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Buying my first car - credit card or loan?
This is going to be a tough one! I hope someone can help me!
I am buying my first car and unsure which route to take.
Rather than PCP or HP, i decided to buy the car outright because the interest rates on Car finance payments means i'm paying A LOT more than the car is worth, so the interest on a loan or credit card is more favourable. So that's where my dilemma is - credit card or loan?
The car I want PLUS insurance costs about £9,000. I would add £3,000 of my own money but i need £6,000.
I could take out a loan from the post office (which i'm 95% eligible for): £6,000 loan, 4.4% APR, 3 years, £177.98 per month, £6,407.37 in total to pay and NO extra charges to pay more or pay off the loan early.
OR I could take out a Santander credit card (which I am 9/10 eligible for): 0% interest for 26 months, £3 monthly fee, 21.7% APR after the 26 months is over. The advantage of this is that if i pay £230 a month over 26 months i can pay off the loan interest free! worst case scenario, if i pay it off with £200 per month, i will only pay interest for month 27, month 28 and month 29 which would mean total to payback (including the £3 monthly fee for the entire 29 month period) is £6,477.60. I have been preapproved for a credit card with a limit of £6,100, but i will only know for sure once i put in the application. If i cannot get a credit card loan for £6k then the credit card is pointless for me
TO SUMMARISE
Option 1: Bank Loan for £6,000
Eligibility: 95%
Interest Rate: 4.4%
Time Frame: 3 years
Monthly Payment: £178
Total Payable: £6,407
Option 2: Credit Card Limit of £6,000
Eligibility: Pre-approved
Interest Rate: 0% interest for 26 months, 21.7% thereafter
Time Frame: 29 months
Monthly Payment: £200 Total Payable: £6,478 or
Monthly Payment: £230 Total Payable: £6,000
Things to bear in mind: I want to get the car in mid-February 2022, I want to keep my credit score and history as clean and as favourable as possible, I am getting married 2022, I hope to get a house around 2025 with my husband (or hopefully sooner), I have recently just paid off a Master's loan in November, I have a bank account with Santander already
Any advice would be greatly appreciated - thank you very much

Rather than PCP or HP, i decided to buy the car outright because the interest rates on Car finance payments means i'm paying A LOT more than the car is worth, so the interest on a loan or credit card is more favourable. So that's where my dilemma is - credit card or loan?
The car I want PLUS insurance costs about £9,000. I would add £3,000 of my own money but i need £6,000.
I could take out a loan from the post office (which i'm 95% eligible for): £6,000 loan, 4.4% APR, 3 years, £177.98 per month, £6,407.37 in total to pay and NO extra charges to pay more or pay off the loan early.
OR I could take out a Santander credit card (which I am 9/10 eligible for): 0% interest for 26 months, £3 monthly fee, 21.7% APR after the 26 months is over. The advantage of this is that if i pay £230 a month over 26 months i can pay off the loan interest free! worst case scenario, if i pay it off with £200 per month, i will only pay interest for month 27, month 28 and month 29 which would mean total to payback (including the £3 monthly fee for the entire 29 month period) is £6,477.60. I have been preapproved for a credit card with a limit of £6,100, but i will only know for sure once i put in the application. If i cannot get a credit card loan for £6k then the credit card is pointless for me
TO SUMMARISE
Option 1: Bank Loan for £6,000
Eligibility: 95%
Interest Rate: 4.4%
Time Frame: 3 years
Monthly Payment: £178
Total Payable: £6,407
Option 2: Credit Card Limit of £6,000
Eligibility: Pre-approved
Interest Rate: 0% interest for 26 months, 21.7% thereafter
Time Frame: 29 months
Monthly Payment: £200 Total Payable: £6,478 or
Monthly Payment: £230 Total Payable: £6,000
Things to bear in mind: I want to get the car in mid-February 2022, I want to keep my credit score and history as clean and as favourable as possible, I am getting married 2022, I hope to get a house around 2025 with my husband (or hopefully sooner), I have recently just paid off a Master's loan in November, I have a bank account with Santander already
Any advice would be greatly appreciated - thank you very much
0
Comments
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If you want to keep your credit files as clean and favourable as possible, then pay cash only for the car. £3k will get you something decent enough, especially for a first car. And with 14 months to go before you buy the car (unless you mean Feb 2021), you can increase that if you need to.
