Buying a 2 year old car - Should i finance?

Massy

Hi All, been a while since i have posted on here!

I am looking at buying a car that is 2 years old for £20k. I had 1 year left on its manufacture warranty.

I could buy the car outright but i have heard sometimes it is beneficial to finance because if anything goes wrong with the car when its out of warranty.... you are covered by the finance company? in this case BMW. Or is that a load of rubbish?

APR is around 11.9% but i have been told by the dealer that they can bring this down and it will be over 48 months.


Here is the full quote... This is a hire purchase not a pcp. I plan on keeping the car for over 5 years.

48 monthly payments of £363.86
Term of agreement 48 months
Purchase fee £0.00
Cash price £19,000.00
Your deposit £5,000.00
Total deposit £5,000.00
Amount of credit £14,000.00
Fixed rate of interest 11.9% fixed
A.P.R. 11.9%
Total amount payable £22,465.28



I am wondering if paying the extra going down finance is worth it if it secures anything going wrong with the car mechanically out of warranty. Plus it keeps money in my bank for a rainy day.


Thank you in advance to those that can help me

AndyMc.....

Get them to bring the APR down and then reconsider the finance option.

By the way finance won't cover wear and tear items so it's not a guaranteed warranty.

Massy

Thanks for the fast reply!

The car has a lot of optional stuff and electric items that could go wrong in the future so im just trying to think of the best way i can protect it.

AndyMc.....

Massy wrote: »

Thanks for the fast reply!

The car has a lot of optional stuff and electric items that could go wrong in the future so im just trying to think of the best way i can protect it.

What car is it?

Massy

Its a BMW 125i 2016

I could PM you the link to the advert if you needed that?

eamon

Rather than do the HP thing why not try your bank for a personal loan. Should be cheaper than the quoted 11.9% interest rate.

Massy

I could go for a bank loan but that doesnt give you all the protection that a car finance loan would, thats what i am lead to believe anyway

Arklight

Massy wrote: »

I could go for a bank loan but that doesnt give you all the protection that a car finance loan would, thats what i am lead to believe anyway

If you want cover for malfunctioning bells and whistles you’re probably better off just buying an extended warranty than paying for £2.5k of finance for no reason.

As long as you pay or pay for part of the car on a credit card (commonly people pay the deposit) you should be covered by Section 75.

https://www.moneysavingexpert.com/news/cards/2015/08/i-got-26k-back-under-section-75-after-i-paid-300-on-credit-card

sheslookinhot

No, get a loan. £14,000 for 4 years will cost £800-£850, saving over £2,500.

System

Section 75 protection won't protect you outside of the manufacturers warranty if there is a fault unless there's a common issue and you have protection under the Consumer Rights Act anyway. If you drive down the road and the clutch goes or the electric window stops working or the car breaks down having a car on finance won't get it fixed for free, you'll be paying the full repair costs.

As stated what you need is an extended warranty but beware even they don't cover everything.

motorguy

Massy wrote: »

Thanks for the fast reply!

The car has a lot of optional stuff and electric items that could go wrong in the future so im just trying to think of the best way i can protect it.

So you're proposing paying £3,500 in interest charges to give you a little bit of extra protection from the finance company? :eek:

Willfully bad idea.

I suspect the dealer is telling you this - as he gets commission on finance - simply take out an extended warranty with BMW if you're worried.

If you really must use finance, you can get it for as low as 2.7% APR.

I'm assuming its a BMW Approved Used car at that price?