how does everyone finance a car?

[Feanor]

Hi all,

I was wondering how best to finance a car? We would like to get a 1/2 year old Ford Focus ST which seem to range from £13-15k. We both work full time, earn good wages and have a good amount leftover every months for luxuries. I have a 02 Fod Fiesta, that has only got 15,000 miles on the clock and was own from new by my aunty before me. Ideally we would like to keep that as a second run around because it is in such good condition..

Whats the best thing to do...get a loan for the whole amount but then rish the car depreciating in value and owing more than the car is worth?

Put 2/3k down as a deposit and the rest on the loan? I am so confused!

We would probably only want the car for 2/3 years max, so is leasing the best idea? Does anyone have any experience of leasing?

Thankyou!

[epz]

i pay cash, cant afford it then dont buy it but then i am lucky in that i hate the look of modern cars so almost every car i want will be under 5k

[30111987]

How about wait a year and save up a bit each month so you can pay at least half of it from the start.
Alternately get a car that's cheaper...

[HenryWeston]

£13-15k.

Its madness to spend that much on a car, especially if you have to borrow it:eek:

[Feanor]

Thanks for the replies..

I wouldn't need to save up or borrow it, i have alot of savings so thats fine..but i was just wondering what is the best way to do it as cars seem to lose their value so quickly, so would like to get the best deal.

Thanks again for your very useful judgemental comments :)

[pinkfluffybabe]

Martin's attitude is that if you can afford something and you get a good deal for it then that is fine, so no need to slate someone for wanting a £13k car.

When I bought my latest car at the start of this year, I had half of the money saved plus my old car as deposit. I opened an M&S 3.9% balance transfer credit card, balanced transferred the money I needed onto my Egg card and from there into my current account. I then switched the card with chip and pin.

So rather than a car loan at say 5% +, I have one for 3.9% until it is paid off (and I can pay extra without penalty). If you can afford to buy it outright, then think about how much interest you would pay if you took it out on credit versus how much interest you would get on that same money sitting in your bank account.

I don't know anything about leasing but if you are planning to trade in a couple of years, then you will still have value left in the car when you come to trade it which can be taken forward to the next car.

I usually look at Parkers.co.uk for car prices to get an idea of what the three year value is which will tell you how much is is likely to depreciate in that time.

Best advice I can give is to look at all the options, use Martin's articles and make the best decision you can based on all the information you have gathered.

[30111987]

Well if you can pay for it up front then that;s probably the best way to pay for it - unless of course you can get a 0% finance deal.

[thescouselander]

I've just bought a car for £12k - here's how I've done it.

Old car trade-in value - £3500
Saved a further £2000

Then put the rest on an un-secured personal loan at the cheapest rate I could find. I plan to change the car again in 3-4 years so I've arranged the re-payments to finish around then.

I looked into leasing but, unless you can get the VAT knocked off (ie you own a business) then it seems like an expensive option.

[Conor]

Ford Finance is currently around 3% but I'm not sure if it only applies to new cars.

[ADEY]

I'd wait till the car was at least 4 years old then it would have lost its initial chunk of depreciation if you are bothered about the date on the plate get a cheap age hiding reg number

[goldspanners]

look after the st,as its top of the range it will always hold better value than the 1.6 or the 1.8 as it is more desirable.so when you go to sell it in mint condition you will get more back for it than the guy who has thrashed his.

every car will loose money nobody buys cars as an investment.
if you can afford to pay for it up front then do so,it saves you paying interest on your loan or finance.
dont listen to all the others above me,the focus st is a beautiful car,it handles and drive amazingly,ok it cost more to run,but if you enjoy it and can afford it then go for it.
(a jelous goldspanners)

[roswell]

If you have only done 15 000 miles in 5 years why do you need a focus ST ?

Are you willing to pay more than £1 for every mile you will drive it ? The fuel costs wont be much if your only using it for short trips but the value of the car will sink like a stone like all cars under 3 years old. What about insurance costs / service costs / mot etc That is a lot of money for something you dont use much,

[thescouselander]

I think the OP might do more than 15,000 miles in 5 years - the fiesta was originally owned by their aunt.

[tali]

i pay cash, cant afford it then dont buy it but then i am lucky in that i hate the look of modern cars so almost every car i want will be under 5k
wise words!

