Should I get a loan to buy a car?

BernieR42

hi, looking at buying a new car and need to put 12k towards it, I get an allowance from work for £500 per month so this would pay a bank loan I can get over 2years or should I use savings this would still leave me with a 6 month emergency fund, no other loans and mortgage free. If you can let me know your thoughts. Thanks

DrEskimo

Yes use savings. No sense in donating money to financial institutions to borrow money you already have....

Just treat the allowance from work as additional pay. Save it up and use it to buy another car later down the line/cover costs for the car.

Brie

first concern is that you are getting the money from work... presumably work assumes you have/need a car.  is this likely to change??

why do you need to spend £12k?  just cuz work is giving your £500 a month?  why not get a car for £2k and pocket thedifference??  and there will be other expenses.  business use insurance for one, maintenance, petrol, parking......

Grumpy_chap

Given the OP has the cash to buy outright, the only reason to take finance is if the finance is linked to a worthwhile incentive - take the finance, bag the incentive, repay the finance so avoiding charges.  Otherwise, buy cash.

BernieR42

Have had allowance for car for last 2 years, had company car for 10years before but they changed. Only use for personal use not work. Sounds like I should pay cash, everyone else at work had been getting cars on pcp. Don’t like giving banks money. Thanks for help