Ridiculous BOI car finance rules! Anyone else?

GHGW

Just wanted to vent some anger at the BOI and their insane finance rules, anyone else having issues like this?

Time for a new car I'm self employed earn a very good wage and figured it would be easy just to top up my term loan.... NO you can no longer use a term loan in BOI for car purchase must go Hire Purchase route through BIF ( bank of Ireland finance)

No problem I make the app and approval is given but as the car is a 05 slk merc I'll have to pay over 3 years not 5 as I usually cause they want to have some equity remaining in the car should I default. Hello?! I'm more likely to default on the much higher repayments they now want me to pay, I just finished off paying a 25k loan and have great credit rating but they won't change the rule.

Second attempt I decide to go for 07 lexus i find the perfect car agree deal but they won't deal with the garage even though it's SIMI approved what the hell!! Im told that unless
the dealer is registered in BIF system they
won't pay directly to them. I hear unofficially
that only dealers with forecourt finance deals with BOI can get regd. So I can't buy that car either.
So now the banks that have almost bankrupted the county are hijacking our
motoring individuality and telling us what car
we can drive how old it can be and who we
can buy from. This must be illegal and anti competitive.
It's the same as being approved for a mortgage amount by a bank that tells you then you can inly buy from developers that
they financed in the first place.
What you all think anyone else having this issue?

ardmacha

You could just save up and then you can do what you like. Taking out a loan on something that depreciates as fast as a car is madness.

-Corkie-

Isnt there plenty more banks..

Berty

Although I am dismayed at the way my bank treated me recently I must also accept that the bank are protecting their investments and were a little to silly over the years.

Take yourself to your credit union my good man. They will be glad of your business.

Ali Babba

Banks in Ireland have been carrying on like this for years, it's nothing new. Why not contact an independent money lending broker like Leasing Company of Ireland or somebody, that is if they're still in existance or maybe a credit union.

the_brain

I'm not too aware of the arrangements with the bank and the dealer but i remember reading about a year ago that BOI were going through a hire purchase arrangement for any car loans over €10k so that sounds about right. But having to go though only selected approved dealers sounds ridiculous.

GHGW

I actually tried all the banks and each if them said you must bank with us for 6 months first. The credit unions said they can help but I must open a savings account for a few months also. I have always banked with BOI and travel away with business so don't want to open accounts anywhere else to avoid confusion and hassle.

Last year it was easier for me to get a mortgage than sort out a car loan. Just find it amazing how difficult they make it now.

I agree with the depreciation comment but as I'm self employed it's half the point I get to write it off against earnings.

I've been a BOI customer for 30 years and they treat me like this now threatened closing all my account but the branch says they can do nothing it's BIF issue, infact I know that a lot of branch managers have complained about this also to BIF but the rules wont look like changing. I could use my cash but it's working capital which is too important to spend on a car and lord knows if I run out if capital they won't give me a shirt term business loan in these trying times.

L1011

Ali Babba wrote: »

Banks in Ireland have been carrying on like this for years, it's nothing new.

It is new - post recession.

BOI would offer up to about 25k to an account holder with virtually no questions asked and the draft in-hand within a week on a term loan for car purchases as late as late 2008 - I got one.

Unsecured, personal loan, never wanted details of the car or anything.

Ali Babba

MYOB wrote: »

It is new - post recession.

BOI would offer up to about 25k to an account holder with virtually no questions asked and the draft in-hand within a week on a term loan for car purchases as late as late 2008 - I got one.

Unsecured, personal loan, never wanted details of the car or anything.

No it's not, some of the banks were awkward to say the least, the dealer had to be SIMI registered or a main dealer, I had to deal with ****e like that when I used to sell cars as a small dealer.

L1011

Ali Babba wrote: »

No it's not, some of the banks were awkward to say the least, the dealer had to be SIMI registered or a main dealer, I had to deal with ****e like that when I used to sell cars as a small dealer.

Its quite clearly new *for this bank*.

GHGW

It's definitely new for BOI I got a 25k Loan for my current car 5 years ago no questions asked.

I just really don't get how they won't deal with an SIMI garage it's uncompetitive what they are doing and I'm sure illegal under EU law.

