Best way to go about buying a 'newer' car?

B0bbyEwing

I'm referring to things like finance, hire purchase & whatever else would get thrown in that band as I have no clue about any of it whatsoever.

In the market for 2 cars, which cuts the budget drastically & I'm finding it difficult to get something.

Our budget is generally about £2k or has been in the past. I've stretched this out to the £3000-£3999 area but still struggling a bit.

Finding results but they tend to fall in to categories that I don't particularly want to deal with...
* FB-Marketplace where the profile of Riley shows him holding his pitbull on a chain while his other hand is in his boxers & a fag hanging out of his mouth with his baseball cap at 45 degrees.
* Ads from garages located in towns/cities that I don't want to go to. Not saying much more than that on the topic tbh other than been there & tried that & wish I'd listened to the advice I'd been given beforehand.
* Wet belted Fords on the belt change interval mileage.

I've always been against things like finance/hire purchase etc but this has been going on a while now that I'm VERY reluctantly considering it. 

I know there's one where you don't own the car at the end of it & another where you do, or something to that effect. I'd be interested in the one where you DO own the car at the end. I'm not in to rental. 

So what should I really be looking for then & expecting to pay?

Obviously that's a bit of an open question because I could be wanting a small engine Yaris or a BMW M5. 

We'd been looking at a town tootler for one of the cars (but something with a boot - no good the boot being filled by a pint of milk when wife is doing the food shop)

And something with 'some nip' for the other car. Again I know nip to one isn't much to another so for reference my last 2 cars have done 0-60 in 8.5 sec each pretty much, or at least those were the book figures. I don't particularly like mentioning 0-60 because then people jump to accuse you of being a traffic light warrior when it's like ... no, I just like a car that can get up to that speed in and about that timeframe. I'm not rallying everywhere but when I'm behind someone who's doing 25-30 in a 50 and we get to a set of lights then I want past them & some times you get idiots who'll floor it to get ahead only to then go back to doing 25-30 in a 50 & it's annoying! If you don't want someone to be in front of you then just do the speed limit or somewhere near it. 

So yeah the other car would have performance around that area and could be a larger car (Focus / Astra / Golf size) but not too large (Mondeo / Insignia / Passat) as my wife struggles driving larger cars. 

Have never looked in to it so it's a different world to me. Where do you begin, what to look for etc?

MyRealNameToo

So you can separate the two, simply get a loan and use the cash from the loan to buy a car. 

Alternatively you have HP - you pay equal payments each month and at the end of the agreement the car is yours

Or PCP - you pay smaller payments up until the last month at that point you have the choice of paying a big payment and the car becomes yours or you dont pay it and hand the car back

The third option of dealer finance is the one you dont want which is PCH or a Lease which is where you are just doing a long term hire and you won't own the car. 

For brand new cars they will often discount for finance but secondhand cars they generally dont so dont need to mess about with taking dealer finance and then cancelling it and replacing it with either cash or a loan. 

paul_c123

If you're thinking of £2000 cars for outright ownership; and financing a car (presumably a much newer car, although you can get those kinds of finance products on older stuff too), first step would be an affordability check on the monthly payments to at least give you an idea of what you can afford.

This is a fairly good guide: https://www.youtube.com/watch?v=cAOm0UyupHc

B0bbyEwing

Thanks. 

Regards affordability - I don't tend to go in for those things too much because they often say I can afford more than what I want to be paying. Just because I may be able to afford £1000 a month (I've plucked that number out of the air btw) doesn't mean I WANT to. I may only want to pay £300 a month.

For the £2000 car, I wasn't looking at financing it. I can just go buy that. 

When I was talking finance I was thinking more of cars that start getting in the £5k-£10k area but again just because I say £10k doesn't mean I WANT to spend £10k. 

I want something that's going to give me a good chance of being reliable without dealing with a conman or the dregs of society. I also keep my cars for a long time / until they break, so I wont be chopping & changing every 2-3 yrs. My existing car lasted me 5yrs & has just broke. Car before that was 12 years. The second car lasted 7 years & would still be going if it hadn't been in an accident. Point being - I keep them. I appreciate that absolutely anyone can be a conman though & price doesn't guarantee reliability at all. It can give you a better chance of it though.



Thanks for the breakdown on the differences. What then is the difference between a loan and HP based on what you say?
Loan - borrow money from the bank, pay back an agreed amount each month. Buy the car.
HP - have an agreement with (dealer?) borrowing money in a roundabout way, pay back an agreed monthly fee, car is yours at the end.

