Finance or Loan for a car

Eddie86

Hi All,

I am just wanting some advice on the best method to getting some sort of finance towards a car. I have saved for a deposit and the insurance for a one off payment. From what I understand a personal loan may have the lowest APR, whilst this is important to me the most important thing is my application is approved as I need the car for work etc. if I have to pay a higher APR at this moment in time I'd be happy to take the hit.

Would I have a better chance of being approved for finance than a personal loan? my chances of securing a loan are rated as 70% on the MSE club. I have no debt or anything, however I am not a home owner and I think my historical lack of credit usage is what is bringing it down.

Would you chance it at 70% for a personal loan or go with the dealer finance?

neilmcl

Eddie86 wrote: »

Hi All,

I am just wanting some advice on the best method to getting some sort of finance towards a car. I have saved for a deposit and the insurance for a one off payment. From what I understand a personal loan may have the lowest APR, whilst this is important to me the most important thing is my application is approved as I need the car for work etc. if I have to pay a higher APR at this moment in time I'd be happy to take the hit.

Would I have a better chance of being approved for finance than a personal loan? my chances of securing a loan are rated as 70% on the MSE club. I have no debt or anything, however I am not a home owner and I think my historical lack of credit usage is what is bringing it down.

Would you chance it at 70% for a personal loan or go with the dealer finance?

Absolutely no way for any of us to tell you this without any of the information a finance company or bank will have access to about you.

However the chances of a getting finance is generally higher as this is secured credit against your vehicle, however there are no guarantees. You haven't said if this is for a new or used vehicle and the cost involved, you really want to stay clear of finance on a used car as these deals are never that good, much better to get a cheap loan if you can. You'll also own the car from the outset in this scenario whereas with finance the vehicle remains the property of the finance company until the final payment has been made.

System

How much have you saved for a deposit? If its a four figure sum you could buy a car outright in cash right now.

Eddie86

Yeah I was looking at a used car with a value of £ 9k-12k and the deposit I have is in the four digits. I appreciate the cars value will go down and I will accept the loss when it comes to replacing it which I will be able to do with my new job.

But for practicality at the minute, being accepted is more important than the cost in the long run.

Any more suggestions?

Mercdriver

Why not use your deposit saving plus a smaller loan taken over a shorter period, say 2 years to get an older, but reliable car? Then you have a means of transport and a way of rebuilding your credit more too?

Look for something with a good service history rather than low miles. Say something around the 2-3k mark. Get a loan for say £1500 - 2k over 2 years and then revisit whether you want a new car at that time on finance. That enables you to settle in to your job too.