Car purchase - use loan or savings?

MrMrMr

If buying a car which is best to get a loan or buy the bulk of the car with savings, and then build savings back up with the monthly payments that would have been paying?

So for example if car was £15000 use 10K of savings and rest on a personal bank loan, then with the monthly payments would have used start getting savings back up. Or just get a lowish deposit of 2K and rest on a loan?

I notice Halifax now do 2 car finance loans of an HP (3.4% apr) and a PCP one (5.9% apr). With the PCP one you can hand back if want, similar to actual car or pay off and keep. With PCP ones as you don't own car, and may hand back, can you modify them? As in maybe little add one, row bar, alloys, add phone holder bracket etc or do you have to hand exact same car back to same specs?

Thanks

[Deleted User]

Savings. .

Nasqueron

If car is on 0% finance, use that, if paying interest, unless your savings earn more than the loan APR then use them

Also on PCP, no you can't change the car if you want to hand it back (or rather you can but they will bill you to restore it to the original spec)

MrMrMr

One car looking is 0% but it's more likely another one which isn't so.

Don't think any savings are 3.4% anywhere near really are they?

Just worried that this will use a lot of savings buying outright, and then have to build up again.

Interest looks to work out average of about £20/month for a loan for me.

[Deleted User]

MrMrMr wrote: »

Just worried that this will use a lot of savings buying outright, and then have to build up again.

It's the same as getting a loan, only in reverse and cheaper.

With a loan, you won't be adding to your savings for a long time.

foxy-stoat

For me I would limit the purchase to price to savings total.

MrMrMr

So if using savings would be a cash sale as such. Would it be better to pay via a credit card then and transfer savings to credit card to clear it. This way would you get some protection from using the credit card in case of any problems?

Sea_Shell

I'd use savings, but pay at least some of it (deposit) on Credit Card, for protection. I think it needs to be over £100 to get protection.

molerat

Sea_Shell wrote: »

I'd use savings, but pay at least some of it (deposit) on Credit Card, for protection. I think it needs to be over £100 to get protection.

No, the item needs to be in excess of £100 but you only need to pay 1p on the credit card to get protection.

robatwork

I doubt many car dealers will let you purchase a £15000 car on credit card - if they will then do that. But you're right, pay some of it on credit card either way.

And the answer is savings.

Pixie5740

What financial incentives is the dealer offering if you take their finance?