Ali Babba

GHGW wrote: »

It's definitely new for BOI I got a 25k Loan for my current car 5 years ago no questions asked.

I just really don't get how they won't deal with an SIMI garage it's uncompetitive what they are doing and I'm sure illegal under EU law.

Maybe for "this bank" but a lot of them were ***king around for years. The main reason they wanted SIMI dealers is back handers and commissions.

Anan1

ardmacha wrote: »

You could just save up and then you can do what you like. Taking out a loan on something that depreciates as fast as a car is madness.

+1, and even more so when you're forced to buy from a dealer.

GHGW

Anan not sure how much you can save in a short time but if your buying a 25 k car saving is not as simple as it sounds how many of us can honestly say we could save that much to buy a car especially when we already have finanace on our current car.

Also depreciation is a good thing when your self employed as you can write it off.

Id say that 90 % of car buyers are on some sort of finance or part finance.

Also when your self employed any money in the business account needs to stay there as working capital.

From a business perspective finance/leasing is the best option.

Anan1

GHGW wrote: »

Anan not sure how much you can save in a short time but if your buying a 25 k car saving is not as simple as it sounds how many of us can honestly say we could save that much to buy a car especially when we already have finanace on our current car.

I personally wouldn't buy any car that I couldn't afford to pay for outright, particularly in a market where good cars can be got for €3000 and less. I'm not saying nobody else should, but it makes very little sense to me.

GHGW wrote: »

Also depreciation is a good thing when your self employed as you can write it off.

It's never a good thing, writing it off just lessens the pain.

GHGW wrote: »

Id say that 90 % of car buyers are on some sort of finance or part finance.

I honestly don't know, but i'd be amazed if the figure were that high.

GHGW wrote: »

Also when your self employed any money in the business account needs to stay there as working capital.

From a business perspective finance/leasing is the best option.

Perhaps, if you absolutely must have an expensive car. Me, i'd happily drive a €3k car and have the other €22k as working capital.

djimi

Credit Union is by far your best bet. Better rates than any bank Ive dealt with.

djimi

ardmacha wrote: »

You could just save up and then you can do what you like. Taking out a loan on something that depreciates as fast as a car is madness.

In an ideal world maybe, but it would take the average person an awfully long time to save up say €10k to buy a decent car. Thats why they have bank/credit union loans. If it was as simple as saving up everyone would do it...

TomMc

GHGW wrote: »

Also when your self employed any money in the business account needs to stay there as working capital.

Not been smart but you could also say that it would be far more praiseworthy for banks to lend money to SME's (as a priority and for more productive use), than as car loans.

While I agree it may be more tax efficient, I think its time this current generation followed previous ones. Save first and spend later.

GHGW

Think your missing the point I wouldn't have 22 k extra capital as its a car loan in the first place.. I have the cash right now to buy it outright but want to keep the cash I have as working capital to support my business. For example if all you had was 3 k in your account would you prefer to buy a 3k car and be broke or finance one and pay 100 euro a month for 3 years. Id say its option 2.

If I bought a 10 k car for cash I would still be spending 10 k of my working cash whereas if I get finance a 25k car I have to pay approx 450 euro a month and write off the depreciation which leaves me all my working capital. Its standard business practice in all industry to lease or finance equipment and my car is equipment.

If I could get the car I want for 3 k it would be great but I like my cars to be fast,new and reliable... also you can claim back 20% VAT on cars registered after Jan 2009 if used for business.

Anan1

Anan1 wrote: »

I personally wouldn't buy any car that I couldn't afford to pay for outright, particularly in a market where good cars can be got for €3000 and less. I'm not saying nobody else should, but it makes very little sense to me.

The problem is you could be years saving for something and you could get it now with the help of a loan. Life is too short to be waiting too long for things.

I was looking at loans of a few 1000 recently and the the extra you have to pay in interest is not even that much.

Tbh even if I had the full cost of a car Id rather keep most of the saving and pay off the car over time out of my wages and still have the savings.

GHGW

Tom I totally agree but listen to the news over the last 2 years and you will see banks are refusing to make business capital loans in many cases its even harder than a car loan. Even getting temporary overdraft for a week or two pending invoice payment is difficult for many SME.

Guess this is my first taste of the credit crunch!