[bclark]

Don't listen to some of these doom mongers. If you can afford it then buy it. There is a balance that needs to be struck between financial prudence and enjoying your life. If, as you state, you can afford it then buy the Car. I would say that a cheap personal loan may be the way to go as dealer finance for second hand cars is normally pretty uncompetitive.

[economiser]

One of the worst investments you can make is a car, but life would be difficult without one for many of us. Best bet is to buy new or nearly new and keep as long as possible. After four or five years depreciation is negligible. Modern cars seem to go on and on. Of course if you want to make a statement with the latest model well and good - but you pay dearly for it. You can't be a serious money saver!

[Garnet_Gem]

If you can afford it, then buy it. It will depreciate, but if you enjoy having it and plan to keep it for a while, why worry? Most material things depreciate but cars get all the negative press.

[vaio]

……. Best bet is to buy new or nearly new and keep as long as possible. After four or five years depreciation is negligible. Modern cars seem to go on and on…………

Surely the best be is to buy one that’s four or five year old so someone else has paid for the vertical part of the depreciation curve.

My current car cost £41k when new, I got it when it was five years old for £7.5k. Basically the previous owners paid £7k per year to own it, I’ll pay the same to own it for as long as I like.

If you really want or need a new or almost new car then enjoy but have a think about going older.

[manda1205]

I do agree with epz in that if you aint got the money you dont get it. And if you want a focus st then I say go for it, but maybe get one a couple of years old (not sure when they replaced rs) but they hold they're value so would not lose out so much on that side. And as for the comment on why get one, they cost so much etc? Have you driven one? They're fun, (lifes far too short to be boring) Ive just been on a rally drive and had a go with scooby, evo and focus rs, must say that I now want an evo, they were brilliant to drive and the focus was pretty good too, still better than the scooby. So anyway Id say to OP go get one but just maybe a bit older and try to pay in full!

[jenner]

I dont know what car this is, (bit thick about cars), but I would say that you're doing the right thing with regards to age. Cars lose about half their value in the first year/2 years, therefore, if you buy a 2 year old car, you get the best of both worlds, a nearly newish car but one that wont depreciate as much as if you bought it new. If your savings are earning something like 6-8% (some accounts pay this) then you could leave your savings where they are and get the car on some of the products mentioned in this thread like the m&s card etc, so that although you're paying interest, you're making it back up again with the savings you have in your account. Alternatlively if you're not bothered about the interest side of things and would rather pay it out altogether, then buy it in cash.

[FannyHill]

If you want it and you can afford it then go for it.

You only live once ( as far as we know ).

[ArsenalFC]

Thats is alot of money to spend these days, but if you can afford it and want it then why not. However I am with the majority here, get a nearly new car between 1-3 yrs old so you're not paying as much.

If you really want to spend that sort of money then why not go for a lexus, bmw and mercedes? These are much better than the ford. I recently just paid £5000 for a bmw 323ci coupe 1999, original price when new was £26k. Between £5k - £8k will get you a very good car these days.

[mrcow]

Our second car cost £12000.

We traded in my old car for £2200 and then bought the balance (10k odd) on a 0% credit card.

When the 0% deal expired, we split the balance......£5000ish on another 0% deal and £5000ish onto a M&S 4.9% for life of balance credit card.

The advantage of doing this over a loan is that we're only paying £20 interest on the total balance per month (although we did have to pay 2% on the £5k 0% balnace transfer) and so are paying off the balance a lot more quickly. The repayments are also completely flexible with no penalties for paying it off early as with some loans.

Our other car is coming to end of lease (after four years) and is about £18000. There's no way I'd be getting another loan out so it's a choice of either a lease or a company car option.

[save-a-lot]

Hi

First off, don't pay over the odds for it - you can get a Fiesta ST for a little over £10.5K brand new - see bottom of this page
http://www.4wheels4u.co.uk/resultspage.php?manufacturer=Ford&model=Fiesta

there is a bit saved already. I've done the 0% credit card thing in the past and that worked fine with me as I do not like settling into a regular payment routine - I rather like to pay for things as quickly as possible. Generally however I pay outright when I want to change my car which isn't that often.

BTW, my mate has an ST and it is a great car, well put together

[save-a-lot]

Just re-read the posts then noticed it said FOCUS... then I thought, quick best edit my post before someone replies... doh... there was a reply.

Yup, a Focus is more expensive