personal loan or car finance

jsek

Am i better going for car finance to purchase new car or personal loan? i am looking to borrow £8000 over 4 years. Abbey are doing 8% working in around 194 per month and car finance with dealer 200 per month. Can anyone suggest which is better to go with or what i need to watch out for? thanks

Comyface

I would personally go for a loan over finance every time.

If the finance is HP, then you don't actually 'own' the car until it's paid off, it's owned by the finance company. There may be restrictions in the agreement, such as no-one else but you is allowed to drive the car, that kind of thing. Even if a person's car insurance allows them to drive your car, it usually states 'with the owner's permission' on the policy, which means every time you want to lend your car to your dad (for instance), they'd have to agree. What a faf.

jsek

thanks for that info but another quick question loan states there is an early settement charge of 2 months interest. if i pay the loan off in 3 years- to buy another car- am i still better going for loan?:beer:

CLAPTON

there is a benefit of HP in that after you have paid half the finance you can voluntary terminate the contract
this may or may not be a benefit for you

if you are seriously thinking of buying another car in 3 years why ever are you going for a 4 year loan?

Also, this seems like setting yourself up for permanent and never ending debt
Have you considered buying a cheap car you can actually afford and then saving up and buying something better later?

jsek

thanks for that. I know is sounds silly but i have always taken car finance and never worried about it but i have never had a loan and the early settlement charge has thrown me. My view is that you never really own a car and the difference in interest over 3 years to the 4 - as i tade in at this time is not that much, reason is to keep the monthly payments down. come on all you maths buffs what extra do i pay back to settle this loan early- 8K over 4 years at 8% and i want to pay it off in 3 with an early settlement figure of two months interest. Put a young lassie out of her missery!!!!! Thanks

CLAPTON

Ok
although I find it strange that you are so willing to waste such a lot of money paying interest year on year (why pay £9,375 for something worth only 8,000.. when you go to tescos do you insist on paying a few quid more for your purchases.)

anyway if you take a loan out (as above) over 4 year but terminate it after 3 years the two months penalty will be about £30.. not even a tank of petrol

jsek

Thanks for that advice. I had it in my head it would be some crazy amount. You have put a young girls brain to rest!!!! You read all the small print on these loan forms and they just bamboozle you. Thanks again