Anan1

Margaret Muscular Tablecloth wrote: »

The problem is you could be years saving for something and you could get it now with the help of a loan. Life is too short to be waiting too long for things.

I was looking at loans of a few 1000 recently and the the extra you have to pay in interest is not even that much.

Even if I had the full cost of a car Id rather keep most of the saving and pay of the car over time out of my wages and still have the savings.

I suppose it all depends on how badly you want the car. Maybe i'm lucky in the sense that I could be very happy with a €3000 car. From a purely financial perspective, though, borrowing for something that depreciates faster than the loan is being paid off makes no sense to me.

GHGW

Anan when your self employed you get to write off interest and depreciation so its actually advantageous to go the finance route as you pay less tax and the write offs negate the interest.

While keeping that all important working capital.

Anyway i guess this tread has moved away from the original point BOI's rules to me make no sense and I figure must be causing many people headaches on the forecourt.

MarkN

It's not just you OP. It's part of the reason why I'm now driving a car that cost me €1,000. Last year (middle of recession) I borrowed a large amount no problem for a car.

If you want it without the finance route and right now, just get a "home improvement loan" from the bank with the normal terms, I don't think they've started sending out inspectors to see where you're spending the loan money....... yet.

What's more ridiculous is if you want to buy a car from a private seller - they WILL give you a normal car loan, even though you've zero comeback then!!!

GHGW

Mark

They 100% will not give you a normal term loan against a car its 100% HP through BIF... I know this because I tried to change to a term loan and then a business loan when I had the issues and because they knew it was for a car they refused. Also My family works for BOI so they did some research and take my word for it unless you lie and apply for a "home improvement loan" its all through HP which causes these ridiculous rules to be applied.

I do see the point of some of the rule but when its a returning customer who has just finished a loan and has a mortgage with BOI and no default with plenty of excess cash in their accounts a great credit rating etc etc why do they apply them....If i was a customer with no history in BOI I may understand it.

seamus

From other threads, all of the banks are now forcing HP agreements for car loans. For obvious reasons - they want to make sure there's equity there if the person defaults. I reckon they've gotten stung over the last 3 years by people defaulting on personal loans and when the bank goes to collect they find that the car was sold long ago or that the loan was never for a car, but instead for a holiday or a deposit on a house.

I don't think it's that big a deal. You can't pay off the loan until you're halfway through the repayment period - I can't see most people saving that much, that quickly anyway. You get a better fixed rate on the motor loan than on a normal personal loan. And it has a clause that allows you to simply hand the keys back at the halfway point - the bank takes the vehicle and you're free to go off and get a new one. Obviously it's a PITA if you can't buy the car from the dealer you want.

Apparently the latter is quite common in the United States - people effectively "hire" their car from the bank and never own it, giving them the freedom to simply hand back the keys if they emigrate or fall on hard times. I know that seems insane to people here in Ireland, but tbh it's no different to renting your home - you're getting the exclusive use of the vehicle without the legal tie-in. I don't know why it's not offered here, maybe just cos we like to own stuff.

TomMc

Words of wisdom ...

Spare not, nor spend too much, be this thy fare,
Spare, but to spend, and only spend to spare.
He/she who spends too much may want, and so complain,
But he/she who spends wisely, spares to spend again.

GHGW

Nice Tom!!

But I live by the""live fast die in debt rule"" LOL!!

Cars are a waste of money but they are an enjoyable waste of money especially if your into cars.

My current car is a n Audi TT modified with all the upgraded shocks springs bushings ECU remamp and Turbo upgrades and its lots of fun to drive but getting old now so time to change. looks standard but drives anything but.. I probably put 4 k into it since buying and its only going to stand me 5 k at trade down from 22k in but I enjoyed every but of it even the break downs and work to keep it going!

galwaytt

djimi wrote: »

In an ideal world maybe, but it would take the average person an awfully long time to save up say €10k to buy a decent car. Thats why they have bank/credit union loans. If it was as simple as saving up everyone would do it...

TomMc wrote: »

Not been smart but you could also say that it would be far more praiseworthy for banks to lend money to SME's (as a priority and for more productive use), than as car loans.

While I agree it may be more tax efficient, I think its time this current generation followed previous ones. Save first and spend later.

