Buying Car,ReJuggling finances- any ideas...

E

Easy

Guest
Currently:
-Credit Union loan €17000 repaying at €400 over 5 years
-Need €9000 euro to buy new car (new car is worth 27000 but getting 18000 for trade in).
Credit Union term is too long and works out at 10.5% interest or there abouts and it wrecks my head to think I'm tied in for 5 years.

Thinking about:
Borrowing €20000 over 3years, €9000 goes to car and paying 11000 to Credit Union and bring term down to 3 years.

My question really is:
Can I get a Car loan for €20000 and only give €9000 to the Car seller and give 11000 to credit union?
The car loan is only 6.9% apr fixed and it is a hire purchase agreement.
Would I need to get a personal loan instead to do this? I think Tesco have the best deals on personal loans at 7.5% at the moment.
 
When you get a car loan the car dealer invoices the bank and they pay them directly, unless the car dealer is going to refund you the difference a personl loan is the best option.
May not be the same with all car loans so better to check it out with car dealer he should be able to advise you or call your bank.
 
Easy said:
-Need €9000 euro to buy new car (new car is worth 27000 but getting 18000 for trade in).
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Do you really need this? Can you not buy a cheaper car and minimise your borrowing requirements especially since you are already in debt?
 
I really have to echo the statement above. Borrowing that amount of money whilst still in debt seems bordering on "out of his/her mind" to me.
Would suggest exploring all lenders to see what the best deal is, you should be able to get a better rate on a larger loan than 10.5%.
Also check t&cs of hire purchase for baloon payments and who actually owns the car at the end of the lease. These aren't always consumer friendly. Straight loan is definitely a better deal.

However really do feel you're better off buying a smaller and cheaper car unless you're on the kind of money that makes buying a car like this just a cash transaction!
 
Easy said:
My question really is:
Can I get a Car loan for €20000 and only give €9000 to the Car seller and give 11000 to credit union?
The car loan is only 6.9% apr fixed and it is a hire purchase agreement.
Would I need to get a personal loan instead to do this? I think Tesco have the best deals on personal loans at 7.5% at the moment.
Click to expand...

A car finance deal cannot be a loan AND a hire purchase agreement at same time - it is one or the other. car dealers will often tell you it's a loan but it's actually the latter - which means you don't own the car until you make the last payment and if you need to end the agreement early you have to pay alot of money and still get no car. Be careful!
 
Borrowing €20000 over 3years, €9000 goes to car and paying 11000 to Credit Union and bring term down to 3 years.
Click to expand...

If you have borrowed €17K from a CU, you must have €4K-€5K in shares. Why don't you bring your loan CU down down to equality with your share balance, and then clear off the CU loan altogether?

OK, you would be substituting one debt for another, but at least you would be freeing up the CU shares, and you could then look at the options for car finance

This could be done with a GE flexi-loan, or AIB or Tesco personal loan.

e.g. €22K from Tesco over 5 years would cost €438p.m. @ 7.5% fixed rate.

At least you would have only 1 monthly payment, and not be struggling to re-pay both CU and personal/car finance.
 
I would be very wary of Hire purchase agreements for a number of reasons outlined before on other posts.
Firstly you don't own the car - if you fall behind it can be repossessed and sold. Usually sold at auction and the prices paid are very low. You still then have to pay the interest and the balance of the car costs outstanding even though you don't have the car. Also a point which i don't think alot of people realise is that if the car is involved in an accident and written off - even if you have comprehensive insurance this will only cover the cost of the car and not the entire hire purchase agreement and technically the money is the hire purchase companies and not yours to spend on a new car. There is no guarantee they will replace the car and you would still have to pay the rest of the hire purchase agreement.
 
Forgive me for not really getting this hp vs finance thing. If I had a car on hp and I crashed it, my insurance company paid up, I would owe this money to the hp company, yeh? I don't see what is so surprising about this... I mean this would mean I wouldn't own a car any more but i wouldn't owe any money to the hp company either - No???

I'm probably missing something that is blatantly obvious here so sorry if that was a really stupid question.
 
Hel_n - there are lots of variables with hp.

For example, imagine if you lost your job a year into a 5-year hp agreement and you want to sell the car. First of all, you can't sell the car as it isn't yours to sell. So, you have to give the hp company back the car. There is also this thing called the half rule which says you have to pay back half the hire purchase price to end the agreement early.

For example:

The hp price is €20k
You HAVE to pay back €10k
You've already paid back €4k
You have to come up with another €6k and give back the car.

So, you end up paying €10k for the rental of the car for a year......
 
Credit is too easily(way too easily) available these days to be using HP contracts. I remember buying the exact same type of car as my sister at roughly the same time as her. I used a personal loan and refused to listen to the Bank when they tried to foist a HP type scheme on me. My sister used HP. I accelerated clearance of my loan and the car was all mine in a short space of time. My sister was locked in to a HP agreement for years after. She couldn't even trade up to a better car at a reasonable price because the HP agreement was in place and demanded a pound of flesh for early termination.

Go in the Bank and ask for a variable unsecured loan for reasons X,Y,Z i.e. buy car, clear loan with an unreasonable APR.
If you have a good income they'll give it to you. If they don't then like some of the posters here, they consider it too risky to be exposing you to so much debt and you should rethink your purchase.

Don't mean to preach but is this a new car? If so should you be buying a new car in the second half of the year considering how plate snobbery affects resale prices?
 
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