Seems basically the same or at least extremely similar. It's just whether you want to have your agreement with a bank or a dealer? So why would you pick one over the other?

DrEskimo

In my view it’s the same as using finance for anything - borrow the least amount possible for the shortest time at the cheapest cost. 

Find the car you want and then just compare interest costs across different finance options. Pay as much as you can and overpay where possible to get it cleared sooner. 

Arunmor

The area of the market you are dealing in will be the "less well of"  they could be selling BMW down to a Ford KA.  I don't think you can escape that.  The only way I see you getting close is via word of mouth and being vigilant on FB marketplace or EBay and find someone selling granny's old car or similar.

You borrow where you get the best deal, it will either be HP or Bank loan, assuming you are of good standing the bank will probably be the best place.

Arunmor

DrEskimo said:

In my view it’s the same as using finance for anything - borrow the least amount possible for the shortest time at the cheapest cost. 

Find the car you want and then just compare interest costs across different finance options. Pay as much as you can and overpay where possible to get it cleared sooner. 

I would switch that around and check finance options first.  Real bargains are snapped up pretty fast so you want to be able to move fast.  Something like an older Fabia would be good.

MyRealNameToo

B0bbyEwing said:
Thanks for the breakdown on the differences. What then is the difference between a loan and HP based on what you say?

Loan - borrow money from the bank, pay back an agreed amount each month. Buy the car.
HP - have an agreement with (dealer?) borrowing money in a roundabout way, pay back an agreed monthly fee, car is yours at the end.

Seems basically the same or at least extremely similar. It's just whether you want to have your agreement with a bank or a dealer? So why would you pick one over the other?

It is very similar, though the HP will be from a finance company organised by the dealer not the dealer themselves providing the credit. 

One key difference is with HP the loan is secured against the car so you stop paying they can take it away. With a loan its unsecured debt so they would have to go through a legal process to attempt recovery if you weren't paying. 

Rates can be fairly different, acceptance levels too given one is unsecured lending and the other isnt. 

There are some advantages in HP though, you can in certain circumstances end the agreement and return the car once 50% of the total debt has been repaid which isnt a thing for an independent loan. Similarly as the dealer arranged the loan then if something goes wrong with the car and the dealer won't help then you can pursue the finance company whereas with a loan you chose the dealer so its your problem. 

Mildly_Miffed

Are you buying new or used?

If new, then things like PCPs and leases come into play much more.

If used, then it's really trad HP or loan.

But ultimately, it's all the same answer... Find the car you want, then see what has the best numbers for you. If you think you'll want to keep it past three years, then rule lease out.

B0bbyEwing

Thanks for the replies. 

I can see I've not been clear with what I'm looking at. Or rather I've not explained it well. 

For just going and getting a car, normally speaking, I was looking at in and about the £2k budget. Things were dragging on so I stretched that budget a little higher but then things continued to drag on & we went from needing 1 car to 2 cars and fairly soon too (or at least 1 fairly soon). 

This made me consider other options I would previously dismiss like finance. To go that route the budget would have to be raised even further to warrant it. 

But unsure really what's the lowest end price wise that someone would bother with financing/loans. This is why I mentioned the types of cars we're looking at as a town tootle and a nippy focus/golf/Astra (etc) would be priced differently to something like an M5  or an RS3 or whatever. 

The answer may well be that unless I'm buying brand spanking new or something that's only like 1 year old then there's no point. I don't k ow. I've never considered this before. 

But yeah it certainly won't be a brand new car we're looking at. Depreciation on that would be huge and initial cost too high. 

Mildly_Miffed

B0bbyEwing said:

But unsure really what's the lowest end price wise that someone would bother with financing/loans. 

The simple answer to that is "more than you want to pay cash"...

Many of the new car finance packages and structures simply don't translate to used cars, because there's manufacturer incentives wrapped up in them. Remember, dealers and importers and manufacturers are trying to hit volume targets (artificial though they may be). They've got cars that are lower-demand-than-expected sitting in yards, and they want them gone, especially if there's a replacement or a facelift or trim-level-rejigs in the offing.

Once a car's already out there on the streets, they don't care, so those incentives don't exist. So it's simply borrowing money, however it's structured. That's why - for example - PCP interest rates are so different new to used.