Just finished reading about the failure of many 2nd hand purchasers to secure finance for cars in the £1000-6000 price range. conclusion of article says as long as the asset is worth more than the loan then it's worth making the loan, but most cars on sale at say £4000 stand the dealer in at about half that, and what a car is worth trade or at auction is often a lot less than the sum owed after deposit paid and interest charges added.

i am a home owner with a small mortgage and no other debts, good deposit available in relation to the car i wanted to buy, and was being quoted outrageous apr rates for a loan via dealers, I suppose they want their comission on that too.

A friend in a major finance company can get me 1% off their headline rate, but as it happens, sold my car privately, got £400 more than the used car dealer was offering, (my neighbour wanted the car for his son) and then used my savings and went to a main dealer and negotiated a good deal for cash.

if the banks are now making it hard to get finance because the asset will not cover the potential losses if the loan is still more than the value of the car then the car is obviously overpriced. When i was still working in the motor trade i advised a colleague NOT to proceed with a deal that would have seen a customer owing far more than the value of the car (retail!) due to the finance co accepting the loan.

Edited by Avant on 21/04/2011 at 23:47