And, if everyone decided to do that, (save before spending), several things would happen

• forecourt sales would stop overnight, for a period of years, until everyone had 'saved' enough......
• ..by which time the business' would be out of.....er, business......
• pool of cars you're looking at/for, would be gone, and there'd be no 2011-reg cars for you to buy, in 2014, when you have saved to buy...!
• good sources of finance -the credit union's - would also be in trouble, as no-one would have borrowed from them, either...........

Like it or not: credit is what makes our economy go around. Take away credit, and we have NO economy, full stop.

.

spoonface

GHGW wrote: »

Anan not sure how much you can save in a short time but if your buying a 25 k car saving is not as simple as it sounds

I think you're having trouble coming to terms with the fact that you can't afford the cars you're interested in. I buy my cars in cash for about 5K and this means I don't waste money on interest and I don't have to waste worry-money on comprehensive instead of 3rd party insurance. On top of that the government gives me a break on road tax.

All the time trying to have a better car than anyone else is a fool's game. If you've such a good salary, simply save up for a couple of years and get the car that's so important to you. The anticipation of it will both motivate you and give you something to look forward to, as opposed to getting the car instantly without feeling you earned it and then still having to pay for it after you've sold it (as you're about to experience with your current car).

GHGW wrote: »

how many of us can honestly say we could save that much to buy a car especially when we already have finanace on our current car.

Well the trick is not to have finance on your current car - you're a victim of your past decisions there and unless you break the cycle, it'll get worse as now you'll have the old loan (for a car you don't even own any more) and the new one to shoulder. And I have saved that sort of money while self-employed but don't spend it on a car because frankly other things are more important - i.e. having a little bit of a nest-egg should there be a hiccup in the self-employment game e.g. injury or lack of customers.
In the same vein I'm just paying the last payment on a mortgage this month, way ahead of schedule, which leaves me debt free, meaning that any money that comes in now is not already accounted for by deals I've made with banks, so I can put it towards saving for something nice.

GHGW

Spoon believe it or not I have more than enough cash to buy the car today infact I could buy a car twice as expensive the point is i need to retain my cash in these trying times for working capital as I'm self employed.

Also finance is for those who want to buy a car can afford the repayments and wish to spend more than say 5 k.

I have a mortgage I also have payment protection so if I get injured I still get paid, I have a pension and I have saved plenty in last few years I just dont want to spend it all in one go!

Finance last time I checked is used when you need something and actually can afford it but dont wantto outlay large amounts of cash (banks wouldn't give you the loan if you couldn't) but want to spread out the payment. For up to say 5k cash works but over that finance makes more sense to most of us as we dont have large amounts of cash sitting around or do but dont want to wipe out savings.

Also my past decisons do not make a difference.. I am about to make my last installment on my car it has been depreciated on the books so its time to change...also I feel like a new car not a 5k car but something nice not to show off or as a status symbol but as something that reminds me why I spend 250 days out of the county killing myself working. It would be a boring life if we saved every penny just to have a huge nest egg to try spend when Im too old to enjoy it or to afraid to drive.

Boards.ie is a funny place it seems that people digress off the subject of the original post to try get a dig in at anyone...the discussion is about stupid BIF rules not my ability to pay cash or my choice of finance. I would have called the thread "Should i buy a car on finance or cash" if i wanted this sort of discussion.

mickdw

The point here is that the bank have tightened up to a silly degree. The OP clearly appears to be able to afford the car & has an excellent history.
IMO, one would be foolish to sink a large amount of cash into a car in these times when the option to finance it is there specially in the case of where it can be used against tax.
I wouldnt have any issue with borrowing for the car. The only time I wouldnt agree with car borrowing is when you cannot pay sufficient deposit to ensure that the car is always worth more than the loan. When the car is always worth more than the loan, all is good IMO.

GHGW

My exact point Mick!!!...the issue is these damn new rules are making it so difficult there are just so many loopholes in it and it looks like its anti competitive.

I'm guessing if I got my hands on the requirement to become a registered dealer with th BOI Finance and handed it to the ombudsman that all hell would break lose.

Wouldn't mind if it was a case of non SIMI approved dealers are not allowed but it seems to be that any dealer not working with BOI F is off the list.

