Car finance/purchasing

GrassSnakeUK

Currently Tescos are offering 6.1% on loans to club card customers. I can't find anyone cheaper than that 

DrEskimo

Is there a strong need to buy a car of that value and borrow to pay for it? Could you not explore cheaper cars, or wait till you have saved enough (through saving the hypothetical 'loan' cost over the next few years)?

Arunmor said:

You are not buying a new car, so there will be no manufacturers discounts etc.

This is not accurate. I bought a used car from Renault and using their PCP initiatives I got £1,000 deposit contribution from the manufacturer and 2 free services. I settled the finance 2 weeks later and paid minimal interest (from what I've seen, dealership finance rarely charges 56-days interest fee on early settlement).

Worth making sure car is a good price first though, and haggle still. I had search for a good 6-months and this was the lowest I had seen before the haggled price and £1,000 deposit contribution were added.

GrassSnakeUK

Yeah I could save up for 4 years, I started doing that 4 years ago.... 

Mutton_Geoff

GrassSnakeUK said:

Before I say anything else, a massive thank you to all who have replied. There is some great advice and help offered!!!

I have been discussing a new plan with the Mrs, as she isn't over the moon with using a large lump of our savings.....
Borrow some of the money from a bank at the lowest APR possible and use the interest gained on the money in the savings as an "offset to the payments" for the loan.. tmThis allows us to have capital in the bank and asset in the car to sell if we absolutely had to .
Is this feasible?

Eg 
30k car.
10k cash deposit
4k trade in

Borrow 16k at 6.1%
48 months @ £ 400 
Interest paid £ 2139
Interest per year =  £534 

My savings are in accounts getting 5.2% so essentially borrowing at 0.9%

Does this make sense??

Why waste the 0.9%? Use your savings then save back up again and only take out a loan if your boiler needs replacing etc before you've rebuilt your savings pot.

Otherwise what else are savings for?

GrassSnakeUK

Hi Mutton (great handle by the way).
I've managed to secure a loan at 5.8% (if I accept it)... so only 0.6% being "wasted"
I know what you mean about it being a waste, but mentally (and receiving ear ache from mrs) still having those savings gaining money in reserve is a more appealing concept. My (oddball) thinking being, we are just not getting interest from our savings and using that interst that we aren't getting to get a cheap car.

GrassSnakeUK

An update for anyone still following... 
I bought a hyundai tuscon ultimate, after my trade in the balance to pay was £26,560
After a bit of,
"I don't want to pay that how about this, could you work with me on that?"
And the old classic of
"let me speak to the boss"
We shook hands at £25330 along with it's 1ST MOT and a full service. 

To finance this
:I borrowed £11000 at 5.8% with barclays over 3 years, but it's flexible so i can make any overpayment I like at any time to reduce the term of the loan (and if course accrued interest, which I intend to)
I paid the rest out of my savings.

Thanks for all the replies and assistance. 

johnbhoy70

Bit of a bump on this thread as i'm now looking to buy a used car again unfortunately. 

I'd be trading in my old one and am a cash customer and do understand the finance argument if i can get get any incentives. 

However, on a couple of recent visits to used dealerships they didn't seem to be pushing on the finance either. I think in one i possibly mentioned i would maybe look at clear finance in 2 years when i had money coming in from shares locked away. Maybe they smelt a rat or it was bad timing as it was right at the end of Feb.  

My main question is this though. If they do give what you consider a decent ''incentive'' for going through their finance on HP then it would be in your interests to get as long a term as possible as this would lower monthly interest payments and if penalties for clearing are based on this figure ( e.g. 2 months interest) then this is the way to go. Am i overthinking this??

I was overthinking it. It makes no difference does it as the interest is  fixed and built in at the start so the term is irrelevant. What i need to be careful off i think is how i clear the balance. As i understand it if doing so within 14 day would be withdrawing from the agreement and after 14 days would be settling it. 

I wouldn't want to fall foul of a dealer if they threw in some kind of extended warranty, free services etc and have to take the car back there. 

I think if i do get a loan then the best way forward is to try and negotiate some kind of discount if i can and then clear  clear it after 14 days.