Loan or car credit

lyla01

Hi,

I am hoping to buy a new car (we normally buy old ones cos they're cheaper but the keep braking down on us so we are going for a new on) but am not sure whether it is better to get one on finance or with a personal loan. Could you please give me your opinions on which is best.

Thanks

x

Xbigman

Check out what offers the local dealers have currently. There were some excellent 0% deals around 6 months ago. If you can get one of those they work out cheapest, but you will need a good deposit.

If your deposit is limited then a personal loan should give a better interest rate and be more flexible than what a dealer can offer. Talk to your bank and ask what sort of money they will lend you and at what APR, but stop short of making an application. If you make too many applications too quickly it can effect you credit rating.

Also check that any rate that a dealer quotes is APR and not flat rate. Cars can be sold with loans quoted in flat rates, IE 6%. That sounds fantastic but is reality double that as an APR (using rule of thumb), so more like 12%.

Lastly. I wouldn't buy a new car on credit. The interest and the depreciation means an 8 grand car will be worth 5 grand in a years time but could cost you 12k to buy.
Regards



X

Phoenix79_2

But by buying a car on finance usually means you can voluntary surrender it half way through without paying any more money. This can be a lifesaver if you fancy changing car and there is negative equity in it.

Car finance is usually more expensive but some dealers (BMW in my experience) will always beat the best loan rates......and most are open to haggling.

lyla01

great, thanks for yopur help, it's a bit clearer in my head now.

x:beer: