Car finance for new car. 36% APR.

2022work

Part time single mother, part time working. Been looking at a newish car which is 24000. My parents giving me 10k towards it and I've applied for finance for the other 14000.

374euro a month for 52 months the payments will be. Total of loan is 19448e. Is this working out at 36% APR? If it is, I thought this was illegal to have this much APR on a loan or I could be wrong.

ChippingSodbury

That's about 7.6%

User1998

Its 7.6%.

The loan is only costing you €5,450.

coylemj

The APR is not 36%, you are expressing the total interest (5,448) as a % of the principal (14,000). Which does not yield the APR.

If you made no monthly repayments and stumped up 19,448 after 52 months, even that would not be an APR of 36%. Because you had the money for over 4 years.

What you are being quoted equates to about 17% APR which is still steep. Can you apply to your local credit union or bank? Maybe one of your parents could go guarantor? You're essentially being treated as a high risk ('subprime') borrower and the interest rate reflects this.

Henry Ford III

So it's either 7.6% or 17%.

Crikey.

User1998

Actually I think this calculator is saying 14.6%?

https://tools.ccpc.ie/LoanCalculator

2022work

Oh ok. I thought it was 36%. I suppose I did calculate it differently seeing as I wouldn't know anything about this kind of thing.

Credit union won't give me a loan because I don't save with them. My wages go into it thou after changing banks after ulster bank left here.

I wouldn't have any previous loans anywhere other than a credit union loan 18 years ago for 2000euro.

coylemj

I did a reverse calculation using Excel. Borrow 14,000, pay 374 p.m. for 52 months until the balance is zero. Apply interest every month before the repayment. Excel says the APR is 17.07%.

1.1707 to the root 12 is 1.01233. So every month you apply 1.233% interest to the balance, then deduct 374. Repeat for 52 months. At which point the balance is zero.

QED

embraer170

Why not buy a cheaper car?

Is there anything a good 10,000 euro car won’t do do that a 24,000 euro car will?

I honestly think borrowing to buy a second hand car isn’t the most financially sensible thing to do. Will you be able to afford to fix it when it runs into problems?

2022work

https://www.boards.ie/discussion/comment/120819000#Comment_120819000

I've read this 5 times and still can't understand it lol

LIGHTNING

Seems like in your situation buying a 24k car is probably not a best idea. Why not half that budget? 12k will get you a nice safe car and you wont have those payments hanging over your neck

2022work

https://www.boards.ie/discussion/comment/120819015#Comment_120819015

I don't mind paying for the car. It's something me and my kids want. It's just the high interest that bothers me.

What would be an interest rate that others would be comfortable paying.

Can I even try to negotiate the interest rate.

User1998

https://www.boards.ie/discussion/comment/120819002#Comment_120819002

To make it worse the €10k doesn’t even belong to them to begin with, and they are borrowing another €14k on top of that.

OP it seems like you should be buying a cheap reliable €5,000 car. Not a €25k motor that you cannot afford.

bazz26

Repaying nearly 5.5k in interest on a 14k loan is shockingly high. Must be a loan shark offering those sort of rates.

With the greatest respect OP, getting 10k from your parents, trying to finance the remaining 14k and what seems like you have no proof of savings to date to get a lower interest rate, I think it's saying you cannot really afford a car of that value.

bazz26

https://www.boards.ie/discussion/comment/120819093#Comment_120819093

I think the high interest rate is a reflection of the risk to the lender offering it - your a part time worker, single parent with what looks like no previous credit rating. Unfortunately that means they are taking a big chance on giving you a loan and the interest rate reflects it. Even the Credit Union won't take a chance and they are usually more flexible and understanding around people's personal circumstances.

My advice would be to buy a cheaper car, take out a smaller more affordable loan to tie you over for a few years. This will give you a credit rating i.e. it shows you can repay a loan. Then in a few years look at upgrading the car.

newmember2

https://www.boards.ie/discussion/2058304111/car-finance-for-new-car-36-apr

Have you had a look at what the 10k loan from your parents would buy you? This would avoid you taking on the unnecessary hardship of the proposed repayments and interest rate on the 14k loan. Or even see if you could get a 2-5k loan from the credit union to add to the 10k in case you wanted to establish a credit history.

You're in the motors forum here and if you said what you're requirements were I'm sure there'll be plenty of posters posting links of cars for sale to help you out.

kravmaga

Why are you going for a brand new car OP when your a part time worker and Mom? Why are you over stretching your finances to 24k.

As another poster said , you have 10k from the bank of Mam and Dad, add 5k of your own money and you will get a very good car for 15k.

Whats the obsession with a new car, the minute you drive it off the garage forecourt it depreciates by about 3 to 4 k.

Im a full time worker, I always buy a used car about 4 yrs old from a garage with a 2 year warranty supplied.

