18 Year old's first financed car - Finance tips?

433danger · 20-01-2008, 03:28 AM

Hey guys,

I've currently got a heap of junk Ex-Taxi ED Falcon

I'm looking at getting an ED XR6, I found a beautiful one, '94 Black XR6 in perfect condition with 170,000 Ks, 5 Speed, Lowered, CD Player, GT rims etc... for about $7,000.

I was wondering, is this a good price for the described car.
More importantly, what is the best way to go to buy it? (Finance/loan, not saving.)

I work 25 hrs a week, have a good bank record, and make about $525 a week.

I reckon my current falcon would sell round the 1200 - 1500 mark (new engine and LPG, but the body is not too crash hot)

Thanks in advance,

Tom

**Polyal** · 20-01-2008, 07:43 AM

hmmm..its a tough one as I wouldn't use finance on a car which is close enough to your first I assume?

If you can sit down, work out the repayments, insurance, rego, servicing etc costs and have enough money left to actually have a life then I would do it. If not, suck it up and continue to drive your current car until you have saved enough. By which time you will probably want something else anyway..LOL

Yellow_Festiva · 20-01-2008, 07:49 AM

Quote:

Originally Posted by 433danger

Hey guys,

I've currently got a heap of junk Ex-Taxi ED Falcon

I'm looking at getting an ED XR6, I found a beautiful one, '94 Black XR6 in perfect condition with 170,000 Ks, 5 Speed, Lowered, CD Player, GT rims etc... for about $7,000.

I was wondering, is this a good price for the described car.
More importantly, what is the best way to go to buy it? (Finance/loan, not saving.)

I work 25 hrs a week, have a good bank record, and make about $525 a week.

I reckon my current falcon would sell round the 1200 - 1500 mark (new engine and LPG, but the body is not too crash hot)

Thanks in advance,

Tom

Mate, your going to hate me saying this....

But for God's sake, save up the cash and BUY a car for 7 grand!

Do you still live at home? Is your 525 in the pocket?? Put away 300 a week and in no time you will have decent cash for a better car than ex-taxi.

If you start this sorta stuff now, in 1 year this is your next post:

"I have an ED XR6, worth about 3 grand, but owes the bank 6 grand, but I have found a beaut BA Xr6 turbo for 14 grand. Whats the best way to finance it, I make 600 a week"....

And on and on and on.

I had a Datto 180B at 18, it was a hand me down from mum. My parents wanted me to save to buy a decent car. If I went to my dad saying I found a better car for 7 grand (that i needed to borrow money for) and wanted to sell the datto he prob would have knocked me flat....

Be happy with what you have if you can't afford the next car..

Sorry, it's not what you want to hear but perhaps if you hear this now you wont get into this cycle of credit on credit in the future...

433danger · 20-01-2008, 08:42 AM

LOL

Ok, Thanks guys, I SUSPECTED this would be the answer, I was just wondering if there was any other option, in the past few months I haven't seen a car quite like this. But, you never know, in 4-5 months I might find one better/cheaper, and I'll have cash-in-hand that way.

See you on the other side :P

Thanks again,

Tom

b2tf · 20-01-2008, 09:01 AM

can i be the first one to say "if you want it, get it" ?

Obviously that's in moderation, but hell, if you want the car, why not at least see what you can do in terms of finance. I took out a loan to buy my ute and I dont regret it one bit, I still have it and have no plans to upgrade to a newer car.

AlbertM · 20-01-2008, 09:12 AM

From someone that took out finance at 18, I regret it. Save up, avoid paying intrest and deprication. There are always nice cars around, never think this is your only choice.

