personal loan or car finance?

jaymac28

I am looking to buy a new car in January (i am told i will get the best deal in January)for which i will need to borrow. Am i better with a personal loan or finance from the garage i buy from? I was originally thinking a personal loan so i could buy through private sale.

stator

ignore me please

SeanG79

If you are looking for a private sale, personal loan is your only option, but be aware of your recourse, etc. via a private sale.

If you buy from a garage, it will depend on your credit status and what rates are offered/available to you. Also, depending on the vehicle and age of the vehicle, some dealers offer warranties/deposit contributions for using their finance, which you forfeit if you choose to use another form of payment.

Gaz83

Neither one is 'better' than the other. They both have their positives and negatives.

fatblokexl

take a look at PCP (personal contract plan?) this will allow you to "buy" a new car, run for three years or so and upgrade for a newer car.

no MOT to worry about, just usually a mileage limitation or fee for every mile over as set limit.

SeanG79

But with a PCP you never own the vehicle or the benefit of any equity there may be in the vehicle (you also wont have the responsibility of any negative equity there may be).

There are pros and cons to all finance agreements

hostertlady

personally I would ask your bank first what their rates are, if you are really disciplined you could borrow a bit more than what you need as their rates will be lower...
spread the cost over 5 years with the provision you can pay extra off the loan with no penalties..
the extra you have borrowed ( to get the lower rate of interest) shove in a savings account, for now...
the monthly payments over the 5 years will be lower than if you had the loan over 3 years.... BUT you overpay as much as you can and then you will end up paying the loan off before the 5 years and save a fair bit on the interest...
I hope this makes sense? it does to me...but I may not have written it down clearly enough.....


the rates are better than if you got the car on finance through a garage....

jaydeeuk1

SeanG79 wrote: »

But with a PCP you never own the vehicle or the benefit of any equity there may be in the vehicle (you also wont have the responsibility of any negative equity there may be).

There are pros and cons to all finance agreements

A PCP gives you the option of owning it if you decide to go for a lump sum. A lease will be cheaper but you rarely get the option to purchase. PCP IMO isn't worth it unless its 0% Apr and you can get t a good discount off rrp.

Another thing to check is length of warranty, I'd hate to have 12 or 24 months left of a finance deal when the warranty has already run out.

downhillfast

A lot depends on how much you are looking to spend.

We need to change cars as we're expecting a baby and have 2 dogs that already fill our Corsa! I'm funding this with a 'money transfer' credit card. Effectively a 29 month loan at 4% and they offered me £6500 limit which is more than enough for what I'm looking for.

Money transfer credit card info

bsms1147

downhillfast wrote: »

A lot depends on how much you are looking to spend.

We need to change cars as we're expecting a baby and have 2 dogs that already fill our Corsa! I'm funding this with a 'money transfer' credit card. Effectively a 29 month loan at 4% and they offered me £6500 limit which is more than enough for what I'm looking for.

Closer to 2% if you're comparing it to a loan as it's a one-off fee not an APR.

Even better.

jaymac28

Thanks for all the help, having spent a few days looking about i think im going to go with Tesco 4% loan as i can make as many over payments as i can. I tried my bank first and was shocked when they said the best they would give me was 12%! One company offered 29% and said this was due to my poor credit score, i don't understand that when my credit score is 936!!!!!! Im shocked at how easily these loan companies can offer such poor rates, thank god i done a bit of homework. Thanks again for the help.