~£10,000 required to fund car purchase

elDeeJay

My girlfriend is looking to buy a new car after Christmas.
Its £14k and she’ll get about £4k part-ex for her current car, but wanted to know the best way to finance it.
The dealer gave her an option of doing the car on finance which leaves her paying a silly amount of interest (£98 a month interest alone, I think it was £261 in total per month!) and still having a large final payment after three years before she even owns the car.

She has asked me the best way to finance the purchase and suggests a personal loan from the post-office may be a viable option.

I haven’t a clue, so if anyone can suggest something please do say!

socmwils23

Having just bought a new car myself i thought id explain my choice. I went with the AA loan which is 5.8%. The option your girlfriend was offered was also offered to me and is called PCP. Usually this is a high interest rate (the one thy offered me was 14.5%). Basically you agree a mileage limit for the three year period and they give you a guaranteed future value for the car provided you stick within the mileage limit. That guaranteed value is what you will owe in 3 years.

Now my first ever car purchase was done using this scheme and it wasnt that bad. It allowed me to get the car i wanted at the time and when the three years was up i traded it in (i got more than the guaranteed future value) and used what was left as a deposit. Id say if you are going to change cars every three years its not that bad a deal as it keeps your payments per month down. However if there is any chance of you keeping it buy it outright. Also if you can afford to do so id say buy it outright as well.

The PCP deals are designed for younger people who want a good car but cant afford to own it outright. It sounds like your girlfriend is in the category of being able to own it outright.

Having looked around the two best deals i saw were with Northern Rock and The AA. 5.7 AND 5.8% Respectively. Shop around and use some of the search engines to get the best deal.

moneywasternomore!

Marks and Spencer offer a PCP-style loan at a reasonable 6.2% APR for loans in excess of £7500. An illustration of £10k over 3 years is http://www6.marksandspencer.com/pages/default.asp?pageid=home&Product=BP here, but is £202 a month, without PPI. A&L used to offer a similar scheme, but have now stopped; I have just gone for the M&S option myself.

The_Boss

Another option might be to go to sainsburysbank.co.uk/drive if it is a new car - they do a very competitive rate similar to the Mark and Spencer PCP one above AND guarantee to beat the What Car? target price which is usally a good deal cheaper than the list price.

elDeeJay

Just an update.
there's been a slight change in circumstances. She now wants a Seat Ibiza (the new one launced on Apr 14th). This has an OTR price of ~£8,800 and her existing car is worth ~£3.5k. Therefore she will need about £5k to fund the car purchase.

Looking at the Sainsburys option above, they will do it for £103 p/m which seems quite good, but the APR of that is 8.9% (total amount repayable is £9,331.72 on a 36mth loan with a final payment of £2,624 and a £3000 deposit).

Before i put this option to her is there any better way to fund the car purchase or a loan of £5k?

Thanks for all your help on this issue.

roswell

you may get lucky with a life of balance credit card with a limit of 5 k interest rate of 5 % ish i think but make the same repayments as you would on the loan above to make it shorter

Faster_Loans

Hi elDeeJay,
I think most companies could do better. You are not in a hurry if you can wait until Christmas. Shop around.
Regards,
Alex

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jonesMUFCforever

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adewton

Do you really need to have a NEW car? £4K is enough to get a decent car. Think of the money you'll save and not 'keeping up with the Joneses'.

trigger_mike

I was looking at a new Astra last weekend, they are doing 4 years 0% intrest at the moment on the 1.6 Active, which means after 4 years you have paid of the car and not suffered any intrest, thought this was a good deal.

billywhizz

The_Boss wrote:

Another option might be to go to sainsburysbank.co.uk/drive if it is a new car - they do a very competitive rate similar to the Mark and Spencer PCP one above AND guarantee to beat the What Car? target price which is usally a good deal cheaper than the list price.

Or go here https://www.freewaycars.co.uk/ which is the company behind Sainsburys bank (check the small print on the Sainsburys website - Freeway Cars and HBOS) and offers 6.9% APR.

Not that Sainsburys will thank me for pointing that out, so just between us eh!