months later. The forecourt depreciation means the car is only worth 30k, The total finance was 46k, and they end up with a 16k repayment and nothing to show for it.

What I'd do in your shoes, is if your 100% sure you can afford 15k over 4 years, or whatever, then take it - but spend max 11.5k-12k on a car. Keep the rest as just in case money. That way, you've got a get out clause if something goes wrong, be it either job - or just something unexpected mechanical on the car etc.

[Tilly]

Basically, the running costs will PROBABLY be alot higher than you think.

Heres what I did:

Took out finance + loan for 20k.

Spent 15k on car,

Put rest in high interest account.

Sounds stupid? But I was slightly worried about job security etc etc and something going wrong, so this way I knew, I could sell the car, use the banked money plus the car to settle the finance, and end up with say £200/month max outstanding for like 6 months to get rid of the last bit of it.

As it is now, I've paid the loan back, and due to the market my car is worth more than the outstanding finance after just one year :) It also gave me the cash to mod the car as heavilly as I did in the first year, with much lower costs than just credit carding it etc (7.9% apr vs. 16.9% apr, etc)

I've heard horror stories about people financing new cars for 40k, then losing their job 3 months later. The forecourt depreciation means the car is only worth 30k, The total finance was 46k, and they end up with a 16k repayment and nothing to show for it.

What I'd do in your shoes, is if your 100% sure you can afford 15k over 4 years, or whatever, then take it - but spend max 11.5k-12k on a car. Keep the rest as just in case money. That way, you've got a get out clause if something goes wrong, be it either job - or just something unexpected mechanical on the car etc.

Only unregulated finance agreements are front loaded as far as interest is concerned like that Mega. People taking lease purchase/hire purchase agreements in their personal name are on regulated agreements regardless of vehicle cost. Therefore agreements are not front loaded, it's always a percentage capital/percentage interest and your settlements work similar to a personal loan where your early redemption fee is oly a month or twosworth of interest (ie f*ck all)

And as far as depreciation is concerned... anyone buying a 40k car that's only worth 30k a few months later is just sh*t at buying a car. Not meaning to sound harsh but that is purely down to not shopping around. Everything is relevant and depreciation is only so major when comparing LIST price to used value but then again you're stupid is you pay list price. Cars depreciate based on the manufacturers initial leway on discounts, FACT.

Look at minis for example... you're lucky to get 3% discount on one... compare their values on nearly new cars in comparison to brand new, they're bulletproof on depreciation so it's not a huge problem if you dont get a discount. Look at a mondeo on the other hand. Fleet discounts can be up to 30% discount, take companies like motorpoint and how much they sell them for. Alarm bells start to ring if you're mad enough to pay list price.

So the above horror stories mentioned relate to two things... people not knowing their arse from their elbow as far as finance is concerned. ie. not knowing what product they're buying (as finance is a product) which in my eyes is f*cking scary if they're completely oblivious, it should be tret just as seriously as the purchase of the car itself to save them a lot of aggro... this way they'll know agreements are regulated and the nightmare stories are exactly that. Stories. Once of a day they were true yes, but now people are swayed by the propaganda and pub talk.

The second problem relating to people being stupid enough to trust the first salesman they speak to because he offers them a cup of coffee and a test drive. I mean come on guys... of course he's gonna lie about discounts at a main dealer because they have overheads to cover and are greedy corporate trained monkeys... Cars don't drop that heavily if bought at the right price. Do your research and you're sure to win. You cant avoid depreciation on a month by month basis because that's what cars do unfortunately but you can avoid drops of several thousand.

Noooooooooooow.... onto the loan itself. I know theory behind your idea Mega and this is something a lot of people say to me but it's something I time and time again push people away from doing.

You borrow for arguements sake £20000, £15000 for a car and £5000 for a rainy day however from day one you're paying interest of lets say potentially 8.9% APR for arguements sake but your bank account is only paying 5% before tax... By the time tax has kicked in you're paying 8.9% interest on money for the privilege of gaining less than 5% back. You're talking a gap of 4% + and for what? If you don't intend on using the money you're p*ssing it away for the sake of p*ssing it away... If you're credit worthy you wont have a problem in getting a sizeable overdraft on your accounts so why not have that set up in place instead? Something you're not going to have to pay for unless you ever actually use it... same abilities, less costs. Or if times change why not take £15k out on your car and then a second £5k loan at a later date if you ever need it? Your credit score doesn't drop overnight unless you've done something really stupid so you'll be able to get finance.

Plus you have two other bonuses. If you get a personal loan or straight HP you're not offsetting a final payment and so you're always building closer towards equity in the car because all cars have a value, they are an asset. Within reason, car depreciation is pretty simple... it loses more in its first year than its second, more in its second than its third and so on so on so essentially as the car is month on month depreciating less, you'll still paying a linear amount of cash off your car slowly aiming towards your target of having £0 remaining on your loan however at this point the car will still have an asset value of £xxxx so essentially you have equity there.

The other option is finance with a balloon. With all agreements now being regulated, decent finance companies ie santander, blackhorse, lombard etc will not allow silly advances (amount borrowed, not the cost of the car). If a true vehicle value is 20k... they dont give a sh*t if you pay 20 or 25 for it, but if you pay 25 they wont touch it without a 5k deposit to bring the advance down to market value. This is to reduce their risk and the customers risk ensuring noone is left over exposed because essentially if something went tits up and they had to repossess the car... they dont want to be out of bed 25k on a car with a 20k value because that'd lose them money. Same again on the back side, balloon payments are based on a percentage of CAP future trade value, sort of the worst of the worst to ensure again both themselves and the customer are not left exposed. The other benefit of this is with a lower balloon the customer pays off more per month than is necessary which will cover both depreciation and interest costs.

Long story short... If your current income can support the costs of a well structured finance agreement, why not. IMO, job loss protection schemes etc are only really applicable to those who do not manage their finances properly and shop around because when done correctly you can always be one step ahead and in a scenario where worst case should your employment or personal life etc go arse over... you sell up and it doesn't kill you.

[MistaSmiff]

There is nothing wrong with financing a car dude, most people do, as long as its secured and maybe not longer than 3 years then go for it. :D

Personally I would rather get a used car maybe a year old from a dealer on a PCP Balloon payment scheme.

[Tilly]

I shoulda just said what he said ^ short and sweet LMAO

Dont necessarily restrict yourself to solely dealer PCP though, sometimes very good value but not always.

And look at it this way... you're always gonna have a car so if you own it outright yeah you have a £15k asset or whatever but so what? You're never gonna see that 15k for the rest of your life because it's always going to be tied up in a car because when you sell that one yo're only going to plough it into another arent you... may aswell enjoy life because the product is designed for a reason or else people wouldn't bother with it... Crack on, just dont over endulge... it's like gambling. Everyone buys a lottery ticket once in a while but you need to know where to stop and what's good for you. Don't take the p*ss and things will be all gravy baby yeaaaaaaaaah! :D haha

[lumus]

The amount you should realistically consider borrowing is entirely proportionate to your income and overall earning potential.

Borrowing 15k to one bloke might be financial suicide in the making. To another it might be a drop in the financial ocean.

It also depends to do with your living situation. Do you have a mortgage to service? a big one?

I know people should live their life and be happy but shakling yourself with debt and being SKINT (your words) is just daft IMO. I wouldnt encourage it.

[Raj]

I'd rather die owing a million pounds than die with a million pounds in the bank.

[lumus]

I'd rather die owing a million pounds than die with a million pounds in the bank.

lol, I don't think that was the question.

[MEGA]

holy crap longest post in the history of the internet by Tilly :D

But yep, Tilly really knows his stuff. Helped me pick my PCP deal when I bought the car last year.

[Raj]

lol, I don't think that was the question.

It was my way of saying do it...:D

or another way... You're a long time dead... So live ya life.

[Tilly]

although lumus... you've hit a good point I never mentioned. If it will physically leave you completely skint. F*ck that... they say money cant buy you happiness. No, potentially no in abundance... but enough money to keep your head above water and support living... yes, that brings happiness and retains sanity otherwise why don't we live in tents off the fat of the land?

Borrowing is fine but I cannot stress enough... within reason, dont be greedy. Keep payments that you can comfortably support working on your current or forseeable future. You cant start worrying about what if I lose my job etc? if you have no reason to believe you will... as long as you dont go silly, IF that scenario arises, you can sell up. NEjoy yourself but dont be a d*ck lol

[Tilly]

holy crap longest post in the history of the internet by Tilly :D

But yep, Tilly really knows his stuff. Helped me pick my PCP deal when I bought the car last year.

LMAO nowhere near my longest. There's plenty of rampant attacks at mercedes customer service and dodgy dealer finance salesman somehwere :D haha

[MEGA]

1047 words. That constitutes an essay in my books! ;)

[paul46rider]

I'd rather die owing a million pounds than die with a million pounds in the bank.

agreed lol

look brenda if you can afford it and your not gonna leave you self short do it mate, you only live once.

we would all love to be in the position of the people who have enough cash to buy a car out right, but unfortunatley not all of us can

[Mahal]

Wow..

