Buying a car- do I get a loan, use a credit card or take out a finance agreement?

doddsy1

I am buying my first car after 9 years of having company cars. I have a new job which will still mean I have to travel but need to supply my own car.

The car I am looking at is around £21,000. but not sure what is the best deal for me.

Should I get car finance at around 7.9% APR, get a loan or apply for a credit card at 0% APR and then just keep transferring the amount each time to amount 0% APR card.

Please help!!!!!!!!!

no_more_cards_for_me

How secure is the new job ?

I went from a company car scheme to my own car last year. Bought an S60 volvo for £4k cash and pocketed the car allowance each month. I own the car and owe nothing to anybody. With fuel costs going up I'm still about £250 per month better off.

Unless your very sure that the job will work out and be secure in these interesting times, it might be worth buying something cheaper for cash. Unless your credit is very good its unlikely you would get a 0% card with that sort of limit.

Does the company place any restrictions on what you buy - 4 door saloon etc.

(Ps this is money saving so expect answers in a similar vein)

doddsy1

Thnaks for the advise. I dont get a car allowance with this job as its only a year contract, however they are paying double what I earn now.

I do have a credit card and only use it for work and pay it back each month. Getting into debt is a new thing for me.!

no_more_cards_for_me

Firstly well done on getting the job then :beer:

Double what you earn at the moment must be great.

However what happens in 12 months time ? Do you think you will be able to find another contract on the same rate ?

Whilst I can appreciate the desire to get a new car, I would still look at the options and consider where you will be in 12 months time. £21k is a lot of money on a car that is just going to depreciate. How long is the finance ? What remibursement for your travel - 14p per mile?

Do you have a reliable car at the moment ? If they are paying double rate for the work then how much could you save in 12 months to buy outright ?

doddsy1

Thanks again you are giving some sensible advise.

I am nervous about a 12 month contract as been with my current company for 16years so it is a big risk. I have chatted to them about my concerns and they said they have looked into what I could do in year two and have commented they would like me to stay on but I guess that isnt guarenteed.

Your point about would I be on the same wages is a very valid point and not one I had really thought much about other than I am looking to save what extra I earn in case I cant get another job. I have also approached dealers about giving the cars back after a year and they feel as though that maybe an option but would defo loose some money.

I hear what your saying about not buying a new car but with doing 18,000+ per year I am concerned about reliabilty so that is why I opted for that.I will defo have a think about what you said and do it bit more research.

However thanks for your wise words and support!!! xx

CLAPTON

doddsy1 wrote: »

Thanks again you are giving some sensible advise.

I am nervous about a 12 month contract as been with my current company for 16years so it is a big risk. I have chatted to them about my concerns and they said they have looked into what I could do in year two and have commented they would like me to stay on but I guess that isnt guarenteed.

Your point about would I be on the same wages is a very valid point and not one I had really thought much about other than I am looking to save what extra I earn in case I cant get another job. I have also approached dealers about giving the cars back after a year and they feel as though that maybe an option but would defo loose some money.

I hear what your saying about not buying a new car but with doing 18,000+ per year I am concerned about reliabilty so that is why I opted for that.I will defo have a think about what you said and do it bit more research.

However thanks for your wise words and support!!! xx

cars are pretty reliable these days and in any event you are more likely to have a fault with a brand new car than one that's 3-4 years old

bouncydog1

How about leasing a vehicle - that way you would have a monthly payment but as far as I am aware that should cover cost of maintenance etc.

If you buy a new vehicle of £21k that is going to depreciate quickly - as soon as you get it off the forecourt basically. Add to that the maintenance and running costs and if something happens at the end of the year, you are still going to have to service the debt.

I agree with previous posters - buy a second hand vehicle at a price that you can afford. If you don't have the funds available then set yourself a budget that you could afford to service without your income if things go pear-shaped. Once you have looked at that people might be able to suggest the best way of funding.

IMHO £21k loan for a car is a no-no. If you have to borrow you can't afford it.

BadgerFace_2

I agree, leasing sounds a great option for your situation. You can definitely give it back in 12 months time and aren't going to lose anything, bar the cost of the payments.

On the Credit card front; I think you'd find the 0% cards quickly dried up with that kind of amount involved, then you'd be stuck @ 16.9% or higher.

no_more_cards_for_me

Good luck with whatever you decide.

For reference my £4k volvo has cost a grand total:

£385 in servicing for the last year.
Road tax £245
Insurance £320 - be aware that as your just out of a company car this will be expensive as most companies will not accept company car insurance history and you have to build NCB.

On 109k, its never broken down or even failed to start. The biggest problem I had was a bulb failure. I've driven 19,000 in it so far and not missed a beat. I used to be worried about reliability but now I don't give it a 2nd thought, get breakdown cover if you want but makes like this tend to be reliable.

Fuel for a 2.0 turbo is expensive but even at £75 to fill up its still cheaper than leasing or HP. For my business mileage reclaim at 14p a mile and HMRC pays me the 26p difference. So I effectively I get £1.2k back in addition to the car allowance to run the car.

Leasing - what penalties are involved ? 50% of the outstanding rentals ?
Dealers are going to give you bottom dollar if you give a car back and you will lose money.

Personally I'd do like bouncydog says and buy something cheaper, it will keep the insurance bill down.

Get a reliable make - JP powell guide and honestjohn are good guides.

You might loose out in the car park stakes but pocketing the money should give you a big smile instead.

no_more_cards_for_me

BadgerFace wrote: »

I agree, leasing sounds a great option for your situation. You can definitely give it back in 12 months time and aren't going to lose anything, bar the cost of the payments.

Dear Badgerface, are you sure on that ? I always thought that a leasing company would want at least part outstanding rentals ?

Thanks

BadgerFace_2

^^I'm not 100% what you're getting at there?