It's particularly important not to spend more than you need as you also only have a couple of years to save for the wedding and three more for the house.2 -
Most car dealers will not take credit card payments for a car purchase.
1 -
Buying my first car - credit card or loan?
Neither - cash is the way to go.3 -
Deleted_User said:If you want to keep your credit files as clean and favourable as possible, then pay cash only for the car. £3k will get you something decent enough, especially for a first car. And with 14 months to go before you buy the car (unless you mean Feb 2021), you can increase that if you need to.
It's particularly important not to spend more than you need as you also only have a couple of years to save for the wedding and three more for the house.
You make a good point. Being honest, keeping up with the Joneses plays a big part. I'm 27 and only getting my first car, meanwhile my friends are on their 2nd and 3rd cars and have Mercedes or BMW or Jaguar. I thought me getting the Astra i had in mind was me settling haha, but you're right, best to just do what I can definitely afford. It's better to own a house than have a nice car! Thank you4 -
Good decision, the money you'll be saving will make those with the Mercs, Jags, BM's envious when you've got very little debt and can afford more of the basics, and essentials, etc than them.
Years ago i kept up with The Jones's and i often look back and remember all the money i spent - soooooooo much money wasted 😥0 -
Car dealers are reluctant to accept credit cards for large amounts because the credit card company will take a percentage of the cost which directly impacts the profit that the dealer will make.1
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Mutima said:You make a good point. Being honest, keeping up with the Joneses plays a big part.
best to just do what I can definitely afford. It's better to own a house than have a nice car!
Keeping up with the Jones's is the surest way to poverty.
It reminds me of when I was first courting my now wife. My BiL is a sales rep, but in sales a "big" title is important, so his business card reads "European Sales Director". My MiL could not understand that was just a job title and kept bleating about her successful son, who was "on the board" of the massive major multi-national Japanese company he worked for. BiL was also going through a premature mid-life-crisis promoting the "successful" image and swapped his aging Passat Estate (sensible family car) for an A4 Estate, which he decided was not sporty enough so swapped that after 6 months for a BMW M4 coupe, which he hated the ride comfort (sales reps do a lot of motorway), and so swapped that 6 months later for a regular A4, which was too small (still wife and 3 kids at home) so 6 months later took delivery of a Superb Estate - a fantastic car but all those brand new cars in quick succession on "new reg" day burned a fair few bob. He had to go to FiL for a bail-out.
Rather than play to "keep up", I went into bangernomics on the basis I didn't need to impress anyone. MiL was not impressed - she thought I was not good enough for her daughter. Anyway, roll on to present day and we are in by far the better place than BiL.1 -
Mutima said:This is going to be a tough one! I hope someone can help me!
I am buying my first car and unsure which route to take.
Cash is king, my first car cost £60 quid and was a hand painted Morris Marina in Dulux dark cherry !!!Had a 6ft, roof mounted CB mag mount (anyone under 25 ask yer dad) on it, went racing down a hill with overhanging trees, and it knocked it straight through the back window lolFor 60 quid i wasn`t too bothered, I went and bought an allegro for £200.What i`m trying to say is first cars should be all fun and frolics, and most of all cheap, not leave you in serious debt at a young age.
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sourcrates said:Mutima said:This is going to be a tough one! I hope someone can help me!
I am buying my first car and unsure which route to take.
Cash is king, my first car cost £60 quid and was a hand painted Morris Marina in Dulux dark cherry !!!Had a 6ft, roof mounted CB mag mount (anyone under 25 ask yer dad) on it, went racing down a hill with overhanging trees, and it knocked it straight through the back window lolFor 60 quid i wasn`t too bothered, I went and bought an allegro for £200.What i`m trying to say is first cars should be all fun and frolics, and most of all cheap, not leave you in serious debt at a young age.0
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