Advice on buying a new car - finance options?

Tomzmuffin

I need some advice Me and my husband need a new car – we have just spent our savings on buying our first property. We have a few options and I was wondering if anyone could give their advice

Option 1: Buying a car on passport finance – where you get a brand new car pay a set amount each month for 3 years then either hand the car back, upgrade or pay the cars value to complete own it. We would use the scrappage scheme to help lower the price of the car and we can afford the monthly payments, but I am wary of the finance part.

Option 2: Use the scrappage scheme and just get a normal finance agreement with the dealer

Option 3: Get a loan from the bank – I am able to get the 7.9% apr from Nationwide

Option 4 – just keep fixing the car we got and save for another used car

The reason we like the thought of a brand new car is the lack of work that will be required to be done on it for a while, trusting that when you’re driving it it’s going to work and you feel safe, no mot for 3 years and the tax will be £35 a year. A few people we know have spent a lot of money on second hand cars and then had to spend more on them fixing them – as I don’t know a lot about cars I don’t want to spend a couple of grand buying one that still needs more doing to it.

I’m wary of finance and we can afford the repayments but just wary of being conned – any advice on the best route?

Thanks

Natalie

computershack

Option 4 gets my vote. There is no guarantee that a new car is likely to be any more reliable than a used one and there's even an argument that a used car is likely to be better as any manufacturing defects have already been found. If your car has been well maintained and is of an MOT pass standard, there's no reason to think it'll be any less safe. No MOT for three years doesn't save you the money you'd be spending on interest and the additional premium of a dealership service.

I run around in a 5 year old Mondeo with 128,000 miles on. I've owned it for 2 1/2 years. Other than normal servicing and consumables (tyres), all it has needed in the time I've owned it was an alternator which cost £180 fitted. Its done 1000 miles in a day and done 300-500 miles most weeks all without any complaint. The simple fact is that cars are better than they used to be and anything built in the last 10 years which has been well maintained will not cost anything out of the ordinary to run. There is no reason that a modern car that's looked after shouldn't do 200,000 miles. In fact, my brother this week has finally had to replace the Rover 600 I sold him 5 years ago for £750. He's done 20,000 miles a year in it and kept up to the servicing. At 180,000 miles it has started to need a few repairs doing which would cost more than it was worth and at 13 years old, the rear wheelarches were starting to show signs of rusting. Anyhow, despite all of that he's had to replace it because he hit some ice and skidded off the road - not because it broke down.

bclark

computershack wrote: »

Option 4 gets my vote. There is no guarantee that a new car is likely to be any more reliable than a used one and there's even an argument that a used car is likely to be better as any manufacturing defects have already been found. If your car has been well maintained and is of an MOT pass standard, there's no reason to think it'll be any less safe. No MOT for three years doesn't save you the money you'd be spending on interest and the additional premium of a dealership service.

I run around in a 5 year old Mondeo with 128,000 miles on. I've owned it for 2 1/2 years. Other than normal servicing and consumables (tyres), all it has needed in the time I've owned it was an alternator which cost £180 fitted. Its done 1000 miles in a day and done 300-500 miles most weeks all without any complaint. The simple fact is that cars are better than they used to be and anything built in the last 10 years which has been well maintained will not cost anything out of the ordinary to run. There is no reason that a modern car that's looked after shouldn't do 200,000 miles. In fact, my brother this week has finally had to replace the Rover 600 I sold him 5 years ago for £750. He's done 20,000 miles a year in it and kept up to the servicing. At 180,000 miles it has started to need a few repairs doing which would cost more than it was worth and at 13 years old, the rear wheelarches were starting to show signs of rusting. Anyhow, despite all of that he's had to replace it because he hit some ice and skidded off the road - not because it broke down.

But the new Car will be under warranty and will therefore cost nothing at all to be repaired.

hewhoisnotintheknow

what car do you have and whats wrong with it

Tomzmuffin

Its a 1996 Vauxhall Corsa, its squeals like a boy racer whenever it rains, gets cold or feels like it. If I get stuck in traffic for more then 5 minutes it over heats and I have to put the heating on full blast and wind the window downs - in the summer i nearly cooked alive! It cost me only £600 3 1/2 years ago but this year have so far spent £350 on fixing it. The passenger window doesnt wind down, my wing mirror is glued into place, if more then two people are in the car at one time when it rains the windows steam up so much i cant see even with the blowers on. The heated back window is not working completely.

I have the money to be able to either save or get finance but im just wary of getting a second hand car that will need more work. My brother in law paid £2k for his a year ago and it already needed a new engine.

bclark

I have bought my last few Cars using option 1 and find it great. Its a nice flexible way of keeping your monthly payments low but i am aware that not everyone likes it.

If you shop around you can find good rates too especially if you aren't too fussed which Car you are getting. I was this time but I still found a PCP at 8.4%.

edit: Looking at what you are saying above, just go for a nice new Car. It sounds like you can afford it and there is nothing quite like a new Car. Personally I love the peace of mind that I have 3 years of fairly risk free motoring. My new Car came with a 3 year warranty, 3 years breakdown and accident cover and has service intervals of every 2 years of 20,000 miles.

AdrianHi

bclark wrote: »

But the new Car will be under warranty and will therefore cost nothing at all to be repaired.

Which is where I chime in with my suggestion which is buy a 3 to 6 month old car when it's lost the worst of it's depreciation and have 30 months of motoring secured by the manufacturers warranty.
I've done the sums before and if you work out the cost of a car as a long term average monthly expense there is virtually no difference between say a 5 year old Mondeo and one bought 3 months old and run for 33 months. The difference is the cash flow challenge the purchase price of the younger car presents vs. the possibility of repair cost on the old car.
Purchase price is not the same thing as the real cost of the car over time.
If repairing the old car is getting tiresome I'd suggest this option and use the 7.9% loan from Nationwide. If you have a flexible mortgage with sufficient credit available it will probably be cheaper to put the car on that and then make sure you have the discipline to pay back that borrowing over a normal car loan term (and not 20-25 years which would be daft!)

hewhoisnotintheknow

it might of cost you 350 this year, but you will loose loads more than that if you buy a new car, in term of the cars value and in terms of interest

Also with a new car you have to get it serviced on the button which will cost a lot!

AdrianHi

If your old car could be kept going at £350 a year in repairs the difference between that and buying a 1 year old Corsa 1.2 Club and running it for 24 months until warranty expiry is in the region of £45 a month extra for the newer car. That is including finance charges at 7.9% APR on £8100 which is roughly what this car would cost at a Vauxhall dealer, differences in road tax, MOT costs etc.

The question is are you prepared to pay around £540 a year extra to be in the newer car and can you really keep the old one going for only £350 a year in repairs?

HellsGranny

You need to think of what might happen if one of you loses their job, or if mortgage interest rates start to rise.

Option 4 is the best bet for the time being.

Cheers, HG

computershack

bclark wrote: »

But the new Car will be under warranty and will therefore cost nothing at all to be repaired.

Err, not necessarily if its a consumable part. And even then, only for the first 12 months typically. Fine if you change the car every 12 months.