Loan vs. Credit Car for Car

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becky701
becky701 Posts: 28 Forumite
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Hi
I need approx £7K for a second hand car

Is it best to get a no interest credit car or a loan?
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  • Ebe_Scrooge
    Ebe_Scrooge Posts: 7,320 Forumite
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    It's best to save up first :D


    However, if you are set on borrowing money, here's the things to bear in mind.


    First, a loan is simple, and if you have a reasonable credit history will be not extortionatly expensive.


    A 0% card on the face of it sounds attractive. However, to get a 7K limit on first application is unlikely. Also, be aware that most car dealers will pass on the fees ( typically about 2 or 3 % ) to you. So you need to work out whether that will outweigh the cost of interest you'd be saving.


    Finally, remember that when the 0% period expires, you'll revert to their standard APR. You could try shifting the balance to another 0% card - but there's no guarantee you'll be accepted, and you'll usually have to pay a balance transfer fee. For this reason, you need to make certain that you save up the money to be able to clear the balance once the promotional rate expires.
  • becky701
    becky701 Posts: 28 Forumite
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    Hi
    Thank you for your advice :)

    I'd love to save up, but unfortunately that could take years.

    After your advice I'm thinking a loan is the best way to go

    Thanks!
  • Daveahare99
    Daveahare99 Posts: 50 Forumite
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    If you have 7k to spend on a car and feel confident enough to go to an auction do it.

    I went with my sister to British car auctions in Liverpool. Where dealers will source a lot of their stock. You can save loads. Good to have someone there with you who knows cars/engines.

    The auction we went to wasn't that competitive as there is just so much surplus stock for boht diesel and petrol cars at the moment. Only 2 other people bidding on our lot.

    A 57 plate mini cooper 79k miles @ £1400. Sells on auto trader for a least 2k +.

    Hope it helps.
  • Ebe_Scrooge
    Ebe_Scrooge Posts: 7,320 Forumite
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    Daveahare99 wrote: »
    If you have 7k to spend on a car and feel confident enough to go to an auction do it
    .


    To be honest, auctions can be a bit of a nightmare for the public. There's no denying you can pick up some bargains, but you have to really know what you're looking for. Plus, be aware that the various fees can quickly mount up, meaning a car may not be quite the bargain it first appears.


    I'm not disagreeing with you - just pointing out that auctions come with a very large Caveat Emptor :-)
  • becky701
    becky701 Posts: 28 Forumite
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    great thanks for your help!
  • System
    System Posts: 178,096 Community Admin
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    becky701 wrote: »
    I'd love to save up, but unfortunately that could take years.

    There's a lesson in there somewhere if you've bought stuff on credit in the past.
  • freeisgood
    freeisgood Posts: 549 Forumite
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    But just think....paying the loan off "could take years" also.
  • worried_jim
    worried_jim Posts: 11,631 Forumite
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    freeisgood wrote: »
    But just think....paying the loan off "could take years" also.

    But you'll be driving a car as you do and not sitting on the bus.
  • cjmillsnun
    cjmillsnun Posts: 615 Forumite
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    freeisgood wrote: »
    But just think....paying the loan off "could take years" also.
    worried_jim wrote: »
    But you'll be driving a car as you do and not sitting on the bus.
    You may well be, but by the time you've paid off the loan... It's time to change the car... Never ending debt.
    2.88 kWp System, SE Facing, 30 Degree Pitch, 12 x 240W Conergy Panels, Samil Solar River Inverter, Havant, Hampshire. Installed July 2012, acquired by me on purchase of house in August 2017
  • jimbo747
    jimbo747 Posts: 630 Forumite
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    worried_jim wrote: »
    But you'll be driving a car as you do and not sitting on the bus.
    Assuming the engine doesn't blow up 18 months in to a 4 year loan.
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