Guess I could lie and say the loan is for something else but I don't want to go down that road and feel I shouldn't have to considering my history with the bank.

AI really don't get the age rule with increased repayments it just increases the possibility of a default makes no sense at all.

TomMc

galwaytt wrote: »

And, if everyone decided to do that, (save before spending), several things would happen

• forecourt sales would stop overnight, for a period of years, until everyone had 'saved' enough......
• ..by which time the business' would be out of.....er, business......
• pool of cars you're looking at/for, would be gone, and there'd be no 2011-reg cars for you to buy, in 2014, when you have saved to buy...!
• good sources of finance -the credit union's - would also be in trouble, as no-one would have borrowed from them, either...........

Like it or not: credit is what makes our economy go around. Take away credit, and we have NO economy, full stop.

.

Pay as you go and if you cannot pay don't go. Save now, spend later and so on.

Money makes the world go round for sure. In more recent decades though this has changed from "Money" to "Credit". Why, mainly due to instant gratification. People want more and more when they already have enough and they want it NOW. A little more self discipline, moral restraint and moderation wouldn't go amiss.

Once cheap credit became available for this that and everything, it was always going to be very hard to control. It becomes the norm (not saving) and a repeat cycle of debt, fuelled by the buy now, pay later mentality. The conspicuous consumption of the celtic-tiger era was a shining example of this. That doesn't justify it or make it right. And mostly on imported not indigenous goods, so crazy for the economy in the medium to longer term.

Anyway, if people save first, they will appreciate something more and they will also know the true value of what they bought. Getting things on credit all the time is a recipe for disaster. It usually leads to a level of profligacy where one day, chickens will come home to roost. Waste not, want not.

Bottom line, this buy now/pay later mentality has led us astray. Banks lent more and more money and coupled with other factors the credit crunch happened. Ultimately it is unsustainable. Attitudes need to change and people will be forced to whether they like it or not.

***

Car dealers should build their business model based on servicing and customer service, not mostly (order taking) new car sales. And if their overheads are so high now from building glass palaces that they are unsustainable, more fool them. If a motor business needs a franchised dealership to survive and pandered to distributor requests tough luck. If they cannot survive as an independent, well then selling/servicing motor vehicles isn't really their thing. There will always be a supply of nearly-new cars whether sourced locally or in the UK. Supply and demand works itself out. Supply will not dry up in real terms.


I wouldn't want my local credit union give out my savings for expensive car loans in the current climate. Nor would I want them investing it in certain banks either. I would be far happier with small interest rates, knowing my capital is both safe and liquid. The credit unions need to earn their keep but can do so with prudent lending. To my mind, that doesn't involve 25-30k car loans.

mickdw

GHGW wrote: »

My exact point Mick!!!...the issue is these damn new rules are making it so difficult there are just so many loopholes in it and it looks like its anti competitive.

I'm guessing if I got my hands on the requirement to become a registered dealer with th BOI Finance and handed it to the ombudsman that all hell would break lose.

Wouldn't mind if it was a case of non SIMI approved dealers are not allowed but it seems to be that any dealer not working with BOI F is off the list.

Guess I could lie and say the loan is for something else but I don't want to go down that road and feel I shouldn't have to considering my history with the bank.

AI really don't get the age rule with increased repayments it just increases the possibility of a default makes no sense at all.

TBH, I would simply laugh & walk out of bank if they suggested those rules to me.
I borrowed some in 08 for a new car, got the cash unsecured with no request for record of earnings although there is multiples of the loan amount on deposit with them too. It certainly makes things much easier now if I want to change cars.
Open creadit union account then get the cash there after a few months.

And TomMc:

If you were to look into the workings of your credit union, Im sure you will find that they are giving cash out in much worse ways that to self employed man trading profitably in this current climate who has a perfect credit history who is simply renewing his car after successfully paying equivalent loan for the last number of years.
THe number of people I know who have taken money out of creadit union for no reason other than to reduce credit card debt only to max out the credit card again is scary. These people will never meet the term of the original agreement & many are just paying tiny amounts occasionally just to keep them happy. That is the real scandal IMO, not giving €25k to a guy who will in all probability pay it back in full & on time.
Also, Do you believe that the credit union just keep yor cash in a safe when you give it to them? I know of a financial outfit who were pitching to handle the entire irish credit union investment business so I asume the funds are gambled on the markets just like every other bank

GHGW

Tom your view is very naive yes in a perfect world credit would not exist but the world has never been perfect and never will be.

