Loan vs savings

stagsman

I am thinking of buying a car but not sure whether to get a loan or use my savings, any advice? (I think a loan would probably be better.)

CLAPTON

In financial terms, if the APR on the loan is lower than the net (after tax) AER of your savings then go for the loan; if the APR of the loan is higher than the AER of your savings then use the savings....

If you were thinking of HP then there are some rights (like returning the car after half the payments are made) that might be a consideration but in general use your savings...

tuggy

cheaper in the long run to use savings, but then that means you dont have savings sitting there for an emercancy. the interest you'd pay on a loan would be the "cost" of having the peace of mind that your savings were untouched in case of an emergency...

so work out the interest total and think is that worth it for peace of mind or not?

CLAPTON

makes no sense to borrow money simply to 'save' it for an emergency...

buy a cheap car (lots of cheap good reliable cars these days ) until you have an emergency fund and can afford a car

stagsman

I have seen a newish car for cheaper than i was going to pay so i should be ok. Thanks for the advice