Do I need car finance?

bigdog69

Hi,
Having seen all the reports about large car inventories and discounts available I was thinking about buying a car.
I have never bought one before - do I need to get financing?
I do have enough savings to buy one for £7000-8000 outright - would it be more advisable to get some sort of financing?

Many thanks for any tips

anewman

Work out how much the finance will add to the cost and decide for yourself. I think you'll find it would be a £few k and effectively the car costs you that much more, with the only benefit that you get to keep your savings (which at the moment are earning next to nothing in interest.)

TheCarMan_2

The only thing about using your savings is that you lose the security of having them behind you. If you were to buy a new car on finance and lose your job 3 months down the line, you could probably survive for 6 months unemployed on what you have saved up.

Not sure if I am making sense? I think I would feel more secure (especially right now) knowing that I had a few month wages in the bank just in case.

There are great deals with low deposits to be found at the moment. Just get a monthly payment that suits you and dont exceed it

MX5huggy

Don't do it buying a car is amoney pit what ever way you do it. You will never have savings again!

OK so why do you want a car? what are you going to use it for? and why not spend like 2k instead?

mluton

You could buy a car outright for the money you have saved, but nothing special, only a small economic city car.

New cars loose allot of value as you have to pay VAT, best to buy one used.

Used from a personal sale will also save money over a dealer buy.

You get piece of mind with a new car as they all have 3 years or more warranty. Warranties are transferable and run with the car, but ensure service history has been followed to manufacturer specs and garage is VAT registered.

A personal loan is also prefferable over finacing as its not secured on the car.

You cannot in theory sell a financed car.

TheCarMan_2

There are both good and bad points to the above.

Have you considered leasing a car? This is the only way you could guarantee how much a car will cost you over a set period of time.

Here is an example of a particularly good rate at the moment:

Honda Civic Type R 2.0(£19000 from Honda)
After 2 years car is valued at £12000+-

In that time you have lost £7000 plus interest that you have paid on £19000 borrowed

You can lease this car at the moment for £195inc vat over 2 years(£5070) and have your Road tax paid for you(worth another £430 over 2 years). No worries of residual value or selling the car with negative equity.

If you were to finance this car through Honda it would cost £410/month with a £6,000 deposit.

Choose the car that you want and compare the costs

Lemonade_Pockets

bigd!!!9 wrote: »

Hi,
Having seen all the reports about large car inventories and discounts available I was thinking about buying a car.
I have never bought one before - do I need to get financing?
I do have enough savings to buy one for £7000-8000 outright - would it be more advisable to get some sort of financing?

Many thanks for any tips

Firstly for a lot of MFR's inventories are the lowest they have ever been.

But that doesnt mean there aren't some great deals to be had. Just need to shop around a bit!

We've had many debates on here about the opportunity cost of cash. I.e How could you make your money work for you instead of ploughing it into a car.

I'd suggest going down the PCP or Lease route unless you are planning to keep the car for longer than three years. This will enable you to budget more accurately for what the car will cost you over your ownership period. Depreciation is the biggest cost of motoring its also the one cost which people routinely fail to predict acurately....myself included and i've worked in the trade for many years.

Many mfr's will offer PCP's on either low or 0% APR's to atm.

Idiophreak

Like the car man says, it's all about whether you're prepared to lose the security having your saving brings at a cost (when I borrowed 8k I repaid 9k on dealer finance..or was it 9 and 10...something like that ).

Personally, I'd be tempted to look at something 5-6k from a dealer, couple of years old, low mileage. You'll get a couple of MOTs, AA cover etc thrown in from the dealer and a 12 month warranty as well, to give yourself a little bit of cover in the first place.

itn

Civiv typr R, whos doing this offer at the moment?