In your opinion every one should use cash not credit that is and always has been impossible in every way.

The farmer need to buy seed before he can turn a profit where will he get the cash to buy this seed if he has no cash in the first place.. he needs a loan which he repays over time once he harvests.

The airline cannot possibly afford to buy a 48m aircraft to set up a new airline so they lease and finance and repay over time once they start flying passengers.

I need business working capitol so I van continue to work so I retain my cash instead of using it for a purchase and use finance to buy a car.

Its how new business and enterprise has always been finance since the dark ages. Only exception is communist country's and CoOps which both work on more or less the same principle of group mutual help and non captalist economys for the benefit of all.


Your simplistic view leaves no room to dream.

TomMc

mickdw wrote: »

And TomMc:

If you were to look into the workings of your credit union, Im sure you will find that they are giving cash out in much worse ways that to self employed man trading profitably in this current climate who has a perfect credit history who is simply renewing his car after successfully paying equivalent loan for the last number of years.
THe number of people I know who have taken money out of creadit union for no reason other than to reduce credit card debt only to max out the credit card again is scary. These people will never meet the term of the original agreement & many are just paying tiny amounts occasionally just to keep them happy. That is the real scandal IMO, not giving €25k to a guy who will in all probability pay it back in full & on time.
Also, Do you believe that the credit union just keep yor cash in a safe when you give it to them? I know of a financial outfit who were pitching to handle the entire irish credit union investment business so I asume the funds are gambled on the markets just like every other bank

That's why I said they (credit unions) need to earn money with my savings to pay their way, but should be prudent in their lending. Yes there is all sorts of things going on we don't know about, so now we have to decide for ourselves who is the most responsible and solvent financial institution with our savings. The post office (and savings certs) would appear to be one of the better options, but who knows.

TomMc

GHGW wrote: »

Tom your view is very naive yes in a perfect world credit would not exist but the world has never been perfect and never will be.

In your opinion every one should use cash not credit that is and always has been impossible in every way.

The farmer need to buy seed before he can turn a profit where will he get the cash to buy this seed if he has no cash in the first place.. he needs a loan which he repays over time once he harvests.

The airline cannot possibly afford to buy a 48m aircraft to set up a new airline so they lease and finance and repay over time once they start flying passengers.

I need business working capitol so I van continue to work so I retain my cash instead of using it for a purchase and use finance to buy a car.

Its how new business and enterprise has always been finance since the dark ages. Only exception is communist country's and CoOps which both work on more or less the same principle of group mutual help and non captalist economys for the benefit of all.


Your simplistic view leaves no room to dream.

You are mixing up business and pleasure.

Airlines need modern aircraft to operate. Nobody would fly in an airplane that was clapped out. It is an absolute necessity of their business. You yourself do not need to change your Audi TT, you just would prefer you could. And it is taxpayers money that is keeping the banks in business so the public have a right to expect certain standards of behaviour.

If you said that you had won a 100k or million Euro contract in your business to supply such and such and you needed 25k for plant and machinery to make it happen, then it would be a different story. But instead (and I don't mean to be harsh as you sound like a decent enough bloke) you are just bored with your current car and would like some newer or flashier, sportier to enjoy (stroke your ego!). It is not even a transit van or work vehicle but a glorified play thing (indulgence).

You can afford your own business (with some working capital) or you can afford a flash car. But you can not afford both. If you cannot pay for something with your own savings you cannot afford it. To my mind, been able to service the repayments (with future disposable income) doesn't count as affording something, but may be I'm just old school. It may be the way business operates, but that should be for essential items only. Something along the lines of speculating to accumulate. Working for you not merely a fast depreciating asset.

TomMc

TomMc wrote: »

You are mixing up business and pleasure.

Airlines need modern aircraft to operate. Nobody would fly in an airplane that was clapped out. It is an absolute necessity of their business. You yourself do not need to change your Audi TT, you just would prefer you could. And it is taxpayers money that is keeping the banks in business so the public have a right to expect certain standards of behaviour.

