car finance

Green_tea_girl

Hi everyone,

This is my first ever post. Quick question regarding finance for a car. If I have the money to pay the car off in full, should I do this? It wouldn't leave me with a whole lot but the car would be paid for. Or, would it be better for me to put down a chunk towards the car and take out a personal loan for the rest? I've been looking around and Zopa seems to be coming out tops for cheapest personal loans.

Any advice would be greatly appreciated.

Cheers

jamesd

Green tea girl, cheapest personal loans are usually 0% credit card deals with 4% fee and up to 16 months of 0% interest after that. See this list of super balance transfer (SBT) credit cards that let you do a balance transfer from a current account, so you can use the money to pay off the car loan. The Virgin card tends to be particularly generous with credit limits.

If you have the cash to pay it off will you still have an emergency fund to cover you if you lose your job or have some unexpected emergency? If not then perhaps you might instead start using one of the 0% for purchases credit cards for your normal spending and accumulating an emergency fund from the saved regular spending.

I wouldn't want to use all of my cash to pay off a loan. One of the 0% for purchases cards seems like a better idea, since credit isn't as reliable as cash in your own savings account for handling emergencies.

But what is the interest rate on the car loan? It might be too cheap to be worth paying it off.

Green_tea_girl

Thanks for your reply jamesd. I was having a look at SBT cards on the site just after I posted. I'm going to do some more reading up on them as I don't have any credit cards at the moment and my knowledge regarding them is limited! The interest rate on the car loan is 7.40% fixed p.a.

Thanks again for the advice

jamesd

7.4% is worth improving on, so good luck with the cards.