Advice Wanted on New Car Purchase

orangeapple91

Hello everyone,

I'm new to this forum so please forgive me if this is in the wrong place.

I am considering a new (used) vehicle purchase of circa 15-20k and want some advice on the best way to finance it. It should be noted that I currently have an HP agreement on my current car which is at a £6k settlement figure. The reason I am considering a new car is a recent promotion which has increased my vehicle budget from £150 pm to £300 pm.

As I see it, there are three options:

1: Bank loan for 15k which I will use to cover the settlement figure and then use the trade in value of my car (circa 6k) to purchase the vehicle for 15k.

2: Bank loan for 6k to cover the settlement, then either HP or PCP the new vehicle. Note: two credit applications in a short space of time.

3: Find a dealer which will agree to settle the HP as part of the trade in and finance the new vehicle on either HP or PCP through them (essentially option 2 but with only one credit application).

I am currently in favour of HP type finance given that I do circa 20k miles per year and am a little confused regarding excess mileage charges on PCP deals.

If anyone has any thoughts on which is a more sensible option in terms of credit file and likelihood of best APR etc then that would be much appreciated.

Thanks

PeacefulWaters

Have you considered a cheaper car and saving money monthly so that next time you fancy a new vehicle you can pay cash? Or you can build up a house deposit?

£20k for a second hand car sounds nuts.

Dobbibill

I agree with PeacefulWaters - that's alot of money for a vehicle.

Save it up then make your choice when you are not in a HP agreement.

You may find you actually like not having to pay out monthly for a car.

Congrats on the promotion too.

FIRSTTIMER

I want to spend around 10k on a car and I am almost in this dilemma....


2.5k Deposit and 7.5k bank loan over 5 years OR
2.5k Deposit and a PCP.


Which is the better option? My friends are saying PCP as you get more benefits, but I will ultimately keep the car after 3 years so feel I would be paying over the odds in the end

bengalknights

Have you considered leasing the car and just keeping the cash on you to invest elsewhere?

Dribiddi

Can I ask a slightly related q that I don't think metits a new thread.

HP goes on your credit file like a loan you are paying down doesn't it?
Is it the same with leasing?

Jon_B_2

I've just bought a second hand car for £13k. For me using a bank loan was a no brainer. Only 3.4%. Most HP and PCP deals are at least 10% Apr.

parking_question_chap

orangeapple91 wrote: »

If anyone has any thoughts on which is a more sensible option

Do you need a new car?

If you are buying a £20k car and you cant pay cash, I would say its too expensive.

Pixie5740

orangeapple91 wrote: »

Hello everyone,

I'm new to this forum so please forgive me if this is in the wrong place.

I am considering a new (used) vehicle purchase of circa 15-20k and want some advice on the best way to finance it. It should be noted that I currently have an HP agreement on my current car which is at a £6k settlement figure. The reason I am considering a new car is a recent promotion which has increased my vehicle budget from £150 pm to £300 pm.

As I see it, there are three options:

1: Bank loan for 15k which I will use to cover the settlement figure and then use the trade in value of my car (circa 6k) to purchase the vehicle for 15k.

2: Bank loan for 6k to cover the settlement, then either HP or PCP the new vehicle. Note: two credit applications in a short space of time.

3: Find a dealer which will agree to settle the HP as part of the trade in and finance the new vehicle on either HP or PCP through them (essentially option 2 but with only one credit application).

I am currently in favour of HP type finance given that I do circa 20k miles per year and am a little confused regarding excess mileage charges on PCP deals.

If anyone has any thoughts on which is a more sensible option in terms of credit file and likelihood of best APR etc then that would be much appreciated.

Thanks

Does the budget increase due to promotion come from the company you work for in that they expect you to drive a certain type, age, make of vehicle or is it just that you're earning a bit more money now so want to "treat" yourself to a more expensive car?

Pixie5740

FIRSTTIMER wrote: »

I want to spend around 10k on a car and I am almost in this dilemma....


2.5k Deposit and 7.5k bank loan over 5 years OR
2.5k Deposit and a PCP.


Which is the better option? My friends are saying PCP as you get more benefits, but I will ultimately keep the car after 3 years so feel I would be paying over the odds in the end

Option 3 buy a £2.5k car.

What benefits do your friends say you get with PCP? I'm not saying that you don't I'm just curious as to what advice you are receiving.

You would need to compare the total cost of Option 1 against the total cost of Option 2 to work out which option is cheaper but neither will be as cheap as Option 3.

Pixie5740

Dribiddi wrote: »

Can I ask a slightly related q that I don't think metits a new thread.

HP goes on your credit file like a loan you are paying down doesn't it?
Is it the same with leasing?

It really should have been a new thread. Yes car leasing is reported to the credit reference agencies (or at least some leasing companies report to the agencies) even though you are really hiring the car and not taking out a loan.