MrEL · 20-01-2008, 09:24 AM

Look at a personal loan , but pay it off fast. Get one that is variable rate so you can make extra repayments and instead of saving $250 a week to buy a car make a $250 a week payment. When you sell the ex cab instead of spending the cash on mods put it straight on to the loan.
This will get you into what you want now and will help build you a good credit rating for further on in life. Also make sure you pay the extra for loan insurance in case you get sick , loose your job ect so it gets paid.
There is nothing wrong with getting a small loan. Managed correctly it will do you more good then harm in life if you look at the big picture , but the key is managing it correctly.
I reckon insurance will be the killer on an ED XR6 for a 18 year old. Me and my partner just looked at a AU XR8. Im 32 she is 28 , 65% no claim , her driving record is perfect , mine is well yeah ok , not perfect , but nothing really bad and it was going to cost us $2000 a year for full comp!

InfernoSR · 20-01-2008, 09:27 AM

$7,000 will get you something newer and better than an ED XR6... go an EL Fairmont for that money instead and you'll get a better car with more torque.

Nathan&Amanda · 20-01-2008, 09:55 AM

here is some figures for you

on a loan for 7000 over 5 years at 10.5% works out $35 a week and makes a total of 9000 for the car

now same numbers but 3 years means payments of 53 a week with a total paid of 8200

2 years is 75 a week with a total of 7800

which is good weekly payments of nothing.

yes once you pay of the car has dropped in value but even if you buy cash it going to drop.

I would recomend to get a small loan.
as it is a setup for life with your credit rating, For when you want a house loan or a car loan or anything, the bank will go look and go yes he paid weekly made everyone yeah we see you can stick to a plan.

also always set up to pay weekly as monthly will cost you more in interest.

You are best go see the bank they dont charge to talk to about a loan they will give you rough figures. but have money saved up for deposi on car, and another 500 ish area for bank fees, to setup the loan if yo get one

I got a loan for my Turbo at 20 for 24,500 on apprentice wages whish is a little less then you are on now.

Nathan

robjh80 · 20-01-2008, 10:35 AM

I'm with Nathan on this one.

I think it is not the loan here that is the important factor as it is such a small and insignificant amount anyway, but instead the investment you are taking in acquiring a positive "credit rating" with a reputable lending institution such as your bank.

Paying outright for a car does not give you any sort of "credit rating" with anyone, your bank isn't interested that you paid cash for your 7k car, it wont stand you in any sort of "good terms" with them, you will still be at home base as far as they are concerned with no proof of your ability to steadily pay any sort of debt.

For any young person I would recommend doing exactly what you are thinking of, take out a small loan in your early working years and stick with it and pay it off over the term of the loan, the 2k odd interest you will pay will pale into complete insignificance compared to what that positive credit rating will do for you in a few years time when you want a mortgage for example.

Stick with your bank of choice for life if you can and deal with your local branch where possible, build up a long standing "positive" relationship with your bank and they should look after you for life.
You hear of all the horror stories and bleeding hearts of people getting "done over" by their bank, this is usually because they "DONT PAY!!"

Whatever you do and this is the "most important part" ......PAY THE LOAN!!
Do not ever get into arrears or you will go onto a "bad credit list" and will be done over for at least 7 years if not for life!!......MAKE SURE YOU PAY, DO NOT EVER TRY AND MESS WITH THE BANKS!!

Get the loan amount taken out of your account automatically every week or fortnight on a set day and you wont even miss it, ie: if you get paid on a Wednesday then get the loan taken out on a Thursday for example.

Here are a couple of screen shots of the repayments of 7k over 5 years at todays unsecured rate of 13.5%

As you can see the repayments are only $40 a week and should be easily repayable by someone on your money, the difference of paying such a small amount weekly or fortnightly in regards to interest savings in insignificant.

My advice is get your loan, buy the car you want, enjoy it and the rest of your young years but most of all........"pay the loan each and every day it's due, do not miss a repayment!!"

Rob.

boss-290 · 20-01-2008, 10:55 AM

A lot of parenting going on on AFF of late.

Kryton · 20-01-2008, 10:57 AM

Quote:

Originally Posted by Nathan&Amanda

the bank will go look and go yes he paid weekly made everyone yeah we see you can stick to a plan.

well i have my credit report sitting here in front of me.
nowhere does it mention how often i have paid of various loans, it does mention a loan date and a paid off date but it doesnt say if it was weekly or monthly payments that were made.

also, for 7k, by an AU or something. Insurance will be cheaper and it isnt like its lacking in power.
7k for an ED XR6 is a tad steep in my books.

paul_r_d · 20-01-2008, 10:58 AM

All I have to say is if your going to do it, go with a reputable bank. I went through the Westpac and they were fantastic. They had the lowest rate I could find at the time, and they were very helpful. Those ****y little finance companies are traps galore.

