Why I Got My Car On Finance

Hello Friends,

Apologies that I haven’t been putting blog posts up regularly, adult life really does take over! There’s always so much to do, then when I have spare time I just binge YouTube or religiously learn Moana song lyrics…you know, priorities guys.

I know my most recent posts are generally about adult/life topics so I hope you guys are still enjoying reading them. I enjoy writing about them the most as I love reading about those kind of topics and always pick up tips and hints to make my life a lil better. It feels like your having a natter with your friend and I like that alot. But if there is anything you want me to chat about, let me know!

Anyways, today I thought I’d share with you why I got my car on finance as it seems I have a very different opinion to most people on the subject! Before I explain the pros/cons of it, I’ll share my car experience with you which is what prompted my decision of car finance and why I’m doing it.

So I turned 17 in Feb 2014, originally with no intention to learn to drive straight away, but come March I’d applied for an Apprenticeship which was 19 miles away, and living 6 miles away from a train station, I quickly decided I needed to learn to drive and pass in case I got the job (which I did, so lucky I did get going!). I started lessons in March, passed first time in July, and started my job in August. All in the nick of time!

As a side note, if you are thinking about learning to drive or worried about it, a few tips I would give would be:

  • Get your theory done early on in the learning process, or even before you start lessons. It’ll help you when driving about with signs and things but it also gives you one less thing to worry about.
  • Get learners insurance for a month-ish so you can practice driving in your own car so it’s not a shock when you go to drive it after passing. (If you have a car that is, if not, I’d recommend asking to use your parent’s car). It isn’t that expensive and it gives more you practice, and therefore more confidence.
  • Finally don’t rush learning, get your confidence, do a couple of hours each lesson, and have lessons in different kind of weathers.

Right, back to my car story. So I was kindly given a car from my Granddad for my birthday, he is friends with a car dealer so got a cheap deal. It was a light blue 05 plate 1.5L Petrol Nissan Micra (the bubble shape). It was a very cute car, and I really enjoyed driving it. The only trouble with it was every time I stalled (Which seemed to be alot, but hey, I was a new driver) or I went to start the car up it would take at LEAST 5 times to start. The electrics must have had a dodgey connection or something but it was really unreliable to start… I put up with it for 3 months, after multiple unsuccessful trips to various garages to get it fixed, until one day, on the Southgates roundabout (King’s Lynn) I stalled as I was mid roundabout-ing (again, I was a new driver okay) and it took me 19, YES NINETEEN turns to start the car. So embarrassing, everyone bibbing me, staring, and my poor car just ticking. The next day I gave the car back to my Granddad and I’m pretty sure he just put it in the auction. So that was car 1.

Onto car two. I temporarily borrowed some money of my Nan and went looking for a cheap second hand car. I eventually found an 05 plate 1.4L diesel black Renault Clio that was a trade in from a BMW Mini Dealer. I loveeeeed it. Compared to my Micra the Clio felt really sporty (lol) and cooler. My insurance was also cheaper, which was a bonus.

Another side note, insurance. I have had a ‘black box’ since I passed and I 100% could not thank myself enough for it. I’m a good driver, but no way near perfect yet the box is still fair and really not as sensitive as people think. I’ve been with 3 insurance companies, Dial Direct, Tesco Young Drivers, and now I’m with Co-op Young Drivers. Co-op Young drivers, for the record, is the best one I’ve had – no mileage restriction, rewarded with cheaper insurance on a 3-monthly review period and super easy to check how you’re doing. And it’s cheap, so duh. 

So car two was going well for 6 months, until there was quick a rattle coming from under my car – naughtily I ignored it for a couple of weeks, but I did finally take it to a garage, hoping it just needing a bit of welding or something… but luck doesn’t come to me, and I then discovered my catalytic converter had broken badly and needed replacing, OH and on top of that, my head gasket had blown. BAM, BAM. Double BAM. All the work that needed doing cost alot more than the car was even worth so,  it was time to look at cars again, and this where I started looking into finance.

