What is the best way to buy a car?

Cambsalex

Hi all - I'm hoping someone can help me with some advice on buying a new/second hand car. I have always had a cheap runaround car (an old Fiat Punto) but am in the process of buying my first home and after all expenses will have around 24k savings. I'd love to buy a nice car as it's something I have never had. I was looking at a small SUV, perhaps a Mercedes GLA, Audi Q3 or something similar. To buy a 2018 model looks like it would set me back 20k roughly. So my question is, what is the best way to purchase this or perhaps a newer, more expensive version. 

1) Buy outright. I could buy a 20k car outright though this would leave me with just 3-4k to my name. I guess the benefit is I wouldn't be paying any monthly contributions so slowly I could build my savings back up.

2) Buy using PCP and putting down a medium size deposit to bring costs down to a manageable amount per month (maybe 5k?). I have never had a car on finance, the appeal of being able to potentially get something a little newer than what my budget would be to buy outright, my worry is additional expenses through not owning the car.

3) Buying a car on HP - which would mean I would own the car outright eventually. I have no idea if this is a good thing or not.

4) Getting a loan to finance buying a car outright. If I can find one at a half decent rate it would mean I could own the car outright from the start. I have never taken a loan out though.

Any help, thoughts or opinions would be extremely appreciated as I really am clueless when it comes to buying a car! I would also welcome any opinion on Cazoo and if they are a good way to purchase a car.

Thank you! 

iwb100

Look at leasing (personal contract higher). You will almost certainly get a new car for less than financing via pcp. But leasing is fixed you have no flexibility and the car goes back at the end. It only makes sense if you have monthly disposable income to use and it will almost certainly be the cheapest way into a new car at least in terms of costs over the period. 

Your other options are to pcp and pay off with a loan if there are any pcp inducements. Such as a manufacturer contribution. That way you get best price but lower interest usually than pcp finance would offer.

I personally wouldn’t sink all my savings into a 2018 version of one of these cars but I know many on here would. You will find that works put cheapest and is most money saving but it also is a greater personal risk to you in that if you decide to change cars you are beholden to the market value of whatever you bought.

The other thing to consider is a new car could be a long old wait right now unless you find a cancelled order or something in stock. See a lot of new Q3s right now so maybe there is a stock of them somewhere.

Mutton_Geoff

Cambsalex said:

but am in the process of buying my first home and after all expenses will have around 24k savings 

I would seriously reconsider your decision to spend almost all of your savings whilst embarking on your venture into property ownership.

I've owned dozens of cars in my lifetime, many of them brand new, but the feeling of "new car ownership" wears off much quicker than paying off (or saving back into) the money you spent on them. Second hand car prices are currently at an all time high due to shortage of new vehicles. Stick with the Punto for a while, great cars.

If, in a year or two's time, you still want a new car, then take a look at the market at that time. To do it now would be bonkers.  

Grumpy_chap

Cambsalex said:

Hi all - I'm hoping someone can help me with some advice on buying a new/second hand car. I have always had a cheap runaround car (an old Fiat Punto) but am in the process of buying my first home and after all expenses will have around 24k savings. I'd love to buy a nice car as it's something I have never had. I was looking at a small SUV, perhaps a Mercedes GLA, Audi Q3 or something similar. To buy a 2018 model looks like it would set me back 20k roughly. So my question is, what is the best way to purchase this or perhaps a newer, more expensive version. 

1) Buy outright. I could buy a 20k car outright though this would leave me with just 3-4k to my name. I guess the benefit is I wouldn't be paying any monthly contributions so slowly I could build my savings back up.

2) Buy using PCP and putting down a medium size deposit to bring costs down to a manageable amount per month (maybe 5k?). I have never had a car on finance, the appeal of being able to potentially get something a little newer than what my budget would be to buy outright, my worry is additional expenses through not owning the car.

3) Buying a car on HP - which would mean I would own the car outright eventually. I have no idea if this is a good thing or not.

4) Getting a loan to finance buying a car outright. If I can find one at a half decent rate it would mean I could own the car outright from the start. I have never taken a loan out though.

Any help, thoughts or opinions would be extremely appreciated as I really am clueless when it comes to buying a car! I would also welcome any opinion on Cazoo and if they are a good way to purchase a car.

Thank you! 

I would wait until you have completed the house purchase and settled in before buying a new car.  That way you will retain an emergency fund for any costs you have not envisaged, or extra repairs to the property, or to get used to the costs of running a house.  Then you will have the full awareness of your future budgets and can assess the best way to have a new car.

A small amount of patience now could really pay dividends and avoid unnecessary stress along the line.

Brie

Lots of sensible advice here but I'll add my tuppence worth as well.

As a new home owner make sure you get something with enough room to help you sort out your new home.  Big boot for trips to Ikea or to the dump etc.  Not too new as things get mucky or scraped when you're cramming boxes or garbage bags in.

Do you have a credit card with a large available balance?  Is there a 0% deal on it?  Either purchase or transfer?  I've used this in the past to buy cars and have always found it easier than financing through the car seller (who usually don't know a thing about credit agreements)

Will your mortgage agreement be affected by any finance or spending?  That's the best reason to wait until after everything is sorted on the home front.

Herzlos

Wait until you've moved in and don't find something that'll eat up your savings, because there's almost always going to be something.

But I'd definitely consider putting most of that extra £20k in savings into the house - it may land you a better mortgage rate and save you a lot of money going forward. Use some of that saved money to buy a car.

Bigwheels1111

At the moment everything is overpriced.Due to supply and demand.

I would keep your old car if you can for a couple of year until things get back to normal.

Plus you keep your funds in place for emergenies.