For 7k you should also look at a low rate credit card. Most are around the personal loan rate- 9 to 13%. Look out for promotions that have 6 or 12 month interest free periods too, you can save a heap on interest. If you use the card to strictly buy your car, and then cut the the thing up, you will be fine.

Nathan&Amanda · 20-01-2008, 11:26 AM

the payment weekly shows up on bank account statements which they can pull back up and look at if needed to.

Kryton · 20-01-2008, 11:28 AM

Quote:

Originally Posted by Nathan&Amanda

the payment weekly shows up on bank account statements which they can pull back up and look at if needed to.

good point.

paul_r_d · 20-01-2008, 11:30 AM

Quote:

Originally Posted by Nathan&Amanda

the payment weekly shows up on bank account statements which they can pull back up and look at if needed to.

If you got through a bank, you get online banking... can also print them off.

XR6_661 · 20-01-2008, 11:33 AM

My tip - If you can afford to, always pay more p/month then what your repayments are.

i.e. My car is $500 p/m buy I pay $700p/m ($350 fortnightly)

That way if you are strap for cash, you can call the bank and tell them you are going to miss a payment.

Also, if you can, salary sacrifice your car. That way, the car payment is taken out of your pay before tax is taken out, in turn making your taxable income less, which means you pay less tax!

irish2 · 20-01-2008, 11:45 AM

I kept my dunger car and saved cash until at the ripe old age of 20 I purchased a mint condition 65 stang. I bought it with cash and it is still increasing in value (had it almost 3 years now). My mates got loans for all sorts of /modified older commodores/falcons that they are still paying off and they are now worth nothing.

sleekism · 20-01-2008, 01:15 PM

Quote:

Originally Posted by robjh80

I'm with Nathan on this one.

I think it is not the loan here that is the important factor as it is such a small and insignificant amount anyway, but instead the investment you are taking in acquiring a positive "credit rating" with a reputable lending institution such as your bank.

Paying outright for a car does not give you any sort of "credit rating" with anyone, your bank isn't interested that you paid cash for your 7k car, it wont stand you in any sort of "good terms" with them, you will still be at home base as far as they are concerned with no proof of your ability to steadily pay any sort of debt.

For any young person I would recommend doing exactly what you are thinking of, take out a small loan in your early working years and stick with it and pay it off over the term of the loan, the 2k odd interest you will pay will pale into complete insignificance compared to what that positive credit rating will do for you in a few years time when you want a mortgage for example.

Stick with your bank of choice for life if you can and deal with your local branch where possible, build up a long standing "positive" relationship with your bank and they should look after you for life.
You hear of all the horror stories and bleeding hearts of people getting "done over" by their bank, this is usually because they "DONT PAY!!"

Whatever you do and this is the "most important part" ......PAY THE LOAN!!
Do not ever get into arrears or you will go onto a "bad credit list" and will be done over for at least 7 years if not for life!!......MAKE SURE YOU PAY, DO NOT EVER TRY AND MESS WITH THE BANKS!!

Get the loan amount taken out of your account automatically every week or fortnight on a set day and you wont even miss it, ie: if you get paid on a Wednesday then get the loan taken out on a Thursday for example.

Here are a couple of screen shots of the repayments of 7k over 5 years at todays unsecured rate of 13.5%

As you can see the repayments are only $40 a week and should be easily repayable by someone on your money, the difference of paying such a small amount weekly or fortnightly in regards to interest savings in insignificant.

My advice is get your loan, buy the car you want, enjoy it and the rest of your young years but most of all........"pay the loan each and every day it's due, do not miss a repayment!!"

Rob.

