Best Car Finance Options

SimonR22

I was hoping for some advice on best way to fund a new car. I’m 21 years old and and looking to get a 2020/21 Mk8 VW Golf. I know the car is a bit extreme for my age however I do a lot of miles for work so needing something able to cope with that and is also good to drive. I’ve came into a bit of money so can instantly pay off about 1/3 of the cars full price.

I have been looking at different finance options but was just wondering what one is the best or if there’s any I haven’t even considered. PCP is working at £65 per week (easier for me to work out as I get paid weekly) for everything including insurance. I’ve had a look at 0% credit cards and I am getting offered cards however it will not tell me the limit without applying for the card which is obviously not much use when trying to spend £10,000 on credit. 

I was hoping someone may have some suggestions on the cheapest way to fund this as I’m sure there are options I haven’t considered. I would consider other cars however I love the way the Mk8 looks and it’s a brilliant car to drive. Any help appreciated!

born_again

Avoid PCP on 2nd hand cars.
0% credit card, while good. You may find a lot of dealers will only take deposit on them, not the balance of purchase (excessive cost to them)
Have you run any ins quotes, to see if the purchase is viable, given it sounds like you are using for work, so DDP & commuting will not cut it.

Cheapest is most likely going to be a bank loan.

Herzlos

What numbers are you looking at? I can see 2020 Golfs from about £5k to £25k.

Personally, I find VW pretty dull, expensive and overrated and would probably look at the Seat equivalent (Leon) or possibly the Ibiza which is a bit smaller. Basically the same car but without the badge snobbery and thus cheaper.

Pretty much everything can cope with a lot of miles, it'll mostly be down to whatever you can sit most comfortably in so it's worth going and sitting in a few before deciding.

Don't use a 0% credit card for a car purchase - the dealer won't accept it so you'd need a money transfer deal, and then if you can't pay it off over the time you'll get stung for what'll likely be 30%+ APR.

Goudy

As already stated, PCP deals on used cars tend to be expensive.
They often attract higher rates of interest that customers are usually blind too because of the lower monthlies.

You're are also usually out of manufacturers warranty and it's a used car so repairs as well as it's basic needs, like servicing need to be factored in.
If you take a 3 or 4 year old car over 3 or 4 year PCP deal, it'll be 7 or 8 and you'll still owe the GFV (balloon payment) when it's 7-8.

PCP's are a little better for new cars.
Take one over 3 or 4 years with a full manufacturers warranty and you only really have to worry about servicing.

As explained, your 0% credit card probably won't be accepted for anything more than the deposit.
(though I use one every year for road tax, servicing etc, helps spread the costs as they all come in the same month).

A bank loan might be the way to go but at 21 your "creditabilty" might be problem.
I know a lot of people say credit scores are meaningless, but as you're young you probably have little credit history and that will show.
It won't just effect a bank loan but would probably put you in the realms of the "we finance anyone" PCP deals at eye watering percentages.

My advise is to park this idea for a while.
Use the money you have to find a nice cheap runabout that will get you to where you are going.
Yes, perhaps apply for an interest free card for your road tax, help build a bit of credit history (pay it though, you don't want bad history).

Build up some no claims bonus on your runabout and then consider your position say at 25, when your insurance risk should drop a little.

Arunmor

At 21 you want an older car somewhere in the 7-8yo range that you can buy with a small loan from the bank.  Have you figured out how much insurance is going to cost you?  It also sounds like you are on a wage and not a salary how sure can you be of your hours?

motorguy

PCP on a used car will be crazy expensive.

Also... at the end of term, you'll have to stump up the residual value figure or hand the car back.

At your age, and with a bit of a cash sum behind you i'd be buying a car outright with cash.  Assuming its maybe £8K, thats going to get you a decent mk7 Golf (if a Golf is what you want).  

Mildly_Miffed

You do "a lot of miles for work".

Commuting? Or for business purposes?
How many miles a year?

How much will your insurance be with suitable business cover?

How much are you willing to subsidise the HMRC business mileage repayment by?

If you really are going to be doing anything approaching a high business mileage, is a company vehicle not on offer? Or have you decided to opt-out to drive something you want instead? How do the sums work out for the allowance vs BiK tax?

Or if you're "paid weekly", is this some fragile gig economy thing...?

SimonR22

Arunmor said:

At 21 you want an older car somewhere in the 7-8yo range that you can buy with a small loan from the bank.  Have you figured out how much insurance is going to cost you?  It also sounds like you are on a wage and not a salary how sure can you be of your hours?

Mildly_Miffed said:

You do "a lot of miles for work".

Commuting? Or for business purposes?
How many miles a year?

How much will your insurance be with suitable business cover?

How much are you willing to subsidise the HMRC business mileage repayment by?

If you really are going to be doing anything approaching a high business mileage, is a company vehicle not on offer? Or have you decided to opt-out to drive something you want instead? How do the sums work out for the allowance vs BiK tax?

Or if you're "paid weekly", is this some fragile gig economy thing...?

Yeah I have a car just now so theres absolutely no rush, however it is now starting to have a lot of things break in it and it just generally struggles with doing 70/80mph on motorways. It’s silly but just enjoy the way golf’s drive and how they look but not completely shut off to SEAT’s ect.

Into my final year of apprenticeship so definitely steady job. Company just seems to prefer paying everyone weekly than monthly. 

SimonR22

motorguy said:

PCP on a used car will be crazy expensive.

Also... at the end of term, you'll have to stump up the residual value figure or hand the car back.

At your age, and with a bit of a cash sum behind you i'd be buying a car outright with cash.  Assuming it’s maybe £8K, thats going to get you a decent mk7 Golf (if a Golf is what you want).  

Yeah I think buying the car outright is the way to go. I’m very stubborn with what I want and actually not a fan of how the Mk7’s are on the inside. Will keep having a look but think the 0% card is out the window unfortunately.

Herzlos

SimonR22 said:

however it is now starting to have a lot of things break in it and it just generally struggles with doing 70/80mph on motorways. It’s silly but just enjoy the way golf’s drive and how they look but not completely shut off to SEAT’s ect.

As long as you can get to 70 you should be fine. You're wasting a lot of fuel at 80 and not saving that much time.

What do you currently have? Because I don't think there are many cars that would struggle to get to 70.

Have you driven many cars? Without being condescending I'm curious as to why you prefer the Golf. Because I've found the many VW's I've driven really dull aside from performance.  Admittedly I've never driven a Golf but I've owned a Lupo, Polo and a few Passats. Nice cars, very practical and sensible, but dull.  A lot of people really like them though.