finance problem
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Thread: finance problem

  1. #1
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    finance problem

    This is not a question of the car itself, but how i can get a finance to buy the damn car.
    The owners of 206gti i'm interested in at the moment still have finance on the car or something. Is there any way I can 'take over' that finance and repayments?
    or is there any good way to get finance for buying used cars privately? Banks doesn't seem very keen on car loans for privately sold used cars for personal use. We are not really able to dish out cash for car at the moment because we are considering to move to a better house in the near future.

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  2. #2
    Moderator Alan S's Avatar
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    Back in the days of everything being on HP it wasn't too hard providing the seller was happy to stand guarantor so that effectively, if you defaulted, he picked up the tab; scarey thought if you don't know the buyer. It also could have ramifications to the seller if he decided to go buy another car & it has happened that the T.O.T deal he was involve with prevented him from buying another car due to the total risk involved.
    These days with leases, chattel mortgages, personal loans and so on, it becomes even mirkier if you try to short circuit the system. I'd suggest your best bet may be to go & have a yarn to a credit union. There's quite a few around Brisbane & Ipswich and often they can be associated with certain professions & trades. The Police, nurses, coal miners and some public service departments have their own as well as a swag of others, & in some cases you don't have to be a member of that trade to be eligible for a loan. Loans are approved sometimes on the spot, other times within a day or so but providing you fulfill the criteria, it's a foregone conclusion that you'll be approved.
    Interest rates are better than banks & HP companies too.

    Alan S
    If it ain't broke, use a 12" shifter.....that usually does the trick!!

  3. #3
    Gone Fishin' Ray Bell's Avatar
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    Also talk to Heritage and Wide Bay Capricorn... they're in expansive moods from what I gather.

  4. #4
    nJm
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    Another alternative is to extend your mortgage and use those funds. The interest rates are usually better than any form of personal loan or car finance.
    Nick
    1983 Peugeot 505 GR


    "All of its cars from the 1.1 litre 205 through the ugly duckling 309 to the 2.2 litre 505 GTi had a rightness and a righteousness about them that turned every humdrum drive into a journey. Someone, I once wrote, in the bowels of Peugeot understands handling and how a chassis should feel." - Jeremy Clarkson

  5. #5
    1000+ Posts Rod Hagen's Avatar
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    Not sure that many banks care where the money will be spent (dealer or private sale). I agree with Alan and Nick. A mortgage extension if possible, a credit union if not. If you have any equity in a house etc its unlikely you would be knocked back.

    Automobile clubs often offer finance too. RACQ have loans for vehicle up to 3 years old. Minimum 20% deposit or trade in, around 10% interest per annum. <a href="http://www.racq.com.au" target="_blank">http://www.racq.com.au</a>

    Cheers

    Rod
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  6. #6
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    You'd have to be mad not to go a credit union and re-finance the loan coladuna.

    I have friends paying double my interest rate with dealer finance. My credit union offers 8.6% (unsecured loan) so I'd imagine many other credit unions would offer similar rates.

    Derek

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    nJm:
    Another alternative is to extend your mortgage and use those funds. The interest rates are usually better than any form of personal loan or car finance.
    Are you certain that we can extend our home mortgage and use the fund to buy a car for personal use? Wouldn't the bank think it's too risky lending money for used car purchase at an interest rate that is far lower than normal car loan interest rate?

  8. #8
    nJm
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    Well that's what we're doing with our imminent purchase. I saw it in BRW magazine.
    Nick
    1983 Peugeot 505 GR


    "All of its cars from the 1.1 litre 205 through the ugly duckling 309 to the 2.2 litre 505 GTi had a rightness and a righteousness about them that turned every humdrum drive into a journey. Someone, I once wrote, in the bowels of Peugeot understands handling and how a chassis should feel." - Jeremy Clarkson

  9. #9
    Moderator Alan S's Avatar
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    Ahh, NO; coz if you default, you get to keep the car and..........they (can) choose to keep the house which would be collatoral. deal
    I personally wouldn't risk my "Castle" for a car regardless of what it was....as my wife would say "Tell 'im 'e's dreamin' " mallet mallet

    Which is why I usually choose the credit union personal loan path. The loan taken against the house could also limit the amount you could borrow on a new house & if included in the payments can end up costing a bundle over the period of a house repayment period.
    Last people I knew who did this had to sell their house & buy something cheaper in another area to get clear of debt; bugger that for a joke. cry

    Alan S cheers!
    If it ain't broke, use a 12" shifter.....that usually does the trick!!

