Car finance advice please

WardG

I need to get a new car - here's the background as to why (other than just wanting one of course!)

I've got a 1998 Saab with a big engine, had it 3 or 4 years it's been OK but things are slowly failing and it guzzles fuel around town - <25mpg. I only do about 15 miles a day but it's costing me 80+ per month.

Last MoT (6 months ago) I was given a serious advisory notice about rust on the suspension and told I should get it done in the next few months or it might give way. Add the other stuff it needs & it's costly:

Suspension 300 + Battery 100 + New wheels 200 = way more than the car's worth. Plus the aircon is knackered, heater + trip computer playing up and it's generally a bit tatty inside now, admittedly I haven't looked after it well!

So I want to get a reasonably new car (and look after it this time!), ideally under 3 years old, will prob go for a (boring) Ford Fiesta TDCi for cheap tax and fuel economy - looking at 8,000 pound ish

My dilemma is whether to blow all my savings on it which will just about cover it, or get loan/finance or poss even lease/pcp etc.

I'm in my early 30s, no debts & don't own my own home yet so although I know it's stupid to hold on to savings while paying interest on a loan, I like the idea of having the savings ready to pay the deposit on a house sometime in the next couple of years.

Any advice much appreciated, I'm rubbish at weighing up the pros and cons, and at calculating the real cost of motoring!

cheers

davetrousers

You don't need to spend £8k

WardG

This is probably true. I do if I want to get a modern diesel engine that is both better for the environment and fuel economy though - my current car's poor fuel economy and emissions weighs on my mind from an ethical perspective as well as a wallet perspective

MFWannabe

Have you looked into the scrappage scheme? Yours is a 1998 car so it would fit into this category and i believe the remainder to pay could be done either on 0% finance aor very low apr.
Might be worth a trip to the dealer to find out what they are offering

WardG

Yeah, thought about it ever since they announced the scheme, but don't think it's worth it when you factor in the fast depreciation of brand new cars in the first year or two

Plus it seems wrong to scrap a complete car that only has a few failing parts - it's got 120k miles on it but the old Saab engines are pretty solid and will probably do 200k

So probably not going to do that, but thanks for the thought anyway Freez (and thanks too dave for your quick but short response!)

thescouselander

It will probably work out cheaper overall to use your savings but if, as you say, you might want your savings to put down as a deposit for a house its probably best to have some money in the bank.

If I were you I'd probably do a mixture of the two - use a bit of your savings as a deposit on the car and get some sort of finance deal. They key will be to pay off the finance as quickly as possible to keep the total interest paid lower.

Having said that I am not you so really only you can decide whats most appropriate for your circumstances.

MFWannabe

You mentioned above probably getting a Diesel but you do very low mileage so it's not really worth the extra expense of buying a Diesel car. You can now get petrol engine cars that have low tax and good mpg