I completely agree. I have a personal loan for my AU and have made extra payments on it. When calculating the borrowing amount I went by the rule that if I lost my job and was on the dole would I be able to service the loan?

In regard to the XR6 I would recommend going for a Fairmont Ghia. I was in the same situation where I had turned 18 and wanted an XR6 but not only was the XR6 a few grand more expensive and insurance will kill you. I pay $700 a year for full comprehensive insurance.

Anyway don't listen to people saying to save up for a car and keep driving the bomb. That bomb could end up killing you and then what use is money in the bank??

robjh80 · 20-01-2008, 03:11 PM

Quote:

Originally Posted by irish2

I kept my dunger car and saved cash until at the ripe old age of 20 I purchased a mint condition 65 stang. I bought it with cash and it is still increasing in value (had it almost 3 years now). My mates got loans for all sorts of /modified older commodores/falcons that they are still paying off and they are now worth nothing.

But your missing the point completely, there is a bigger picture here than simply a loan for a car......forget the car, take it right out of the equation, by taking on the loan any young person is purchasing something much more valuable than a car.......the proof that he/she can successfully service a debt and show resiliance and restraint in money management by doing so.....ie: build a credit rating.

If your mates with their modified Falc/Commi's want to go and get a mortgage after servicing their car loans for the past few years they would quite possibly have a far better chance of getting it due to having a credible and positive credit rating, the fact that the cars are now not worth anything is completely irrelevant, they have served their purpose.

You on the other hand walk into the bank with no history of servicing a debt and as such have no credit rating you would have little to no chance, the bank is not interested that you paid cash for your "stang" some years ago, it's completely irrellevant to them, they are not interested that your car is increasing in value, in wont matter "diddly squat" to them.

sprjenkins · 20-01-2008, 09:28 PM

7k is way to much for an ED XR6, I know of people who have bought AU XR6's for $7500.

RSgerry · 20-01-2008, 10:47 PM

besides the advice that has been offered above, i can only add this...

GET A REVS CHECK

seriously, the $20 or so it costs can save you so much heartache in the future.

**ebxr8240** · 20-01-2008, 11:03 PM

Whatever you do PAY it off before modding it...
Don't go from car to car on finance or you'll end up in trouble...
I had no previous loans when I went for home loan..
The main thing they look for is security, income and any other depts, defaults etc...

Yowie · 20-01-2008, 11:40 PM

I would like to know the worth (ifI may) of a 1973 Ford Escort 2dr sedan, 1.3ltr 4speed engine, this is the original car owned by a old lady (my Mum) to drive 15 minutes return trips on a monday (bowling) and a thursday (shopping) weekly. Original 90000miles (yes miles) it was bought as a demo of the showroom floor back in 1973, it has factory fitted driving lights fitted in the front grill, body is red w/white roof. The car is mechanically sound and the body is above good but not excellent. The paint is faded not shiny, but with a good buff will come up shiny for awhile. The only major parts replaced have been Starter/Alt/1 Clutch/Brake Master/Brakes/Tyres/Battery x 5 (cause she doesn't drive it enough)
My mother is moving into a retirement village (90yrs young, but garaging costs r 2 expensive) I have looked after the vehicle in respect to servicing & maintenance, everything still works inc an aftermarket radio/cassette, (cause they didn't come with) I love the little thing, still drives exceptionally well but I already have 2 many vehicles myself, I would like an opinion of what someone may think it is worth, any reasonable opinions would be gratefully recieved. Thank You.

Yowie · 20-01-2008, 11:48 PM

I apologise if this is not in the correct forum or area to ask about the Ford Escort, but i looked around and this was the only way I could post a query.

I know the car is over 30yrs old which I believe makes it a classic, I have had thoughts of ..?? MAYBE ???... a Ford enthusiasts club, may be interested, or I have been thinking about possible sponsorship and fundraising to drive it in the ?? Bush to Beach ?? rallies. (The rallies that raise funds for charities, I forget what they're called...sorry)

Any ideas, suggestions, or interest would be appreciated, ThanX

irish2 · 23-01-2008, 07:37 PM

Quote:

Originally Posted by robjh80

But your missing the point completely, there is a bigger picture here than simply a loan for a car......forget the car, take it right out of the equation, by taking on the loan any young person is purchasing something much more valuable than a car.......the proof that he/she can successfully service a debt and show resiliance and restraint in money management by doing so.....ie: build a credit rating.