Sir Galahad

Crazy idea to buy a new car in your current situation. It'll depreciate as soon as you drive it out of the dealership. Do not under any circumstances borrow money from a finance company. You say the Credit Union wont lend you the money ? The CU's are now competing with B of I and AIB so time to look around for another CU. PSCU.ie have a Welcome loan for first time borrowers at 4.9% so keep looking. But seriously, don't buy a new car.

JoyPad

Have you tried other places to take a loan?

My bank is currently offering something like this (according to their online calculator):

€14000 over 4 Years

Monthly Repayments

€336.94

Total Repayment €16,173.12

Total Cost of Credit €2,173.12

Interest Rate 7.5% APR

I hope you get the car you want, if you can afford it.

McCrack

Go borrow sweet cheeks, 24k car, well wear

2022work

https://www.boards.ie/discussion/comment/120819616#Comment_120819616

What do you mean in my current situation! I can afford this car. It's just the repayments I think the interest is more than what I thought it should be. Now I understand why and that is because never taken any loans out before and no credit history. I never needed to take loans out other than one back in 2006 I think it was.

Anyhow, I am still considering buying this early this week and in the meantime, I will look at other finance options.

User1998

https://www.boards.ie/discussion/comment/120820312#Comment_120820312

What makes you think you can afford this car? You are getting €10,000 from your parents and getting another €14,000 in finances.

You might be able to afford the monthly repayments but you certainly cannot afford the car.

Obviously we don’t know your full circumstances, but it seems that buying this car makes no financial sense what so ever.

circadian

It seems like you're thinking about this emotionally rather than rationally. What is it about this car that you want? So much so that you're even considering such a high interest rate?

Is it brand new?

Who's offering the finance?

Is it a PCP deal because if it is then there's a lot more to it.

There's a lot not adding up here and you said it yourself, "as I wouldn't know anything about this kind of thing."

24 grand, with loans from parents and elsewhere to pay, with interest, is a lot of risk when you don't really understand what you're taking on.

pat_sconce

I've never heard of a 52 month loan.

Is it 52 months for a specific reason?

If it is, the rate is a stupidly high 15% and suggests that either you have a poor credit record or you are being taken advantage by a car dealer.

I also agree with many above - no reason to spend 24k on a car and I would suggest you bring someone with you to buy the car as I suspect you are being taken advantage of.

Remember, car dealers are probably the most untrustworthy people out there.

Plenty of very decent cars in the 10k-15k bracket and if you stretch yourself it will become a noose around your neck.

pat_sconce

This is a bit strange as in other threads the OP has a construction business, had planned to buy an old house, has 3 different trading names and plans to import a car from Northern Ireland and pay 8k vrt.

Hmmmm ...

embraer170

https://www.boards.ie/discussion/comment/120820661#Comment_120820661

Well spotted. Not worth wasting more time on this.

The J Stands for Jay

https://www.boards.ie/discussion/comment/120819093#Comment_120819093

At that rate, I'd be wondering if a credit card would have a lower rate.

The J Stands for Jay

https://www.boards.ie/discussion/comment/120820386#Comment_120820386

Yeah, I'd be wondering if they will be able to afford tyres and servicing.

2022work

https://www.boards.ie/discussion/comment/120820661#Comment_120820661

Nothing strange about it. Was posting for my chick who was sitting beside me. Saves all the time setting up another account for her which basically won't be used. So with that said, best just to stick with answers for what this thread is about instead of turning into inspector cluseo!

It's a simple thread asking about is it high Interest rate and possibly advice about getting a better rate than what's in offer for a car she wants to buy for her and her kids. Is there anything wrong with this? Its not a thread for going into someone's personal life about being able to afford it or not! It's affordable even at these rates. No mortgage, no rent, works part time, doesn't smoke or drink and is getting 10k paid off it as a gift.

But with that said, you got to love the internet. One posts a thread about getting a car for her and her kids and it's turned into something other than that with all this nonsense about not affording it, not being able to service it, new tires etc.. haha. Some people are just amusing when you think about it :)

Widdensushi

https://www.boards.ie/discussion/comment/120821548#Comment_120821548

And some refer to a mother of four children as " my chick",it takes all sorts, shocking that people give their opinions on a public forum.

pat_sconce

https://www.boards.ie/discussion/comment/120821548#Comment_120821548

No "inspector clouseau" about it. I just remembered the other thread and the poster (You) had suddenly gone from being a construction worker to suddenly a single mum who seems to be taken advantage of a car sales person with sharp practices.

Most people would say "my girlfriend" or "Sister" or "brother" and responses would be different. You call her your "chick". That says it all.

coolbeans

https://www.boards.ie/discussion/comment/120821548#Comment_120821548

You can't afford it, you simply can't. If you can't see that there's no talking to you.

2022work

https://www.boards.ie/discussion/comment/120821596#Comment_120821596

Explain how?

LIGHTNING

Right this thread is getting closed. OP you have gotten enough answers from folks. Seems like you want the car, in that case go for it. If you want it reopened you can DM a mod.