Need new car - how to finance

JillyC8

What is the best way to finance a new (second hand) car? Use savings and pay outright or purchase via a loan? It would mean clearing out my savings if I go for option 1.
I have a mortgage etc. I also hate owing money. Are there any super-cheap ways to finance this?
Also I commute over 25000 miles a year.

DUTR

The best way is what suits your personal circumstances, cheap isn't always the cheapest (and that is both for the vehicle and the financing) .

[Deleted User]

Savings.
Then put back into your savings every month what you would budget for a car loan.
Or get a o% credit card and pay it back over the o% period.

DrEskimo

Use savings.

But always make sure you have a separate emergency fund of 3-6months of expenses. Don't count it towards your savings pot.

If you don't feel comfortable spending so much of your savings then buy a cheaper car, or save for longer until you have enough that you do feel.comfortable.

I personally like to think of how I can achieve things without the use of credit where ever possible...

Having said that, it can be advantageous to get a car on finance to benefit from deposit contributions and free perks. But settle this straight away!

DUTR

DrEskimo wrote: »

Use savings.

But always make sure you have a separate emergency fund of 3-6months of expenses. Don't count it towards your savings pot.

If you don't feel comfortable spending so much of your savings then buy a cheaper car, or save for longer until you have enough that you do feel.comfortable.

I personally like to think of how I can achieve things without the use of credit where ever possible...

Having said that, it can be advantageous to get a car on finance to benefit from deposit contributions and free perks. But settle this straight away!

That is always a good idea, save for that emergency/rainy day, in my case fortunately it has not come yet and I have had two brand new cars (not bottom of the range either) and the funds are still there to actually retire if I didn't like work.

JillyC8

DrEskimo wrote: »

Use savings.

But always make sure you have a separate emergency fund of 3-6months of expenses. Don't count it towards your savings pot.

Unfortunately my savings is my emergency fund, which is why I'll probably have to find a different way to sort a car.

DUTR

JillyC8 wrote: »

Unfortunately my savings is my emergency fund, which is why I'll probably have to find a different way to sort a car.

Can you not save more and just wait until you have more savings to make your purchase?

JillyC8

DUTR wrote: »

Can you not save more and just wait until you have more savings to make your purchase?

I'm hoping to do this but I think my current car may fall apart before my savings reach the level I need to be able to fund both a car and an emergency fund. My car is essential as I commute over 100 miles a day (4 days a week). I will hopefully keep it on the road for longer but not sure how much longer it will last so I'm starting to think ahead now.

Enginewise it's good - it's a diesel and has done 116000 miles so far with few problems. It's more to do with the body (door catch faulty on drivers side, few scrapes), also I am sure something weird is going on with the suspension. I might be imagining it but I felt 'lower down' last time I drove it! I hope it's my imagination ... it's coming up for an MoT this month so I'll hopefully find out. Plus the bulbs go ridiculously regularly so I'm always sorting them. I just have a gut feeling it's going to need replacing soon ...

[Deleted User]

Isn’t an emergency fund for a new car when you need one? Just use that and build it up again. I would say needing a new car to get to work is important enough to warrant using an emergency fund.
Otherwise what’s the point? You could always sell it if you have to.

DrEskimo

Well I personally wouldn't panic. Just keep going and repair it as long as it's economically viable. Suspension issues are not costly to fix, and the body issues are probably not worth fixing. Can always try some DIY methods to spruce it up.

Cars break down and it's just one of those things. There is no guarantee that if you buy another car (even brand new) that it won't break down...I would just keep saving. You have a fully funded emergency fund, so you are covered if the worse happens (car completely breaks down and you need to repair or buy another quickly). Increase your savings by cutting your budget if you would like.

Having said that, if you can get a small cost loan for a low cost relative to your budget, then it's not the end of the world either....I don't think there is a strong justification for that though.

JillyC8

Deleted_User wrote: »

Isn’t an emergency fund for a new car when you need one? Just use that and build it up again. I would say needing a new car to get to work is important enough to warrant using an emergency fund.
Otherwise what’s the point? You could always sell it if you have to.

I suppose it is, but I wouldn't like to clear it out for just one thing. I only have three months cover for if I lose my job so to use that up I think would be too stressful.