Finance or bank loan?

Arklight

JustAnotherSaver wrote: »

Ok so i have a relative who's looking to buy a car & they've gotten to the stage where they're tired of buying £1k cars that end up as money pits so they're seriously considering 'finance' ... as that's what everyone has, right? That's what everyone says you should get, right? :doh:


Bank loans are pretty simple to me - take out X-amount, pay back over Y-months and pay Z-per month. Job done. Go spend your cash on whatever you wish.


Finance though i know absolutely nothing about.



What would be the best thing for them out of the two? Best to me would be cheapest but can the dearer option be better for some reason?


I think they'd be looking in and about the £5k-£8k range. They wouldn't need the car being serviced to be part of any deal (because can you really trust them anyway?) - so they'd be doing their own servicing. Basically they just want to own the car, not to be renting it. So at the end of the time they want it to be theirs & not have to give it back.


Would a loan be better than finance? Would finance be better than a loan in this case? Is there something else (lease is one term i've heard although i think this is where you don't own the car?) that'd be better than the two?

I ended up getting a Zopa loan. I had never heard of this lender before. They're a peer to peer lending system and the rates for what your relative wants to borrow are less than half the next cheapest rates I was getting on the comparison sites (about 2.5%). :

https://www.zopa.com/loans

Before that I had come to the conclusion I could actually be less worse off getting a brand new lease car with a 0% manufacturer finance deal and deposit contribution, than one 3 years old and having to pay a high rate of interest on the principal.

You need to tell them what you want the loan for, but that's the end of their interest and the maximum payments are completely flexible. If you borrow £10k and only spend £7k on the car you can pay them £3k back immediately, or in a year, or whenever up to the last payment, with no penalty.

I then found a decent local car dealer, haggled quite hard, and made sure to pay the deposit on credit card.

A lot of dealers, especially main dealers, really really like selling finance. They make a tidy commission out of it themselves and often taking out their finance can make the list price drop quite dramatically. In terms of value for money you need to figure out if this leaves you better or worse off than arranging your own finance and haggling.

One main dealer recommended I take out their PCP deal, take the deposit contribution from Nissan, then cancel it in the cooling off period and pay it off outright. I can kind of see what he was saying but it seemed like a lot of effort, and possibly not worth it in the end as main dealer prices seem about 15% higher than decent independents anyway.

System

JustAnotherSaver wrote: »

Read the other thread i posted in this forum today & you'll learn that it's a bit more than a 'few hundred quid'.


And if you can't think beyond that viewpoint then there's little point in it being explained to you.

Doesn't matter if its £1000. My car has cost me £1200 a year in depreciation alone and I bought that at 2 years old for 1/3 of its new price and have owned it 6 years.

I would and have spent more money repairing cars than they're worth in the past and at some point with my current car I will be in the future.

n217970

3 years ago I bought a car for £1.5k, on a yearly basis I spend a similar amount maintaning it as I do the wifes £8k car.

Saying that I wouldn't buy a car from the bloke on your other post based purely on the first text he sent.

foxy-stoat

n217970 wrote: »

Saying that I wouldn't buy a car from the bloke on your other post based purely on the first text he sent.

Nor me, he is connected to the Chinese mafais

JustAnotherSaver

foxy-stoat wrote: »

Look at gen 8 Civic's for this money, golfs are ok but I would choose the Civic instead.

It's a warm day and you really feel like a nice cold Diet Coke (play along. Let's assume you like Diet Coke for arguments sake). What would you do if someone told you you should have a ribena instead? After all it's still a cold soft drink, right?

Yes, the true MSE response would be a tap water which would also be a cold drink, but it was a Diet Coke you were wanting....

foxy-stoat

JustAnotherSaver wrote: »

It's a warm day and you really feel like a nice cold Diet Coke (play along. Let's assume you like Diet Coke for arguments sake). What would you do if someone told you you should have a ribena instead? After all it's still a cold soft drink, right?

Yes, the true MSE response would be a tap water which would also be a cold drink, but it was a Diet Coke you were wanting....

Agreed with everything you say - but lets say the last time you drank a ribena you got very ill and was off work for a week, maybe it was the drink, maybe it was the shop you bought it from who knows.....then would you try a diet coke.....as your work colleague who has drunk them for years has never have a day off......

:beer:

JustAnotherSaver

foxy-stoat wrote: »

Agreed with everything you say - but lets say the last time you drank a ribena you got very ill and was off work for a week, maybe it was the drink, maybe it was the shop you bought it from who knows.....then would you try a diet coke.....as your work colleague who has drunk them for years has never have a day off......

:beer:

I'm glad you see my point