Advice: Personal Loan or HP

MadMatty

Hi


Im hoping for a bit of advice. Im looking to buy a new car but I cant pay it off in full so im looking at financing. Im wanting to keep the car so im definitely going for Hire Purchase and not PCP. (Don't want to be stuck in a cycle)


The question is, would I be better off with a personal loan? Than financing a HP with a dealer? Ive been looking and emailing dealers and all their APRs are around 7% - 10%


With a personal loan they are like 5-6%


So would it be best for me to go down a personal loan route? Unless im missing something?




Thank you so much!

BeenThroughItAll

Plenty of people will advise that buying a car with any sort of finance is insanity, but at the end of the day, plenty of people do and if you want to, that's up to you.


If you do want to use financing to do so, I would go for a personal loan if possible. That way you own the car outright from day 1, so if circumstances change and you have to sell, there's no encumbrances. Equally, if you decide you want a change, you can do so without worrying about VT issues, settlement figures, FW&T problems and the like.


My own car is a bought-cash and keep job. My wife's was financed with a personal loan paid off six months later. If you want to have something now and don't have enough savings to cover it, that's your prerogative. I would, however, advise overpayment on the loan to clear it more quickly and reduce overall cost.

MadMatty

Thanks for your input, much appreciated.
I wasn't particularly wanting to go down the finance route but I need the money for my wedding, otherwise I can pay for it in one go. Plus my current car is nearly out the window so I need something to get to and from work.


But you've cleared it a bit for me regarding my choice of going to get a PL rather than HP from a dealer

UsernameAlreadyExists

Of course the downside of walking in to the dealer with a pile of cash is that you might not get as big a discount off the screen price because they'll not get the finance kick-back.


EDIT: I am not suggesting you chose HP, I am merely making the observation!

Foxy-Stoat_3

MadMatty wrote: »

But you've cleared it a bit for me regarding my choice of going to get a PL rather than HP from a dealer

Looks like you answered your own question in post one:

HP at 7-10% interest or Personal Loan at 5-6% interest.

Your credit score and how much you want to borrow will determine the interest rate for PL's though.

BeenThroughItAll

UsernameAlreadyExists wrote: »

Of course the downside of walking in to the dealer with a pile of cash is that you might not get as big a discount off the screen price because they'll not get the finance kick-back.

EDIT: I am not suggesting you chose HP, I am merely making the observation!

Very true. Buy carefully; another reason why I wouldn't buy new, the opportunities to negotiate on a secondhand vehicle are, in my experience, less driven by finance deals. In any case, I'd rather pay more upfront and own the thing than pay the same in higher interest and charges down the line.