Car Finance Advice Required

This may be a bit of an unusual situation, but I hope somebody will know the best answer!!

I am due to start a job for which I need a presentable and reliable car. I currently have an old-banger and absolutely no money!!! The job pays pretty well so I could afford a decent car on finance. However, after 6 months in the job I would be very likely to get a brand-new company car. What would be my best option?? Would it be worth me taking out car finance, and if so, how would it work when I needed to give the car back after 6 months? Or would it make more sense to lease a car?

Any advice is welcome. Thanks.

Comments

  • I'm guessing it doesn't But It's the same principle as a smart suit.

    If a hobo lookalike tried to flog you an aston martin you'd be wondering what the hell was going on.
    War does not decide who is right, It decides who is left.
  • NickWarren wrote: »
    I'm guessing it doesn't But It's the same principle as a smart suit.

    If a hobo lookalike tried to flog you an aston martin you'd be wondering what the hell was going on.


    Remember all Master's clothing has velcro and no sharp zips. Hospital Rules.
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  • I thought it was rubber?
    War does not decide who is right, It decides who is left.
  • NickWarren wrote: »
    I thought it was rubber?


    That's the other forum.:T
    Hi, we’ve had to remove your signature. If you’re not sure why please read the forum rules or email the forum team if you’re still unsure - MSE ForumTeam
  • Anyway back to the OP.

    Do the maths over six months, you probably will be well out of pocket taking out finance and buying a car. I'd see if you can get a six month lease.
    Hi, we’ve had to remove your signature. If you’re not sure why please read the forum rules or email the forum team if you’re still unsure - MSE ForumTeam
  • Does anyone now how car finance would work if I was to cancel it after 6/9 months? I've heard an explanation before of what I would have to pay but I did not understand it!!! Can anyone put it in layman's terms for me?
  • Hintza
    Hintza Posts: 19,420 Forumite
    First Post Combo Breaker
    jonnywoods wrote: »
    . However, after 6 months in the job I would be very likely to get a brand-new company car.


    Go and ask them what they will do at the end of what I presume is your probationary period.

    Handing a car back after 6 months would be expensive.

    You could lease a car for 6 months which might be your cheapest option.

    Do they have any pool cars you could use in the meantime?
  • Hintza
    Hintza Posts: 19,420 Forumite
    First Post Combo Breaker
    jonnywoods wrote: »
    Does anyone now how car finance would work if I was to cancel it after 6/9 months? I've heard an explanation before of what I would have to pay but I did not understand it!!! Can anyone put it in layman's terms for me?

    Don't go there.
  • Lemonade_Pockets
    Lemonade_Pockets Posts: 1,162 Forumite
    edited 3 November 2009 at 12:03AM
    Yes you simply pay it off.

    Vastly simplified:
    When you borrow money it is assumed you will not pay it back early.
    Therefore the full amount of interest is charged over the period borrowed.
    If you pay it of early you do not have to pay all of this interest back (called a rebate).
    So after 6 months the amount payable is:
    no. of payments left multiplied by the monthly payment. Less any interest rebate.

    So if you borrow £100 over a year. And the total interest payable is £20
    Total amount payable £120
    Monthly Payment 12 x £10
    After 6 months:
    Amount paid = £60 (£50 capital £10 interest)
    Amount owed = 6 x £10 less £10 (interest that you don't have to pay anymore)
    = £50

    The actual calculation is bit more complicated than that and can vary depending on the type of agreement but that's the crux of it.
  • Hintza wrote: »
    Don't go there.

    As above you will probably find that its not worth it.

    By the time you add on the dealers margin, depreciation, finance charges etc it would probably be cheaper to rent one way or another.
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