By this point I’d had enough of cars going wrong, being unreliable, expensive insurance and borrowing money from family…

I went to Stebbings which is just off the Hardwick roundabout, on Saddlebow Industrial Estate. I didn’t know what car I wanted, what I enjoyed driving, what would be the most fuel efficient etc etc, so I just went to look around, test drive some different makes and models and see what tickled my fancy. One of the few cars I actually test drove was a Fiat 500, I was so excited to drive it as they are SO cute and seemed like an ideal little car…I have to say, (sorry to anyone who does like driving them) but OH MY GOSH I’ve never felt so unsafe in a car in my life. It felt like a little tin can go kart that would be pushed off the road with just a kiss of wind. Terrifying. After a while of looking and researching cars and tax and doing insurance quotes I decided on my current car, a 13 plate 1.2L Petrol White Hyundai i10. It’s so fuel efficient, easy to drive, £20 car tax and cheap to insure. Win, Win and Win.

So onto the reason you’re actually reading this, finance. I weighed up all my options as there are different types of finance, but I went for PCP – Personal Contract Purchase.

Shocking disclaimer – I am not an insurance broker or car expert, I’m just explaining the way I know how, so do research for yourself.. but…

PCP is essentially a loan to help you pay for your car, but you don’t own the car at end, unless you choose to. You pay a deposit, then monthly installments for 4 years and finally at the end you have a few options:

  1. Pay a balloon payment aka Guaranteed Minimum Future Value (GMFV) and own the car. The GMFV is set when you take out the finance and is what the dealer expects the car to be worth at the end of your agreement based on the current value of the car and how many miles you expect to do in it.
  2. Or – Take the car back and the agreement is finished. There is nothing else to pay unless you went over your stated mileage or you’ve battered the car.
  3. Or – Get a new car with a new agreement. If the car you’re giving back is worth more than the GMFV then that margin can be used as a deposit for a new agreement.

Money Saving Expert explain PCP really well so take a look if you want to know the ins and outs: Click here

Personal Pros:

  • I get a new car I would have never been able to pay outright for
  • My insurance is cheap because my car is less than 5 years old
  • Newer cars are much more reliable and are less liekly to have issues
  • I pay small monthly installments by direct debit, so never miss a payment and don’t have to worry about owing family money
  • I only have to commit to the car for 4 years and then give it back without having to sell it
  • I can get a new car every 4 years without the hassle of selling a car
  • It builds good credit history ready for when I want to get a mortgage
  • Because my car is new it still had manufacturers warranty for another 3 years, and so I paid for 1 years worth dealers warranty, all included in my monthly payments, so I’m covered for all 4 years without having to fork out money for repairs etc

Personal Cons:

  • As part of the agreement you have to have the car serviced every year, which isn’t that bad, I pay a very small amount monthly so I don’t notice the cost and it’s all sorted by the time my service is due
  • You can’t modify the car because it isn’t yours – it’s not like I’d ever modify a car anyways, like lowering it or changing parts or anything, that doesn’t interest me at all. But I’m still wary if I stick something to the dash board or stick something on the window for example
  • You have to keep it clean, this is the hardest one for me hah! Inside is what counts mainly, as at the end of the 4 years when you go to give it back they won’t accept it with 4 years worth of McDonalds bags, blonde curly hair twined round everything and tissues in every crevice. Sigh
  • If you were to buy the car you’d obviously have paid more than the car was worth because you pay interest, but it’s not really designed for that

So yeah, that’s all I have to say really. It suits me incredibly well, I love the fact I have a nearly new car and that at the end of 4 years I can upgrade to a newer model and generally not pay anymore. FAb u LOUS.

I hope this was useful to someone at least. Or changed your mind about how your view people with a car on finance!! I understand it might not suit everyone, but alot of people dimiss finance because it is borrowing money and sounds like scary interest. Once you weigh it all up it is actually a very sensible thing to do if you ask me!

Take care x


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