  10. #10
    1000+ Posts Rod Hagen's Avatar
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    coladuna:
    nJm:
    Another alternative is to extend your mortgage and use those funds. The interest rates are usually better than any form of personal loan or car finance.
    Are you certain that we can extend our home mortgage and use the fund to buy a car for personal use? Wouldn't the bank think it's too risky lending money for used car purchase at an interest rate that is far lower than normal car loan interest rate?
    Don't know what the situation is in Qld , coladuna, but in the Melbourne papers such deals are being advertised every day. Banks know that you aren't going to jeopardise your mortgage and home for the sake of a few extra dollars a week. Its probably the most "secured" loan for a car they can offer. As Alan says, you need to be very sure that you can meet the loan though. The sercurity is your house, not your car.

    Cheers

    Rod
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  11. #11
    Fellow Frogger!
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    Sorry about the length of this response

    Another alternative is to extend your mortgage and use those funds. The interest rates are usually better than any form of personal loan or car finance.
    Speaking from experience i would recommend the above option .... depending on the level of equity you have in your home. As for your ability to repay that is really up to you however if you can afford to meet your mortgage commitments then whats the issue? .... the addition of $25k over the remaining term of your mortgage will be neglible and its likely your scheduled repayments may only change by a few dollars a week. As the ads say "equity mate" which is a marketing ploy by the banks to get us punters to redraw what we have already paid off so they extend the life of their revenue streams. Problem is, most punters use this as an excuse to "live beyond their means" and get them into trouble. As long as you realise the car is not for "free" and make additional repayments you and your mortgage will be fine.

    This is the best and most cashflow effective way to do it - at an ave of 6.25% mortgage rate you can't beat it. Consider these examples:

    Assumptions
    Car = $25000
    Remaining years on mortgage = 15

    1. draw on home equity at mortage rate of 6.25%

    Additional monthly Repayment required to pay off mortgage in same time = $300.
    Benefit is that you can sell your car at any time and pump the proceeds back into the mortgage - no residual to worry about, and no interest penalty!!

    2. Commercial Hire Purchase loan (westpac equipment leasing)
    Interest rate = 7.5% (could be higher)
    Term = 4 years (48 payments)
    Residual = 40%
    Mthly Repayment = $425
    As is for personal use, you have no tax benefit to this structure. Also if your circumstances change and you want to get out of the car your repayments vs pay-out would not "break-even" until approx. payment no. 30 (2.5 years). In addition early termination will mean you will be penalised for the "present value" of the outstanding interest dollars to finance co. would have earned over the term of the lease.

    Of course, the higher the interest rate the higher the repayment and risk should you decide to terminate early.

    3. Unsecured Personal loan: Interest rates generally range from about 7.2% to 13+% depending on institution (e.g. Community First Credit union 7.2%, Citibank 12.95%).

    Term = 60 months
    Interest rate (midpoint) = 10%
    Monthly Repayment = $531.00
    Usually no penalty for early repayment under these type of loans.

    If it were me (based on my personal circumstances), i would draw on the house buy the car outright and pay the $ difference (as though i had financed the car separately) into the mortgage to increase the revised house payment thus further save on interest.

    Hope this helps
    cheers!
    ashleyt

    --------
    1993 205GTI Sorrento Green
    1990 205GTI Red - Track Car ("431")

    EC:2:02.18, WP:1:16.07, OP 54.27, OPGP 1:28.83, Huntley 32.34

  12. #12
    1000+ Posts brenno's Avatar
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    Are you able to salary sacrifice the car?

    We use Prosperion for two cars in the family and they have great service.

    <a href="http://www.prosperion.com.au" target="_blank">www.prosperion.com.au</a>

    If you ring, speak to Jeff.

  13. #13
    Local Tyrant gibgib's Avatar
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    I can't fathom the fact people obtain a loan for a car.
    Perhaps I'm conservative, but it's bad debt whichever way I see it, depreciating itself away!, especially the French car variety.
    My view is buy what you can pay with cash. Nothing wrong with a 505 for $1500 which is what I'd do if I had to liquidate the 405 for any reason.
    whistle 2_cents

  14. #14
    nJm
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    Ah well, I guess some people want to own a newer car (and the things that come with a newer car - safety features, warranties, etc).
    Nick
    1983 Peugeot 505 GR


    "All of its cars from the 1.1 litre 205 through the ugly duckling 309 to the 2.2 litre 505 GTi had a rightness and a righteousness about them that turned every humdrum drive into a journey. Someone, I once wrote, in the bowels of Peugeot understands handling and how a chassis should feel." - Jeremy Clarkson

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