Car - should you finance if you have cash?

Flyboy152

pinkteapot wrote: »

It would be going out the door if you put the car on finance, but it would be going out the door plus interest and therefore cost you more. If you want to really visualise it, look at the 'total payable' on the finance. I.e. car cost £12k, APR x%, total payable £16,959.

And it's not really going out the door - you're spending your hard earned money on a new car.

:huh:




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pinkteapot

Sorry Flyboy - which part wasn't I clear on?

gilbert_and_sullivan

Flyboy152 wrote: »

When will that happen?

Interest free loans are usually for a quite short period, say a year,then if you don't pay the whole amount by the date stated a very high interest rate and penalties can kick in.

I daresay the loan providers who back these schemes know very well that a fair number of rose spectacled people will default and...kerching.

MsHoarder

alanrowell wrote: »

Whilst I agree on the general thrust that you compare interest rates on loan & savings you also have to take into account the possibility that you might need cash in the short to medium term. You also should consider if you can get a discount for paying cash as opposed to taking out the loan (or vice versa).

But there is still the option to get a loan if cash is needed for something else. Keeping unproductive cash whilst taking out unsecured debt is money down the drain.

Hintza

gilbert_and_sullivan wrote: »

Interest free loans are usually for a quite short period, QUOTE]

The thing about interest free loans is they normally make it up in the prce they charge you.

There is no such thing as a free lunch. I they are offering intest free it suggests with a bit of searching you should be able to find the car significantly cheaper than you would if you took the interest free deal.

Flyboy152

gilbert_and_sullivan wrote: »

Interest free loans are usually for a quite short period, say a year,then if you don't pay the whole amount by the date stated a very high interest rate and penalties can kick in.

I daresay the loan providers who back these schemes know very well that a fair number of rose spectacled people will default and...kerching.

I think you are getting confused over different types of financial products here. Hire purchase, by its very nature, is a fixed interest fixed term product.

Flyboy152

pinkteapot wrote: »

Sorry Flyboy - which part wasn't I clear on?

The bits about going in and out of doors for a start.

gilbert_and_sullivan

Flyboy152 wrote: »

I think you are getting confused over different types of financial products here. .

Quite possibly, don't pay interest to anyone if i can possibly avoid it, we have used interest free loans, on white goods for example, very useful, every time there has been a date which if you haven't paid by the loan will revert to a high interest rate.

wba31

gilbert_and_sullivan wrote: »

Quite possibly, don't pay interest to anyone if i can possibly avoid it, we have used interest free loans, on white goods for example, very useful, every time there has been a date which if you haven't paid by the loan will revert to a high interest rate.

"finance/HP" on white goods is not the same as "finance/HP" offered on cars. the one on cars is often secured against the vehicle, so the car isnt actually owned by the buyer until the final payment made. the loads on white goods (usually by HFC or someone similar) are usually just loans, and the goods are not affected by non-payment. there are a few exceptions thought (Brighthouse...)

masterlumps

buy the car outright, with a loan - from yourself

you will have a smaller monthly payment to back into savings than you would have to pay for finance