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Can someone explain finance to me please?

Home Forums Car finance Can someone explain finance to me please?

This topic contains 5 replies, has 1 voice, and was last updated by Avatar Simon 4 years ago.

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  • #65470 Reply
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    Cameron Pearson

    Hi, im 19 and ive just passed my driving test. I’m looking to buy my first car and ive came across some pay monthly cars. However im hesitant as to whether I should get my first car on finance, or just buy a cheaper car right out first? Could someone please explain car finance and if I should buy a car on monthly instalments (around £150-£300 per month) or buy a cheaper car first and wait a year or two, which will be better? Thanks.

  • #65471 Reply
    Stuart Masson
    Stuart Masson
    Keymaster

    Hi Cameron. Bear in mind that the monthly payment is not the only expense you will have to be paying for. Insurance for a 19-year-old new driver will be very expensive, and this will be significantly greater on a more expensive car than on a cheaper car.

    If you take out a finance agreement on a car, you are committing yourself to paying that monthly amount every single month for the next 3-5 years, regardless of your circumstances. Being young, not only can it be more difficult to get approved for finance in the first place, but your personal circumstances are more likely to change in the next few years compared to someone older than you. Rent or mortgage and other bills can suddenly be eating up most of your salary, and a monthly car payment on top can often be too much to handle. And if you lose your job for any reason, your bills won’t go away. If you can’t make your monthly payments, you can find yourself in trouble quite quickly.

    All of the above is not trying to put you off car finance, but more to make sure you understand the fuller implications of financing – which car dealers are unlikely to tell you.

    The Captain Sensible answer is to buy a cheap car with cash, and make sure you are going for practicality & reliability over flash styling and performance. There’ll be plenty of time to buy or finance an expensive sports car later on ;)

    • #65476 Reply
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      Cameron Pearson

      Thanks Stuart, this helped a lot. I’ll probably take your advice and get a cheaper car first :)

  • #66447 Reply
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    Simon

    I part exchanged a car at CARCRAFT the day before they went into administration they refinanced me on the new car and agreed to settle the old finance which I have a copy of the contract that shows this. They did not settle my old finance and now I’m outstanding ,I have spoken to both finance companies whom are waiting information from the administration but my old finance company still expect me to pay come the end of the month and told me to mention CCA section 56 and I cannot afford two finance agreements. Where do I stand.

  • #66464 Reply
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    Simon

    Thanks Stuart will do.

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