Advice: Finance on used car with low or no interest rate

Cpu2007

Hello everyone

I hope someone give me some advice on this.

My question probably are a bit silly but I'm hoping to get the best advice possible that matches my circumstances.

I'm considering buying a new car when my insurance expires, the cost of the car will be around £16,000, money that I don't have direct access to but that I can pay though finance.

The obvious problem here is the interest rate and I'd like to find a way to pay monthly without having to pay the interest rate. Interest rates vary from 4.9 to 6.9%.

I've been on this forum several times and aware of 0% interest rate credit cards that allow to make purchases for 6 or more months and the repayment can be made without paying the interest rate if the rules are followed properly. However these sort of loans are not possible on high cost products.

My question is: what is the best way to buy a car that will allow me to pay the car but avoid the interest rate or have to pay very low interest rate?

Thank you

YorkshireBoy

Do you have a history of managing high limit credit cards (as verified by your CRA reports)?

What's your income?

If the answers are yes, and circa £50-60K, then a money transfer from an MBNA card might be an option. You'll pay a 4% fee for approaching 2 years of interest free credit.

If the answers are no, and circa £30K, then you're probably going to struggle.

Cpu2007

YorkshireBoy wrote: »

Do you have a history of managing high limit credit cards (as verified by your CRA reports)?

not sure what that means

What's your income?

circa 20k

If the answers are yes, and circa £50-60K, then a money transfer from an MBNA card might be an option. You'll pay a 4% fee for approaching 2 years of interest free credit.

obviously this wont apply to me but it would be nice to understand what you mean by 4% fee for 2 years interest free credit. 4% fee of what and how much would that amount to?

Apples2

You want a £16k car on a £20k income but you consider yourself such a low risk you should have access to that lot interest free?

The only interest free you will get is by purchasing a £13k car for £16k interest free.

I'm not suggesting for a second anyone will lend you £16k at ANY interest rate

YorkshireBoy

Cpu2007 wrote: »

not sure what that means

It means have you had credit cards in the past, and have you managed them well, and do the credit reference agencies show this (so any new lender can check when they make their credit search).

circa 20k

And you want a £16K loan!? It's not going to happen.

obviously this wont apply to me but it would be nice to understand what you mean by 4% fee for 2 years interest free credit. 4% fee of what

4% of the transaction value.

and how much would that amount to?

Is that a serious question?

mustangu

Cpu2007 wrote: »

not sure what that means



circa 20k



obviously this wont apply to me but it would be nice to understand what you mean by 4% fee for 2 years interest free credit. 4% fee of what and how much would that amount to?

0% credit cards charge a 4% fee for giving you a 0% loan

Cornucopia

It seems unlikely that you will be able to borrow £16k on the open market - full stop. You might be able to get hold of 0% credit card with a limit of maybe £3-4k. Even then, car dealers have what is known as a floor limit, and either won't take more than a certain amount by credit card, or may make a supplementary charge.

The easier route is probably car manufacturers' 0% deals - these may be easier to obtain. Though I would suggest that you reduce your outlay somewhat as borrowing £16k against a £20k income seems a little extravagant.

e.g. Toyota Yaris

Deposit: £1888
36 x £159
MGFV: £4341

Obviously this is an example based on list price, and you'd negotiate against that before stating that you wanted 0% finance.

Cpu2007

YorkshireBoy wrote: »

It means have you had credit cards in the past, and have you managed them well, and do the credit reference agencies show this (so any new lender can check when they make their credit search).And you want a £16K loan!? It's not going to happen.4% of the transaction value.Is that a serious question?

it was a serious question because I didn't know what the 4% was referred to , now that you've explained it is a silly question

Obviously I'm trying to find a good alternative. For example the peugeot has a finance offer that allows to pay the car in rates with 0% interest rate.

I want something similar for the used car that I'm looking for, i might not get 0% but a low interest rate would be nice. The idea of 4% on the transaction and then 0% interest rate sounds very good, sadly I don't fit the requirements.

I got two cc from lloyds (american express and mastercard) when I still was a student. I have been using them for the past 3-4 years and always paid on time monthly. I haven't checked my credit reference or anything but had my credit limit increased to £2500 recently.

Cpu2007

Cornucopia wrote: »

It seems unlikely that you will be able to borrow £16k on the open market - full stop. You might be able to get hold of 0% credit card with a limit of maybe £3-4k. Even then, car dealers have what is known as a floor limit, and either won't take more than a certain amount by credit card, or may make a supplementary charge.

The easier route is probably car manufacturers' 0% deals - these may be easier to obtain. Though I would suggest that you reduce your outlay somewhat as borrowing £16k against a £20k income seems a little extravagant.

e.g. Toyota Yaris

Deposit: £1888
36 x £159
MGFV: £4341

Obviously this is an example based on list price, and you'd negotiate against that before stating that you wanted 0% finance.

I forgot to mention that I have some savings, some in a tax isa account and others in easy saving account.
My intention is to reduce the amount of interest that will be paid to the lowest possible. For example, if I was to fit the requirements for the 4% transaction fee, I would only pay around 640£ interest on the 16000 car. However, having isa savings, will allow me to reduce to amount by minimum 100£ after a year because of the profit out of the saving account and I think this is a good reduction.
Furthermore, spreading the payments over 2-3 years will allow me to pay in a more affordable manner and it won't be much extravagant against my salary.

I have learned all these tricks about savings, interests rates, cashbacks from this forum, unfrotunately I know that the majority applies to low cost products, reason why I'm asking advice on how to behave on a big purchase.

Cornucopia

Certainly, the payments will be more flexible with a Credit Card than with a loan or finance deal.

However, your savings are unlikely to make any difference to your credit score.

SeanG79

Cpu2007 wrote: »

it was a serious question because I didn't know what the 4% was referred to , now that you've explained it is a silly question

Obviously I'm trying to find a good alternative. For example the peugeot has a finance offer that allows to pay the car in rates with 0% interest rate.

I want something similar for the used car that I'm looking for, i might not get 0% but a low interest rate would be nice. The idea of 4% on the transaction and then 0% interest rate sounds very good, sadly I don't fit the requirements.

I got two cc from lloyds (american express and mastercard) when I still was a student. I have been using them for the past 3-4 years and always paid on time monthly. I haven't checked my credit reference or anything but had my credit limit increased to £2500 recently.

Bear in mind that there is no such thing as free money, hence why credit card companies charge a fee for the 0% deal. Vehicle dealers/manufacturers that offer 0% deals, the vehicles are blind discounted and the banks are paid the "interest" portion by the vehicle dealer. I know of 0% deals where the dealer pays equivalent of 9.9% APR to the bank for the 0% finance.