Best way to borrow money for car?

MartynHaigh

I was wondering if I might get some advice on how to borrow cash for a car?

I'm looking at borrowing in the region of £20 - £25k, but I'm not quite sure how to structure it so that I pay as little for borrowing the money as possible.

I see that loans up to £15k are going at around 4.9% apr, but any more than that and it shoots up to over 6%. Is there any reason to not get two unsecured loans out? Is there a better way of doing this?

I have an Amex card which I can purchase the car on, and a nice bonus will be that I get the points associated with the purchase.

Can anyone help me work out how best to purchase this thing without giving away more money than necessary?

Thanks,
Martyn

the_insider

MartynHaigh wrote: »

Can anyone help me work out how best to purchase this thing without giving away more money than necessary?

Thanks,
Martyn

Yeah, the best wat to spend as little money as possible is not to borrow such a ridiculous amount to buy something that will drop in value the first time you use it. What on earth are you buying for £25k?

gb12345

MartynHaigh wrote: »

I see that loans up to £15k are going at around 4.9% apr, but any more than that and it shoots up to over 6%. Is there any reason to not get two unsecured loans out? Is there a better way of doing this?

Firstly there is no guarantee that you would get the headline rate - lenders only have to give it to 51% of successful applicants.

Secondly, the 2nd application would likely be turned down when the lender sees that you have applied for another loan.

Tixy

The representative APR on loans over £15k are generally higher than the representative APR for loans of £10k - £15k.

Is there any reason to not get two unsecured loans out

You may not be accepted for the second loan application. Or the APR you are actually offered on the second loan may be higher.
Some lenders may only offer a shorter loan term on amounts under £15k than those over (which may be an issue for you depending on how long you were planning to repay the loan over).

I have an Amex card which I can purchase the car on, and a
nice bonus will be that I get the points associated with the
purchase.

Have you checked if the car dealer charges extra for paying by credit card (often a % fee which will outweigh any point you earn).

MartynHaigh

@the_insider : don't worry - not buying a new car, just scratching an itch I've had for a while.
@Tixy : fair point about the amex points - will obviously check before I go down that route.

My credit rating is ridiculously good, and paying back the money isn't an issue for me but it seems like getting two loans is out of the question. I think I can get a loan for the full amount for 6.9 over 10 years, but I was hoping to get something with a lower APR - anyone know how I can do this?

Tixy

2 loans isn't definitely out of the question. Nobody on here can know for sure how 2 potential lenders would assess your situation.

But if you apply for 2 loans then you have to go through the credit check procedure with both of them, and both will assess your credit file and affordability separately.

The issue that people often have is that the second loan potential lender can see that you have just applied for credit elswehere - and they won't know how much additional debt you have just taken out elsewhere and so will assess your risk/affordability based on than unknown data. So they might decline you, or may only lend at a signigicantly higher APR.

If affordability isn't an issue I'd try getting a loan over a much shorter period of time, because obviously you'll pay less in interest but also 10years is exceptionally long to pay for a depreciating asset such as a car.

Regarding your ridiculously good credit rating - no matter what is on your credit file that is not the only thing potential lenders consider. There are plenty of posts on these forums from people with a perfect credit score/rating from the credit reference agencies who are unable to get anything except subprime expensive credit.

dealer_wins

Barring a house, everything else is life should be saved up for IMO.

It saves £1000s upon £1000s, as well as keeping you out of trouble if you hit hard times!

poppasmurf_bewdley

Borrowing £20/25k for a car over 10 years will mean that by the time the last payment is made, you will have paid a total of about £45k for a vehicle that will then be worth about £2k. And you will have got fed up with it after about year two.

Shark

The poster asked for loan advice not life advice. Just because you penny pinching and do not want to enjoy the finer things in life does not mean you flood this thread with your irrelevant advice.

poppasmurf_bewdley

Shark wrote: »

The poster asked for loan advice not life advice. Just because you penny pinching and do not want to enjoy the finer things in life does not mean you flood this thread with your irrelevant advice.

The OP didn't ask for a preacher either!

gb12345

Shark wrote: »

The poster asked for loan advice not life advice. Just because you penny pinching and do not want to enjoy the finer things in life does not mean you flood this thread with your irrelevant advice.

And the OP got loan advice - don't get one.

Oh and before you preach again - I do enjoy the finer things in life, but I pay for them with my money rather than the banks.