If your mates with their modified Falc/Commi's want to go and get a mortgage after servicing their car loans for the past few years they would quite possibly have a far better chance of getting it due to having a credible and positive credit rating, the fact that the cars are now not worth anything is completely irrelevant, they have served their purpose.

You on the other hand walk into the bank with no history of servicing a debt and as such have no credit rating you would have little to no chance, the bank is not interested that you paid cash for your "stang" some years ago, it's completely irrellevant to them, they are not interested that your car is increasing in value, in wont matter "diddly squat" to them.

Ahh but with my learning to save and working hard I now have a very large deposit for a house only 3 years after buying said stang. I'm sure after the bank sees my income and the lump of cash I already have they will give me a loan because if I default they still own the house and get the massive deposit too. I was trying to say there are greater lessons learnt in life by being patient and saving for little goals rather than just living in constant debt.

433danger · 23-01-2008, 11:20 PM

Wow, thanks for the replies everybody, I'm actually surprised at all the responses of "yes" to this question.

I'm actually considering this now, I never saw it as a way to get a good credit rating. My brother has a horrible credit rating, and I know how that can disadvantage a person.

What I'd like to do first is work out whats happening with work at the moment (as I just got accepted into a Diploma of Paramedical Science) I'd like to see if I can juggle my shifts, if not, I'll probably change jobs, get my shifts where I want them, make sure I can afford to get the loan and still live comfortably, discuss the loan with my parents and bank manager, and if all goes well, maybe get the loan, and make sure the payments are taken out before, or JUST after the money goes into my account.

Thanks again for the replies, after ALOT of discussions with whoever I can think of... I'll consider it :P

Cheers,

Tom

P.S. I Probably won't get THAT specific XR6, but I might get a different XR6, or and EL fairmont, or something else, I'll take a look around.

**Polyal** · 24-01-2008, 08:12 AM

Look around indeed, 4-5k for a ed xr6 maybe. I sold my EL Ghia a few months back for $6200 and it was in pretty good condition (ie. nothing wrong with it)

xbgs351 · 24-01-2008, 10:09 AM

Quote:

Originally Posted by robjh80

But your missing the point completely, there is a bigger picture here than simply a loan for a car......forget the car, take it right out of the equation, by taking on the loan any young person is purchasing something much more valuable than a car.......the proof that he/she can successfully service a debt and show resiliance and restraint in money management by doing so.....ie: build a credit rating.

If your mates with their modified Falc/Commi's want to go and get a mortgage after servicing their car loans for the past few years they would quite possibly have a far better chance of getting it due to having a credible and positive credit rating, the fact that the cars are now not worth anything is completely irrelevant, they have served their purpose.

You on the other hand walk into the bank with no history of servicing a debt and as such have no credit rating you would have little to no chance, the bank is not interested that you paid cash for your "stang" some years ago, it's completely irrellevant to them, they are not interested that your car is increasing in value, in wont matter "diddly squat" to them.

That is crap. I had never had a loan in my life and only ever had a credit card with a $1000 limit. When it came time to take out a home loan, based on my income, savings record and accumulated assets, the banks were prepared to lend me heaps more money than I was comfortable with borrowing. My accumulated assets included cars that I had paid cash for and which had also accumulated in value.

I should also point out that my father was the one who advised me to never take out a personel loan and to always pay cash for things such as cars. Did I mention that my father was a bank manager?

xbgs351 · 24-01-2008, 10:23 AM

Quote:

Originally Posted by 433danger

I'm actually considering this now, I never saw it as a way to get a good credit rating. My brother has a horrible credit rating, and I know how that can disadvantage a person.

Have you thought that it is also a chance to get a horrible credit rating just like your brothers?