Best way to fund new car purchase?

elDeeJay

To cut a long story short, I've recently started a new job and plan on buying a new car in the coming month or two. I’ve no other debt and very little expenditure, and having never previously had a loan of any kind (not even a student loan during Uni) I'm a bit new to all this.
What im wondering is what is the best way to fund a £12,000-£13,000 purchase of a new car? Should I take out something like a personal loan with a bank, car finance through a dealer, car finance through a specialist finance company, borrow from someone like the AA or what?

Basically I have no idea what is the best way to fund the purchase. Also, how much roughly should I be looking to pay back on a monthly basis?

Any advice is appreciated.

Thanks

Nickynoo1

How about saving for it?

That may seem a little flipant but then you wouldn't be in the mess some of us are in. How much can you afford to save each month?

Nickynoo

Rafter

Congratulations on the new job and being debt free!

If you are going to borrow for a car be very careful about anything the dealer may offer you - unless you can get some very low interest rate and a good price on the car as well.

The cheapest option will probably be an unsecured loan and there are articles on here about the best value ones.

You could also fund some of it via a zero % credit card too - but will then have to play the switching or stoozing game when the introductory offer runs out and find another card to transfer the balance too.

As for how long you want to pay the loan off over, that is up to you really.

If you want to own the car outright in 3 years, that would be one option.

If you want to replace the car every 3 years, you could take out a 5 year loan and the value of the car after 3 years SHOULD be more than the loan outstanding. Watch out for early repayment penalties on the loan though.

Other words of advice:

Pick a car which doesn't depreciate too badly if buying new. For example a Mini costing £15,000 will cost you less over 3 years than say an Astra costing £12,000 because the mini holds its value better. [The mini also has a great servicing package which means no nasty servicing bills]. I own a mini but don't work for them!

Consider buying nearly new from a car supermarket. You can often get an almost new car for a big discount.

Research prices using https://www.whatcar.co.uk or https://www.autobytel.co.uk to see what price you should actually aim to pay.

Hope that helps. If it were me, I'd take out a 5 year loan with no repayment penalties. That way the amount of loan repayment reflects the real cost of ownership of the car.

You can always make overpayments, pay off the loan using credit card offers etc if you want?

Good luck and happy car shopping.

R

vansboy

Rafter has some interesting suggestions, above.

Be carefull if you did want a MINI - prices are VERRRRRRRRRRY strong, currently - but you do need to have the right specification, for it to sell on, again. & in another couple of years, the novelty/supply situation may be different.

Anyway, do your shopping around, so as to be fully aware of what is the best price you can get the car for THEN visit your local dealer.

Get friendly with him - imply you want to consider THEIR finance & ask what EXTRA offer there is, over & above the best price for the car.Talk as if you expect them to BEAT your best price, quoted!!The additional offers on manufacteres finance, is NOT out of the dealers profit, so more often than not, it could give an added bonus.

You may want to consider Personal Contract Plans - similar to USA, shortly going to be the way we buy cars, here, if the makers get their way. Simply funding the depreciation & running costs - you'll never really own the car!!

Let us know the make & model you're thinking of - you'll get lots of input, quickly.

& post in http://www.honestjohn.co.uk motor questions, for another friendly chat!!

VBl

elDeeJay

Let us know the make & model you're thinking of - you'll get lots of input, quickly.

Thanks for all the advice and suggestions thus far.

The car I am looking at buying is the new BMW Z4 2.2i Roadster. OTR price is about £25,000 but i have about £12k in savings I can use to fund the purchase, plus my current car, so i was curious as to the best way to fund the rest.

Given that 2nd hand models are currently selling ABOVE list price i'm not going to be able to cut much of a deal (not that it will stop me trying mind!)

Any more advice is welcomed.

vansboy

Currently, yes, there is a premium - but not sure how long this is to continue - or what the TRUE availability is.

BMW branded finance is going to still have some incentives - their dealers have targets, too.

There are other similarly attractive & debatebly better cars to drive, coming through, now. Nisan 350 gets limited suppiles, in soft top form & even Chrysler product, too.

I can't say I've seen a great number of the BMW in auction, as yet, but I'd hate to think you were being swayed towards it, due to it's percieved future value & image - if things went bad, you'd still get stuffed with a hrfty depreciation figure, should you need to sell quickly.The margin on high value vehicles can be VERY speculative - sometimes these cars would be traded on, dealer to dealer several times before finding a retail buyer.

Remember, you could save the finance £$£$ & just buy an Mx5 with your own funds - just as much fun & an even better depreciation level, £ for £!!

VB

jetboy

I'd be very reluctant to put 12K down as deposit on a car..there are beeter uses for it. Why not put the deposit on a credit card with 0% for 9 months. Avoid dealer's finance rates like the plague..generally they can't compete with the loan companies. A+L are doing 15K for 5.8% at the minute!. I've just changed my car last week and the best a dealer could offer was 8.9%. A+L do a car buying deal too..similar to the 3 year handbacks the HP companies offer.