Loan or finance

davidshads

Going to buy a fresh car and need to borrow between £4000 & £5000.
What is my best option
loan or car finance?

CHR15

Whichever one offers the lowest Apr.

If you think you will get bored and find you cannot make the repayment half way through then maybe a HP agreement.

lawrie28

CHR15 wrote: »

Whichever one offers the lowest Apr.

If you think you will get bored and find you cannot make the repayment half way through then maybe a HP agreement.

Don'tbe daft!

If your gonna get bored, then you want a loan. That way you can sell the car and buy another and kep paying the debt.

HP is secured on the vehicle, so if you want to swap then you have to settle etc.

A loan is secured on you, so you can change the car every week if you wish with no penalties etc.

I would start with a loan, see what rates you can get. If you do get HP, they do not get it through the garage as you will pay over the odds as the garage will take a nice fat commission from your finance.

CHR15

lawrie28 wrote: »

Don'tbe daft!

If your gonna get bored, then you want a loan. That way you can sell the car and buy another and kep paying the debt.

How do you do that if you cannot meet the repayments?

nelly12

lawrie28 wrote: »

Don'tbe daft!

If your gonna get bored, then you want a loan. That way you can sell the car and buy another and kep paying the debt.

HP is secured on the vehicle, so if you want to swap then you have to settle etc.

A loan is secured on you, so you can change the car every week if you wish with no penalties etc.

I would start with a loan, see what rates you can get. If you do get HP, they do not get it through the garage as you will pay over the odds as the garage will take a nice fat commission from your finance.

You seem to have a recurring problem with dealers supposedly earning lots of commission... Many of them are earning a lot less from finance commission than ever before as they try to be competive.

In reply to the OP then get quotes from both and compare them. Simples.

lawrie28

CHR15 wrote: »

How do you do that if you cannot meet the repayments?

Chris, getting bored with a car is one thing. If you are bored with a car, the you want a different one, a loan is the easier way to do this.

On the flipside, if you can't afford the repayment, with a Loan, you sell the car and pay off the debt.

This is much better for your credit rating than a VT.

There is a massive difference between getting bored with a car and not being able to pay for it.

lawrie28

nelly12 wrote: »

You seem to have a recurring problem with dealers supposedly earning lots of commission... Many of them are earning a lot less from finance commission than ever before as they try to be competive.

In reply to the OP then get quotes from both and compare them. Simples.

Well, seeing as this website is about SAVING money, then getting finance where a middleman doesn't take a commisions is kinda a good thing!

And working in finance I am well aware of the commisions that dealers can earn, so on this deal if the OP borrows £4k, and the dealer is taking a 3% commision, that is £120 that the OP pays. Not much, but on larger figures the amount increases obviously, and 3%is a low commision.

You are correct with the rate comparison, however it is important to understand the 2 different products as well.