I was just going to say.. If you can afford it then go for it.. but dont stretch yourself as it might sting you in the future.. I think if you have a business or something or you are loaded then its ok to get on finance as you know you can just pay it off straight away if it come to It..

My personal view is.. I could'nt ever justify getting a car on finance.. As I have the motto.. If i cant afford it, I dont touch it.. Unless its a house...

I've still got my 2001 320i.. It got 157k on the clock.. never missed a beat.. hence I've still got it.. I have looked into upgrading and looked at cars up to £10k and put my car for sale but I can't justify selling it hence I've never let it go as its running fine..

If i was you, I would stick with the 528i dont spend a hardcore amount on it, but at the same time save much as you can (maybe the same as the repayments would be on a loan) and then re evalute in a year or so..

But thats me..

Whichever route you take, best of luck!

[imu]

I'd rather die owing a million pounds than die with a million pounds in the bank.

I understand the sentiment, just be careful tho' as debts dont just die with a person...

[Raj]

I understand the sentiment, just be careful tho' as debts dont just die with a person...

I know...lol

[westside]

i would never get a loan to buy a car bro save your dosh and buy something when you have the dosh buddy

[Scholesy]

Personally I've never had a car without a loan of some kind, be it the bank of mum and dad or a proper bank.

Unfortunately I have never had that kind of money available but the loans are paid off before the cars go. They are set to allow me to continue living how I want and the money on the loan isnt an issue.

Not everyone has the cash to go and buy cars outright. To me my car was an expensive purchase, yes there is a loan attached to it but that is my decision in terms of what I would like to drive. I have weighed up the pros and cons.

A better way to go Brendon may be work out what you can afford to pay back per month comfortably, work out how long you'll keep the car and work back the way till you get to the amount of the loan. This way you've done it on better criteria and should be sustainable

[XKaLiBaR]

I would say go for it. But try and pay it back as soon as possible. I dont think you need 15k for a car though. 10k can get you pretty much anything. For a 10k loan you will be looking to pay £470 a month for 2 years. I did this when i first bought my 330, but i paid the loan back within 4 months, and i was skint for awhile, but it was worth it.

[SYE]

a mate of mine brought a subaru once he really pushed his budget to buy this car, had it for 2 months the turbo exploded he couldnt afford to fix it sold sold it broken at a big loss brought a banger and was still paying for the subaru, make sure you can afford to fix the car if it does go wrong..

[mystic sport]

As Sye and everyone else says, buying the car is a doddle, finance is easy to get but it is the running. However, I stand by the sentiment of your post and as Raj says, you are a long time dead ;) . As long as you are sure the sums add up and you can afford to 'run' the car rather than pay back a known ammount each month (the loan) then go for it. I would decide on the car you want and then start getting some prices down for things like the routine servicing, insurance, tyres, brakes etc so you know what you will be faced with. I know the M5 will stitch me up for a new set of brakes soon, I knew the price before I bought it but it will still hurt when it comes to actually having the work performed.

Remember that the calibre of car you will be looking at will need work performed by a garage, be it a dealer or indy as any next prospective owner will be expecting to see bonefide stamps in the service book and not a self service and a few receipts, all adds to the ownership cost.

That said, do the sums and go for it if you can ;) .

[westside]

As Sye and everyone else says, buying the car is a doddle, finance is easy to get but it is the running. However, I stand by the sentiment of your post and as Raj says, you are a long time dead ;) . As long as you are sure the sums add up and you can afford to 'run' the car rather than pay back a known ammount each month (the loan) then go for it. I would decide on the car you want and then start getting some prices down for things like the routine servicing, insurance, tyres, brakes etc so you know what you will be faced with. I know the M5 will stitch me up for a new set of brakes soon, I knew the price before I bought it but it will still hurt when it comes to actually having the work performed.

Remember that the calibre of car you will be looking at will need work performed by a garage, be it a dealer or indy as any next prospective owner will be expecting to see bonefide stamps in the service book and not a self service and a few receipts, all adds to the ownership cost.

That said, do the sums and go for it if you can ;) .

id agree with the stamps in the service book for inspections however I wouldnt give th ecar to a dealer to do th ebrakes etc etc it be best to buy them parts yourself from them and give it to a local garage or do it yourself. I know when people come to me with m cars its normally for brakes etc etc all the inspections are done at the dealer as they want the stamp which makes sense :-)