Son wants to get a car on credit? Advice

[NotWantingToOffend]

My 18 y/o son wants to get a car on credit and I'm not sure what to suggest. We've previously brought cars on credit and had no problems with payments but I have explained to him that he needs to make sure he can make the payments back. I've sent him to this article to help him get an idea of what he can afford. But I would like some opinions on whether this is a good investment.

Never borrow money to buy a depreciating asset (unless you need it to generate income, like a laptop to do paid work on .

Baaaad idea.

@1555CC has the right response.

Unless it is a classic, a car is never an investment.
I would never borrow money for a car or take out finance, this is a personal opinion and isn’t right for everyone, obviously.

What's the alternative option for him? Does he have a car? Does he need one? Can he afford one without credit?

It's all well and good saying don't do it but a lot of people wouldn't be able to afford a car without credit. As long as it's affordable then I see no problem. It is very easy to keep going that bit higher in order to get a better car but he needs to stick to a reasonable figure. A bank loan maybe a better option.

At 18, some young people would be planning to go to university, but presumably he is working full time and intends to continue that way? Does he need the car for work?
The Money saving expert website has good advice on car finance.

Have you had an insurance quote for him? It will be about £4,500 or similar apparently! That may help you decide.

But I would like some opinions on whether this is a good investment

No, it is not a "good investment" to get a car on credit. Ever.

Is he 18 and needing a car because it will transport him to work full time, or 18 in college and wants a car to run him and his mates around whilst he studies at college/university?
That would affect my response.

If it's a small amount of finance to get a car from a reputable garage and he's a sensible lad who will use the car for years and he has a reliable income to cover the payments, then that's different to taking out a large credit agreement for a car that he'll get bored of, want a new one, and he doesn't have the reliable funds to cover it.

I took out a bank loan to buy my first car, I needed it to get to work.
I repaid the loan in two years.
Unless you are bought a car I'm not sure how young people are meant to afford one without borrowing money?

Did you get an insurance quote for him yet? How much was it?

Would he even be able to get credit? Presumably at 18 he doesn’t have any kind of credit history.

If he needs it for work and goes for nearly new from an approved dealer (so missing the worst years of depreciation) and the payments are well within affordability, it might be a reasonable idea. Would he see the sense in second hand?

One or two forms of (appropriate) credit, well managed, are a good idea to start from 18 as credit building for a mortgage later.

No, it is not a "good investment" to get a car on credit. Ever.

It can be, if the car is going to earn you money. Like a taxi driver buying a car to go cabbing in, or you need it to get to & from work when there is no other alternative, and you'll lose your job otherwise. Or if it's a classic and you think it will appreciate in value. Or it has a fault that you know how to fix, and you can sell it on at a big profit.

But for 99% of purchasers, borrowing money to buy a car is bonkers.

At 18 I would get a £3-500 Micra and potter around in that whilst saving, Cars depreciate like a stone.

Cars depreciate like a stone.

Don't you mean their value drops like a stone? A stone doesn't depreciate, because it's free to start with.

What about a Diamond??[grin}

I still think the price of the insurance will be the deciding factor as to whether to buy a car or not.

If the insurance is an additional £4K or something it may rule out a car purchase as it’s used all his credit.

What about a Diamond??

Although they are referred to as stones, technically they aren't, they are made of carbon. Like coal, and no one would call coal a stone. And even if a diamond is a stone, they don't depreciate that rapidly, if at all, so the analogy still doesn't work!

Before the lockdown, DH and I used public transport, but as things are at the moment, we want to lease a car, for the time when we will be allowed to go on trips. The trouble is, we are both in the vulnerable category and unwilling to get on a bus or in a taxi to visit a garage. Has anyone managed to lease a car, having the paperwork sent by post?

@karenenya i leased my car entirely online. No issues whatsoever.

Insurance unlikely to be £4500. My 17 year old is £1400 on his own car. If needs a car and can't afford then credit makes sense. Are you in a position to buy the car and he pays you back interest free. He should be looking at a group 1 car to save on insurance. We bought DS a skoda citigo, excellent car and good value for money. I would be extremely reluctant to buy a £500 car as suggested above, too risky. I would be looking at about £2.5k on a group 1 car. We got a 14 reg skoda as mentioned above for just over £3k and mileage was low.

Interest free credit card could be an option now 5that dealers aren't allowed to charge fees