Loaning or Buying a Car for about 4 Years?

DrEskimo

User36750 said:

DrEskimo said:

Whichever loan agreement works out cheapest in terms of interest cost. 

You can trade/sell the car all the same after 4yrs. 

Of course more prudent would be to buy a cheaper car without any finance. Why have you decided on a higher budget with the need for finance? Better still, why not just keep the current car for 4 more years?

what’s happening in 4yrs that you need to change?

Because those are the parameters of our situation at this moment in time...

We need a bigger car as we'll have two babies and a toddler in car seats.
Not many cars can accommodate three babies and two adults.

After 4-ish years (maybe longer), our situation may change as one child may be tall enough for a booster seat only.

I want a nice car, not a banger, so looking at our finances, a chunk of deposit and a loan seems to meet what we're looking at right now.

There are plenty of nice cars that aren't bangers to be had for between £3-8k, but fair enough.

As stated, look at the absolute cost in interest (don't simply compare APR) between a HP, PCP and personal loan. Pick the one that is lowest.

It will depend on the particular car, from a particular garage/dealer at the particular time though, as all will vary.

Unless there is a particularly good offer or finance incentive with the HP or PCP, it's likely to be a personal loan (assuming you can secure a competitive rate when you come to apply).

Grumpy_chap

User36750 said:

To fund this, we'll be looking at about £12,000 in a bank loan paid back over 3 or 4 years, which probably works out at the same price as some sort of PCP deal.

However, in 4-6 years, we're unlikely to want that car any more.

User36750 said:

We need a bigger car as we'll have two babies and a toddler in car seats.
Not many cars can accommodate three babies and two adults.

After 4-ish years (maybe longer), our situation may change as one child may be tall enough for a booster seat only.

I want a nice car, not a banger, so looking at our finances, a chunk of deposit and a loan seems to meet what we're looking at right now.

OK, so for the higher value car that you desire, look at the lowest cost to acquire in total once all the finance costs, fees, etc are considered.

It might be 4 years.
It might be 6 years.
It might be something else when you decide to change the car.

Give this potential variability, if you choose a finance deal that involves a balloon payment, be sure to put the funds aside to clear the balloon payment if that is your decision in the time when the agreement ends.  That way you will have options and not feel forced into another finance deal if that is not the correct thing for you then.

Families are expensive to support and your future finances could be anything.

User36750

DrEskimo said:

User36750 said:

DrEskimo said:

Whichever loan agreement works out cheapest in terms of interest cost. 

You can trade/sell the car all the same after 4yrs. 

Of course more prudent would be to buy a cheaper car without any finance. Why have you decided on a higher budget with the need for finance? Better still, why not just keep the current car for 4 more years?

what’s happening in 4yrs that you need to change?

Because those are the parameters of our situation at this moment in time...

We need a bigger car as we'll have two babies and a toddler in car seats.
Not many cars can accommodate three babies and two adults.

After 4-ish years (maybe longer), our situation may change as one child may be tall enough for a booster seat only.

I want a nice car, not a banger, so looking at our finances, a chunk of deposit and a loan seems to meet what we're looking at right now.

There are plenty of nice cars that aren't bangers to be had for between £3-8k, but fair enough.

Can you link to any?

The 5008 that was recommended we look at comes in at late teens.  We wouldn't buy less than the 2018 plate as the design and tech included changed significantly with this year (plus the earlier models look awful! :P ).

We're at the stage of expecting Sat Nav on board at least but as the car will be larger, a rear camera is preferred.  Can't find any that we'd be interested in for £3k-£8k with those features, so we're happy to pay more for what we want.

But we're likely to look at a loan rather than PCP or Hire Purchase as we'd rather "own" it outright than have to worry about balloon payments and such.

I think the consideration we thought of was that if we paid £300 a month in a loan for (let's say) 4 years, then at the end, we'd still have the car.  Or we could pay similar and "rent" a brand new car but at the end of that period, we'd have nothing to show for it.

We may keep the car for longer but not sure, so went with the minimum time we'd probably keep it for.  But it's only because I don't really like Peugeot's, although the 2018 5008 does look pretty nice inside.