best loan for a new car

geo_ann

Hi,

I'm 21, I take home 1,200 pounds a month, have a full time job and live with my parents.

I'd like to borrow a maximum of 5,000 pounds over 4/5 years to buy a new car.

I have noticed that I end up repaying an average total of 8,500 pounds.

Having never borrow money under my own name before, can any of you advise on the best way to go about borrowing money?

Any help would be greatly appreciated!

charleyroo

a bank loan is usually the cheapest if you can get the headline rate. The reason that you will pay back so much though is how long you are electing to pay it back. I have borrowed 8k but paying back over 12 months, only £200 in interest (large repayments though)

It's worth noting though that by the time the loan finished and probably before then, you will be 24/25 and probably chomping at the bit to move out but find you can't because you have to pay off the loan.

Tixy

Be careful if you are looking at the headline rates (ie the representative APRs) when working out how much you will repay. If you've never borrowed before you might struggle to get accepted and if you are it could well be at a higher rate that the representative APR they advertise.

Best place for a new borrower is often their own bank (providing you've managed your account well).

5years is a long time to take out a £5k loan over. If you ae looking at £8500 to repay over 5years thats only £140 a month - can't you afford more than that if you still live at home?

charleyroo

Apologies, yes, I agree with Tixy - only 51% of applicants get the headline rate.

[Deleted User]

OP £5k will probably get you a 3 or 4 year old car,5 years of paying for it will soon hack you off,better to save up a few hundred quid for an older car that you can insure 3rdparty f&t rather than a newer car that will need fully comp insurance costing maybe £1500+

dresdendave

You are working full time and living with parents. If you really want a car, save up for about six months and buy one outright for a couple of thousand. Don't burden yourself with a loan for the next few years.

opinions4u

What the hell are you spending £1200 a month on?

Get saving, pay cash for the car. This could easily be done within the year.

If you really do have to borrow, low APR, don't be misled by dealers quoting flat rate and never borrow for longer than 4 years for a car.

Johnny_Barnes10

What car you looking to get? Maybe some alternatives can be suggested. As I don't think it's wise to get such a big amount, for a newer car. Do you drive now? If it's not broke don't be in a rush to change it!

CLAPTON

why would any 21 year old want to burden themselves with a debt until they are 26?

say you want to move out and live independently; go skiing, travel the world, have a baby etc etc.

living at home should be a time to build up savings, not to get in debt

whatever do you do with your 1,200 per month?

redbull5

Give the op a chance, he probaly has savings and doesnt want to spend them, sometimes a loan can be the best bet, although their not to everybodies taste.

Ill be in the same postition, when im 20, i hope to have 15-20k saved, but wont be paying cash for a new car, will take out a loan and pay it off in 2 years or so..

OP, try repayments of 200, that should see it gone in under 3 years not 5..

Apples2

redbull5 wrote: »

i hope to have 15-20k saved, but wont be paying cash for a new car, will take out a loan and pay it off in 2 years or so..
.

You have a weird logic.

Why don't you take it out of your savings and replace the money in 18 Months?