Car Loan

mardatha

Is it better to take finance from the garage selling the car... or apply to the bank? Are there any hard and fast rules about this? And what's a good %rate for a loan and what isn't? Sorry for all the Qs!

wiltsguy_2

the garage will offer Hire purchase or a PCP deal, both of which offer lower rates than banks normally, but you dont actually own the car until paid off, PCP normally requires a final balloon payment at the end(or hand the car back), also if a year down the road you wish to sell the car it becomes difficult(not impossible) to sell the car as will have outstanding finance on it. Where as a bank loan you own the car and just owe the bank money-but can be higher interest rates.

Nearlyold

There are so many variables its difficult to give a definitive answer. Are you buying new or used? Do you have a good credit rating? How much are you looking to borrow? Whether its HP, PCP, HP with balloon, or a Personal Loan you want the lowest APR you can get but at the end of the day buying a car always loses you a shed load of money.

MNM2903

I would go for a bank loan, this way you own the car, if you do go for finance then make sure to get GAP insurance. This means your covered for the finance on the car if you have an accident. Because your car value will decrease but your finance repayments remain the same it can cost you a bomb if you need to claim on insurance because worst case you can end up crashing the car and its written off but the pay out from the insurance only cover 75% of the car so it leaves you with 25% finance left to pay your self and also needing to buy a new car, obviously this is just an example. with gap insurance it covers you for the full ammount.

I personally would never get car finance again. seemed a good idea getting a nice new shiny car and all that but you could probably get by and save the money yourself and buy something nice out right.

MNM2903

suppose even with a loan youd have the same dilemma if you crash, but you do always have the option when getting a loan of selling the car without hassle and paying the loan off if you wanted to. i would agree though lowest APR probably best just make sure you get that GAP insurance

Pixie5740

Since cars are depreciating assets it's really best not to borrow money to purchase them.

Ebe_Scrooge

I personally prefer a bank loan, for all the reasons stated above - at least you actually own the car.


The only thing to consider - most car dealers will make a commission on selling you finance, so may offer a bigger discount on the price of the car itself if you take their finance. You need to work out whether the overall cost ( cost of car + cost of finance ) makes it worthwhile.

Tixy

If you are comparing unsecured loans with car finance offered by a dealer then look out for a dealer quoting an interest rate that is a flat rate not an APR. Its a sales tactic because the numbers are smaller. But any agreement will always show the APR which is the key figure.

You can only compare deals if you are comparing APRs.

Babbawah

I'm looking at the OP's post count & wondering if there's any benefit at all in hanging around MSE for such a loooong time?

mardatha

Thanks everybody (apart from the plonker at the end there).
We're retired and want this to be our last car, hence going for a brand new one which requires finance Very helpful, thank you !

macman

Why not buy a one year old car and let the previous owner take the big depreciation hit? It will still have two to six years warranty on it, depending on the make.