Car finance versus personal loan from Bank

ifconfig

Are there pitfalls to taking out car finance as opposed to a conventional personal loan ?

I remember taking it out for my Polo back in 1998 and, if I recall, there was a penalty for terminating the term of the loan early (I sold the car after 3.5 yrs whereas the term of loan was 5 yrs).
Is it "swings and roundabouts"?

I realise the APR rates quoted for car finance is more favourable than personal loans from the banks.
I wonder if the rates can be haggled with the bank.....

I know my father in law had an old fashioned view about car finance and talked about "balloon payments", etc and was very much of the view that the bank was the only way to go....

-ifc

ifconfig

Is this covered in any of the sticky posts ?
Sorry to bump the topic but I'm just trying to get a balanced opinion on the merits or otherwise of car finance versus bank personal/car loan.

--ifc

ifconfig wrote: »

Are there pitfalls to taking out car finance as opposed to a conventional personal loan ?

I remember taking it out for my Polo back in 1998 and, if I recall, there was a penalty for terminating the term of the loan early (I sold the car after 3.5 yrs whereas the term of loan was 5 yrs).
Is it "swings and roundabouts"?

I realise the APR rates quoted for car finance is more favourable than personal loans from the banks.
I wonder if the rates can be haggled with the bank.....

I know my father in law had an old fashioned view about car finance and talked about "balloon payments", etc and was very much of the view that the bank was the only way to go....

-ifc

I got my first car on finance and was a little surprised when I read the T&C to see it was effectively hire purchase
But I think I was allowed to pay it off early with no penalty if I wanted, I don't know if you could do that with a bank.
Mostly I'd just look at the % rate, what happens if you start to default or miss a payment, and can you pay it off early if you want.

verywell

If you have car finance, you technically cannot sell it untill the finance is repaid. However, if it a personal loan from the bank, you can sell it whenever you wish. That is one key difference. HTH

andyseadog

verywell wrote: »

If you have car finance, you technically cannot sell it untill the finance is repaid. However, if it a personal loan from the bank, you can sell it whenever you wish. That is one key difference. HTH

exactly what i was going to say.

with a personal loan, your not as tied to the car.

last year for example i sold my car which i had taken out a personal loan to buy, and used the money from the sale to pay off the personal loan in one lump sum because i realised that car finance is stupid.

if that were a car specific loan 99% of people would have been too fearful to buy the car and i would still be stuck with it, and broke to boot.

the moral of the story here is that car finance is a bad idea in any form.

mp22

Personal loan
An bank variable interest rate loan is a personal loan which the interest rate charged on the outstanding balance varies as market interest rates change. However, your monthly repayments usually stay the same, so if interest rates rise during the loan term, you will have to make some extra payments at the end of the term. If the rate on your loan falls, you may pay off your loan earlier. You have the option of paying back your loan early or making unscheduled , additional repayments at any time with no penalty.
Hire purchase
This allows you to borrow money over a fixed period of up to 5 years. The car becomes your property when you have paid the final instalment due under the agreement. The interest rate for a hire purchase agreement is fixed for the term of the agreement. Hire purchase is only available for amounts greater than or equal to EUR10,000
Finance and Leasing Payment Protection Plan is available,view details in our related information
Leasing
The bank or finance company lease the vehicle to you at a fixed monthly rental for a fixed term. The bank or finance company owns the car and charges you for its use. The interest rate for a leasing agreement is fixed for the term of the agreement. Lease is only available for amounts greater than or equal to EUR10,000


copied from aib website hope they don't mind.much more freedom with the personal loan IMO

Viper_JB

I'd just like to point out as it may be handy for the op - skoda are currently do finance with an apr of 4.9%, I really don't think you'll find better then this even with a personal loan.

ifconfig

Viper_JB wrote: »

I'd just like to point out as it may be handy for the op - skoda are currently do finance with an apr of 4.9%, I really don't think you'll find better then this even with a personal loan.

Actually - it was the 4.9% rate from Skoda that had me interested.
However, I imagine it falls under the same sort of hire/purchase interest penalty clause as per what has been talked about generally in this thread ?

-ifc

Mar4ix

ifconfig wrote: »

Actually - it was the 4.9% rate from Skoda that had me interested.
However, I imagine it falls under the same sort of hire/purchase interest penalty clause as per what has been talked about generally in this thread ?

-ifc

good to give them call and ask them about terms and condition. vw (vw bank) as well has same interst i think, they gave my wife 10 k euros for 2 years, wile she has sallary 400 after tax.

keithclancy

Mar4ix wrote: »

good to give them call and ask them about terms and condition. vw (vw bank) as well has same interst i think, they gave my wife 10 k euros for 2 years, wile she has sallary 400 after tax.

Her loan would be about 219 euros per month, i'm assuming they took your joint income into account since your married.

Mar4ix

keithclancy wrote: »

Her loan would be about 219 euros per month, i'm assuming they took your joint income into account since your married.

nope, only her. She gave only her own details, i didnt fill any docket, or wasnt my name on any dockets).

keithclancy

Mar4ix wrote: »

nope, only her. She gave only her own details, i didnt fill any docket, or wasnt my name on any dockets).

If thats the case thats extremely irresponsible, giving a loan where the repayments are over 50% of your monthly income is bonkers.

Mar4ix

keithclancy wrote: »

If thats the case thats extremely irresponsible, giving a loan where the repayments are over 50% of your monthly income is bonkers.

We were surprised also.
400 euro weekly she has wages, so she has bit over 1600 month, i think it is no harm pay litle over 400...(25 %) might they took in account that she is married, also rent pay was 300 only.
We got call from them same day, when we filled dockets, that vw bank grant loan, but at the end i had money , and pay all money in one set, we didnt took that loan.

rickyjb

The vw dealer tried to get me to take out a loan from the vw bank as well, the interest seemed very good from what i can remember but I didn't need it so I didn't look too closely at the fine print.

Credit union's the way to go, if you're not a member join one.

johnos1984

rickyjb wrote: »

Credit union's the way to go, if you're not a member join one.

Most certainly true

techie

johnos1984 wrote: »

Most certainly true

+1

Credit Unions are keeping this country running