If you said that you had won a 100k or million Euro contract in your business to supply such and such and you needed 25k for plant and machinery to make it happen, then it would be a different story. But instead (and I don't mean to be harsh as you sound like a decent enough bloke) you are just bored with your current car and would like some newer or flashier, sportier to enjoy (stroke your ego!). It is not even a transit van or work vehicle but a glorified play thing (indulgence).

You can afford your own business (with some working capital) or you can afford a flash car. But you can not afford both. If you cannot pay for something with your own savings you cannot afford it. To my mind, been able to service the repayments (with future disposable income) doesn't count as affording something, but may be I'm just old school. It may be the way business operates, but that should be for essential items only. Something along the lines of speculating to accumulate. Working for you not merely a fast depreciating asset.

I don't agree with your way of thinking at all. If you can afford to comfortably make repayments on something then you can afford it.

Whats wrong with wanting to get a better car and wanting to get it now. As above if you can afford the repayments why not. 100's of thousands of people live comfortably by using loans to pay for expensive items and don't get into financial trouble.

By the time you would have saved for a certain car it could take years and the car would then be much older etc etc.

Life would be quite a boring existence if everybody had an outlook like yourself imo.

If I can afford the repayments and I want a different car because I'm bored of the current one then I will do as I please and buy it.

Anan1

Margaret Muscular Tablecloth wrote: »

I don't agree with your way of thinking at all. If you can afford to comfortably make repayments on something then you can afford it.

Whats wrong with wanting to get a better car and wanting to get it now. As above if you can afford the repayments why not. 100's of thousands of people live comfortably by using loans to pay for expensive items and don't get into financial trouble.

By the time you would have saved for a certain car it could take years and the car would then be much older etc etc.

Life would be quite a boring existence if everybody had an outlook like yourself imo.

If I can afford the repayments and I want a different car because I'm bored of the current one why should I not go ahead and buy it.

It's not that you shouldn't, it's that it doesn't (IMO) make financial sense. At the end of the day, though, it's your money to spend as you see fit.

Anan1

Anan1 wrote: »

It's not that you shouldn't, it's that it doesn't (IMO) make financial sense. At the end of the day, though, it's your money to spend as you see fit.

Take the following. Car costs 20k and you have 20k in savings.

Option 1: Buy the car outright

Option 2: Use 10k of savings and take out a 10k loan over 3 years.

I think that option 2 is the better option. You have 10k cash in the bank should something come up and you have the car with a repayment every month which would not be overly high. (around 320 per month)

I would be very reluctant to put all the cash into the car in scenario like the above. You would probably pay less than 2000 in interest over the 3 years or around 600 per year which in the grand scheme of things is not that much and as I said you still have 10k in cash sitting in the bank or invested in something which could even possibly be making more than you pay in interest on the loan or at least making back a fair bit of it.

Anan1

Margaret Muscular Tablecloth wrote: »

Take the following. Car costs 20k and you have 20k in savings.

Option 1: Buy the car outright

Option 2: Use 10k of savings and take out a 10k loan over 3 years.

I think that option 2 is the better option. You have 10k cash in the bank should something come up and you have the car with a repayment every month which would not be overly high. (around 320 per month)

I would be very reluctant to put all the cash into the car in scenario like the above. You would probably pay less than 2000 in interest over the 3 years or around 600 per year which in the grand scheme of things is not that much and as I said you still have 10k in cash sitting in the bank or invested in something which could even possibly be making more than you pay in interest on the loan or at least making back a fair bit of it.

In such a situation i'd favour a third option - maybe spending €3k on the car and investing the other €17k. Given that a €20k car will likely depreciate €4k+ pa, you might be looking at a saving of €4k+ pa plus interest saved plus return on the invested extra €7k - at least a €5,000pa saving overall.

Tea 1000

Margaret Muscular Tablecloth wrote: »

I would be very reluctant to put all the cash into the car in scenario like the above. You would probably pay less than 2000 in interest over the 3 years or around 600 per year which in the grand scheme of things is not that much and as I said you still have 10k in cash sitting in the bank or invested in something which could even possibly be making more than you pay in interest on the loan or at least making back a fair bit of it.

