Retired couple - car purchase options

rubble2

We are both retired with only income being from state and occupational pensions.

My wife is looking to get a new (used) car as her present vehicle has just passed it's MOT but with multiple advisories for underbody corrosion. She could afford to pay outright for another car (looking around £8k) but would prefer to hold back on usuing all of her savings so would rathe top up a sizeable deposit with some sort of finance.

Given our employment status, what are the chances of successfully obtaining a bank loan for say £5k?

We have looked at various options - 0% money transfer, dealer finance etc. but are curious if the fact that we are retired would immediately exclude our eligibility for a standard bank loan?

For extra background, we are home owners (no mortgage) and no other current debt.

Thanks

Emmia

Have you looked at any eligibility calculators with your current bank? / the one your main income goes to? That's probably where I'd start

fatbelly

If you can't (or don't want to) use all your savings then maybe use some, and one of these methods

https://www.moneysavingexpert.com/loans/personal-car-loans/

There's a link to an eligibility checker in there

MEM62

rubble2 said:

We are both retired with only income being from state and occupational pensions.

rubble2 said:

My wife is looking to get a new (used) car 

rubble2 said:

She could afford to pay outright for another car (looking around £8k) but would prefer to hold back on usuing all of her savings so would rathe top up a sizeable deposit with some sort of finance.

Why?  Not sure what the thinking is here.  Your income is from pensions so you do not have the risk of your income dropping due to loss of employment.  Therefore, your emergency fund is just for larger, unexpected, expenditure - her new car being the perfect example of that.  That is what it is there for.  It makes no sense to pay interest to buy a car when you have the cash sitting there.  'Borrow' the money from her savings and pay it back with monthly payments similar to the amount that she would have paid on a loan.  

rubble2

MEM62 said:

rubble2 said:

We are both retired with only income being from state and occupational pensions.

rubble2 said:

My wife is looking to get a new (used) car 

rubble2 said:

She could afford to pay outright for another car (looking around £8k) but would prefer to hold back on usuing all of her savings so would rathe top up a sizeable deposit with some sort of finance.

Why?  Not sure what the thinking is here.  Your income is from pensions so you do not have the risk of your income dropping due to loss of employment.  Therefore, your emergency fund is just for larger, unexpected, expenditure - her new car being the perfect example of that.  That is what it is there for.  It makes no sense to pay interest to buy a car when you have the cash sitting there.  'Borrow' the money from her savings and pay it back with monthly payments similar to the amount that she would have paid on a loan.  

You know, it is difficult to disagree with what you have posted - thanks. Time for a re-think

sheramber

Our bank had no problem giving us a loan for a car.  We had state pension and occupational pension. We were over 70 years old.

We wanted £8k but they advised it would be better to take 9k as the interest rate was less.

He said small loans are charged higher rate because people who get small loans are more likely to default repaying them

The bank were prepared to lend us up to £50k !

uss_tish

@MEM62 I’m in a similar position to the OP so thank you for your clear logic of using the monthly amount i would’ve paid on the loan to ‘pay back’ to my savings.  it’s a no brainer when you think about it as I have more than enough cash; just feels hard parting with such a large sum in one go.

retiredbanker1

I agree with the consensus here - however with one caveat (well two actually).
1 If they have savings that are/will pay more than the interest rate charged on a loan then take the loan.
2 If they are persuaded to take out finance by the dealer - make sure they get a kickback for doing so i.e. say £1000 towards the deposit etc then pay it off as soon as they have the car.

enthusiasticsaver

We are retired and have used the majority of our cash savings to buy a new car for me and I  would agree your wife should use her savings. She does not  need to worry about income protection as she is already retired and I personally would not want the headache of a loan or credit card even if my savings were earning slightly more than the loan rate which is unlikely anyway. Any finance would need to be paid back with interest so it stands to reason that will hurt more monthly assuming your pensions are not huge. 

retiredbanker1

enthusiasticsaver said:

We are retired and have used the majority of our cash savings to buy a new car for me and I  would agree your wife should use her savings. She does not  need to worry about income protection as she is already retired and I personally would not want the headache of a loan or credit card even if my savings were earning slightly more than the loan rate which is unlikely anyway. Any finance would need to be paid back with interest so it stands to reason that will hurt more monthly assuming your pensions are not huge. 

I agree the gap between loans and savings accounts is negligible these days - but it could be doable on a a zero net gain (and they have the option of paying it off at any time)
As for finance if they get £1000 or even £500 as a sweetener they could be quids in if they pay it off as soon as possible after collection of the car.