Car Buying Dilemma!

hobjahooda

Hi all,

I'm hoping that one or more of you will be able to share with me the benefit of your financial wisdom...

I'm in the RAF and currently living in Germany, however my family and I are about to repatriate to the UK.

I ordered a new car last week at a cost of £11,000.

Right, here's my dilemma:

I can (just) afford to pay for the car out of my savings (it'll leave me with about £1000). However, we have two children and my wife may not find a job as soon as we get home, coupled with the fact that we'd like to buy a house during the next 12 months or so (depending on the market) So, should I buy it outright and endeavour to start the saving process over again, or should I consider car finance or a bank loan?

Ideally, I'd like to have some 'emergency funds', just in case... So, if, for argument's sake, I put down £7000 and took the remaining £4000 from Ford Credit, I'd be paying back around £186 pm over 2 years (slightly less if I took a loan from Barclays, providing they agree to the same amount over the same period).

I don't have any debts whatsoever, nor do I have a credit card; in fact, the last time I had a loan was around 9 years ago with Barclays (I've been with them for around 18 years), which I paid back without any problems.

The reason I've ordered a new car is that (seperate to my day job) I'm a qualified driving instructor and I'm planning to start a small business 'on the side' when we get home. I envisage the business will bring in between £400 and £700 per month, but I can't guarantee this, so am reluctant to include these figures in any plans...

So, if anyone can help me decide whether to either pay for it outright, or take a loan or finance and, if so, to what extent, I'd much appreciate it.

Thanks, in advance, for your help!

Clive_Woody

It may be a bit late now (or not relevant for you) but a lot of new cars are/were available at 0% finance over 4 years with a 30% deposit (certainly Vauxhall, SEAT, Citroen and others were doing this). This would allow you to pay the car off over time. If you have already ordered you new car I suspect it may be too late now to look elsewhere

Another thing to consider is whether a bank loan may offer better interest rates than Ford finance, plus you could look for the added bonus of paying the loan off early if finances allowed or even just making over-payments each month to shorten the term of the loan.

Personally I would like to keep a reasonable lump sum in savings for emergancies or if plans don't go as well as you hoped. With the current economic climate it pays to cautious and have a reserve you can call upon if circumstances dictate.