If you have a way of making more money on a cash deposit than you'd pay on interest on a loan, then what you should be doing is borrowing a million and living off the difference!!
Don't fool yourself if you think you can make more money by borrowing for something and using the savings to make money. If it were that easy, you'd have more than enough money for the thing you're borrowing for in the first place!

Anan1

Anan1 wrote: »

In such a situation i'd favour a third option - maybe spending €3k on the car and investing the other €17k. Given that a €20k car will likely depreciate €4k+ pa, you might be looking at a saving of €4k+ pa plus interest saved plus return on the invested extra €7k - at least a €5,000pa saving overall.

But you wont have the car that you wanted in option 3, which for me personally would be worth the interest and depreciation. Even a compromise somewhere like getting a 15k car but there is a big big difference between a 20k car and a 3k car.

Its like spending money on anything. If you want it you will pay for it. I would probably spend more on nights out over 3 years than the interest on the loan and thats an even less sound investment .

Tea 1000 wrote: »

If you have a way of making more money on a cash deposit than you'd pay on interest on a loan, then what you should be doing is borrowing a million and living off the difference!!
Don't fool yourself if you think you can make more money by borrowing for something and using the savings to make money. If it were that easy, you'd have more than enough money for the thing you're borrowing for in the first place!

I said it was possible rather than easy. It is possible in risky enough ventures. My point was more that you are better to have the 10k in cash at hand and pay back some of the car over time than have the car paid off but have no money aside.

Absurdum

lads if you wanna give me the 20k, my mate in Nigeria has US$35,000,000 in cash waiting to go, he'll give you half in return for a small initial deposit

Anan1

Margaret Muscular Tablecloth wrote: »

But you wont have the car that you wanted in option 3, which for me personally would be worth the interest and depreciation. Even a compromise somewhere like getting a 15k car but there is a big big difference between a 20k car and a 3k car.

Its like spending money on anything. If you want it you will pay for it. I would probably spend more on nights out over 3 years than the interest on the loan and thats an even less sound investment .

That's really the heart of it - we all spend money on things we enjoy and on things that make financial sense. I've no problem with someone borrowing for a car they love, my only issue is with the argument that it's in some way a financially prudent act. In my book, nice cars are a marginally better investment than hookers & coke.

spoonface

GHGW wrote: »

the point is i need to retain my cash in these trying times for working capital as I'm self employed.

So if you have 25K as a cash asset, I'm suggesting, don't cancel it out by setting yourself up with a corresponding debt of 25K to the bank against an asset that will depreciate quickly. Because by getting the loan, you have the cash but you're raising your debt levels.

Look in the end it's just a case of different perspectives, I'm just more careful with my cash and have less needs in terms of having an expensive car so we'll never really agree on the best approach.

GHGW wrote: »

Im guessing you dont have a Mortgage, arent self employed and dont fully understand the finance concept.

Like I mentioned, I have a mortgage which I'm about to finish paying off so it's not a drain on my cashflow.I am self employed for years. I understand the finance concept, it's just we have different priorities.

GHGW wrote: »

Boards.ie is a funny place it seems that people digress off the subject of the original post to try get a dig in at anyone...the discussion is about stupid BIF rules not my ability to pay cash or my choice of finance. I would have called the thread "Should i buy a car on finance or cash" if i wanted this sort of discussion.

Well it's a multi-party conversation so it won't always go the direction you like or then it might be just a monologue.

sean1141

when i went to change my car the bank told me i had to take out finance to buy it as they were not giving out motor loans. i all ready had a lone with them with the value of the car outstanding. when they told me finance was the only option i said no thanks i wont bother. about an hour later they rang and said i could have the lone as i was such a good customer!!

Eric Cartman

credit union...problem solved

Drummerboy08

Eric Cartman wrote: »

credit union...problem solved

Do you not need to have some kinda saving history with a Credit Union before they will offer you a loan? I always thought this was the case. Lots of people dont have that option either.

Eric Cartman

Drummerboy08 wrote: »

Do you not need to have some kinda saving history with a Credit Union before they will offer you a loan? I always thought this was the case. Lots of people dont have that option either.

i joined the credit union, dumped 1/4 of what i needed in as a lump sum, came back 2 weeks later and applied for a loan , not only did they approve the loan for the amount i wanted but they told me i could apply for a bigger loan if i wanted