Which loan Vs car finance

Dowsett

im looking to buy a new car. im not too sure how much the car is going to cost at the moment, as i havnt found the right one. i imagine i will be looking to spend in the region of 7k - 15k Max!

the last car i bought (my current one) 3 or 4 years ago was from a bank loan as bank loans were a much better and cheaper than car credit back then before the credit crunch.

my questions is, is car finance better than loans now? my credit rating is 'poor' according to money super market. so i wont be able to get some of the good deals.

obviously depending on the APR of both car finance and loans. typically which seems to be the cheapest?

ive seen loans in my 'poor' section on MSM and those comparison sites with an APR of 50. something percent!!

i am currently with Halifax bank if that makes any better for being accepted for a bank loan if they are the better option.

any help is appriciated.

Thanks

CLAPTON

given the likely interest rates you will pay with a poor credit rating wouldn't it be better to keep the current car and save up the money instead

Dowsett

CLAPTON wrote: »

given the likely interest rates you will pay with a poor credit rating wouldn't it be better to keep the current car and save up the money instead

well, that wasnt what i asked....

my car is getting old, things will start going wrong with it and i use my car quite alot. not only for personal use but for business as well. i cant afford to break down and have to pay out hundreds of pounds each time for parts.

i need a reliable car for these reasons and would like to get a new one before these things happen.

Caz3121

The people that will be prepared to lend you will be looking for a very high apr (you say on another thread you have a credit card and the limit is £100 so think that will be due to your credit rating)
What income do you have and what other debts?

£10k over 5 years @ 50% will cost you almost £400 per month and you will end up paying over £23k back

If you do a lot of business travel is there an option to get or have use of company car (my firm gives this if you do more than 7,500 business miles per year)

CLAPTON

maybe :
but you already seem to be in the cycle of borrowing money to buy a car, hence can't afford to save, hence have to borrow money to buy the next, hence can't save etc ... all the time paying silly amounts of interest.
And paying out a few hundred pounds for the odd repair is a lot cheaper than repaying 15k at 50% APR.


These days lots of quite old cars are very reliable and cheap to run.
My current car has 150k on the clock: in the last 50k miles I've bought some new tyres, had a broken exhaust stud replaced (£23.50) and had a constant velocity cover replaced £65 ...

Dowsett

Caz3121 wrote: »

The people that will be prepared to lend you will be looking for a very high apr (you say on another thread you have a credit card and the limit is £100 so think that will be due to your credit rating)
What income do you have and what other debts?

£10k over 5 years @ 50% will cost you almost £400 per month and you will end up paying over £23k back

If you do a lot of business travel is there an option to get or have use of company car (my firm gives this if you do more than 7,500 business miles per year)

the reason my limit on my card is £100 is because its new and my first credit card. plus, i dont really want to ask for an increase. £100 is fine at the moment.

i have about 300 - 400 free every month (except this one!)

and yes, if the interest is going to be that high then i will not be taking it out.

Dowsett

CLAPTON wrote: »

maybe :
but you already seem to be in the cycle of borrowing money to buy a car, hence can't afford to save, hence have to borrow money to buy the next, hence can't save etc ... all the time paying silly amounts of interest.

your right. i bought my last from a bank loan which was ok. now interest rates are sky high.

i cant afford to save / dont have the patients to wait years to get a decent amount of money together.

i just wanted to know which would of been the best bet so i can have a look at APR's etc since ive not looked since i last bought my car

~Brock~

There is very little around at the moment in terms of sub prime used car finance, which is likely to restrict your options.

Make sure that you buy a car from an independant dealer who isn't charging over the odds for the car itself. What appear to be low rate deals actually end up being more expensive because the car was overpriced in the fist place, and often a higher APR on the same car at another dealer can work out cheaper.

My suggestion is to lower your sights a little on the amount you are wanting to spend on a car - say to about £5k, which will nowadays still buy you a lot of car. Then it is a case of seeing if you can get finance via a sub prime lender through the dealer.

By borrowing a lower amount, you should be able to afford to keep the payments to 36 months max (preferably lower). This will have a huge effect on lowering the overall amount of interest you pay, together with the benefit that the car will be yours, free and clear of finance, that much sooner.