Car loan or finance

Beebur

Wanting to buy a car, does anybody know if a loan would be cheaper than car finance?
Also, if applying for a loan that you subsequently turn down because the interest rate offered is higher than the interest rate advertised, does this still show up on your credit rating?

The reason I'm asking is mainly due to using MSE website and finding the offers of interest are comparable to the car finance but that's only if I get a loan at the rate offered.

Thank you in advance.

YorkshireBoy

A personal loan would generally be cheaper, ie a lower APR, than dealer sourced finance.

However, if you've a less than decent credit history then you will have a better chance of getting accepted for credit secured on an asset, ie the car.

If you apply for a loan, rather than make an eligibility check, then the search will be recorded as a 'hard' type...and could affect the outcome of any subsequent application you make should you decline the first offer.

DesReyno

It also depends on the type of car finance you!!!8217;re comparing with. A lot of car finance deals these days are so called Balloon deals where you are only financing the depreciation of the car - this means that the monthly payments will be much lower than a loan where you will have to take out the full value of the car

Beebur

My main issue with the car finance is we will be paying back approx £700 more than what we would if we took out the loan...... But only if we got the loan at the rate advertised. Thanks for the replies

System

How much is the car? One of the cheapest loans could be a 0% on balance transfer or new purchases credit card.

Dobbibill

The cheaper rates are normally for loans over £7500 and with exceptionally good history. Only 51% of accepted applicants get this rate though.

Do you expect to fit this criteria?

Nebulous2

Some people do both.

Car finance may come with sweeteners - such as a dealer contribution towards your deposit or an extended warranty. If you sign up for that you you can then pay it off fairly quickly using whatever means is at your disposal.

That has the potential to go wrong though, if you cannot subsequently borrow to pay off the car finance.

PeacefulWaters

Beebur wrote: »

My main issue with the car finance is we will be paying back approx £700 more than what we would if we took out the loan...... But only if we got the loan at the rate advertised. Thanks for the replies

I have no idea what rate you'll be offered.

But you can see which option to pursue first.