Car Funding

no_more_cards_for_me

I'm looking to get rid of my existing car and getting something a little cheaper to run. My car is worth about £2.5k and I've set a budget of borrowing another £4k. Total therefore £6.5k. Seen a nice car for £5.9k. Funding via car allowance at £250 per month but leaving £130 for expenses and upkeep. Therefore I have about £120 to spend per month.

Looking at the loan rates then 16-18% seems the norm, that's awfully expensive - santander offer 11.8% but that still very high. Are all loans of this size now about this level ?

For the cc solution then is Virgin at 12 months 0% the best solution (assuming I could get big enough credit limit).

Current facilities Amex £2k (£143) and BC £1k (£0). I have no other borrowing apart from mortgage.

CannyJock

Virgin Money is 0% for 14 months with 4% fee if money transferred direct to your bank account http://www.stoozing.com/sbt.php

Other option would be a 0% purchase card for 12 months, where car dealer will probably look to add on a 2-3% fee - http://www.stoozing.com/purchases.php

the_insider

Other option is to buy a cheaper car!

no_more_cards_for_me

the_insider wrote: »

Other option is to buy a cheaper car!

Thanks for a completely useless post.

housebuyer_abc

no_more_cards_for_me wrote: »

Thanks for a completely useless post.

Not useless - in fact it's your best option, the fact that you didn't want to hear it doesn't change its validity.

However to answer your question - yes most loans of that value are around 12% or so nowadays - the amount is not great in the scheme of loans and therefore the bank has to think of two things when setting rates

1) Not a lot of cash so not much scope for getting back the loan setup and underwriting charges unless they up the APR
2) Not a lot of cash therefore if the borrower need to borrow that amount they are unable to save that sort of figure in a relatively short time, hence the risk of non-payment is greater - therefore higher APR

Credit cards are good but you'll need to find a garage who will take it (they will add on a facility fee about 3%) or get a SBLT (super balance transfer) card however they also charge about 4% to deposit funds into your bank account

no_more_cards_for_me

housebuyer_abc wrote: »

Not useless - in fact it's your best option, the fact that you didn't want to hear it doesn't change its validity.

Not want to hear it, I asked a sensible questions and was looking for a sensible answer. Posting that you can't afford it is pretty useless in my opinion and certainly doesn't help me make an informed decision.

housebuyer_abc

no_more_cards_for_me wrote: »

Not want to hear it, I asked a sensible questions and was looking for a sensible answer. Posting that you can't afford it is pretty useless in my opinion and certainly doesn't help me make an informed decision.

Actually realising that there are cheaper options to the one you ave decided to take is actually what making an 'informed decision' is all about.

I'll give you the fact that there were better ways the poster could have put it, and they could also have tried answering your specifiic query at the same time rather than being quite terse.

speedbird1973

If you have a car allowance consider leasing a car?

the_insider

housebuyer_abc wrote: »

Actually realising that there are cheaper options to the one you ave decided to take is actually what making an 'informed decision' is all about.

I'll give you the fact that there were better ways the poster could have put it, and they could also have tried answering your specifiic query at the same time rather than being quite terse.

Nothing terse about it. Credit is not the only option, if the OP is concerned about the APR on a loan for something with such large depreciation then not getting the credit is possibly a better option. I'm a big supporter of 'you can't have your cake and eat it too'.

no_more_cards_for_me

Thanks all, I've looked at the options and consider that CC funding or loans is just too expensive.

So looks like I'll take the money out my savings account then top back up with the car allowance. By buying a more modern car then my costs should decrease and ultimately I can top my savings back up in 16-24 months. The 0% option means get another card and i don't really want to do that at present. Paying cash also means that I can hopefully get a little more off the price if I haggle.

I did consider leasing but wouldn't want to be stuck with the car repayments if my circumstances were to change suddenly. Plus you don't own the car at the end of the period.

I'm test driving and sorting out the deal next week so looks like a new set of wheels for the summer :beer:

YorkshireBoy

no_more_cards_for_me wrote: »

...I can top my savings back up in 16-24 months. The 0% option means get another card and i don't really want to do that at present. Paying cash also means that I can hopefully get a little more off the price if I haggle.

The M&S Sterling travellers cheque loophole (10 months 0% for a 1% fee) would seem to fit the bill perfectly.

If you can't get a decent 0% BT deal in 9 months time THEN pay it off from your savings.


EDIT...

I'm...sorting out the deal next week

Not enough time for a new card anyway then?