Best Way to Finance a New Car

idv

Hi

I am looking for the best approach to finance a new car.

I will need to borrow £11,000

Do I

1.) Take out a loan with Northern Rock who are the cheapest I have found at 5.6% APR

(however from reading on this board several people have had bad experiences with Northern Rock. For example how do you know the exact APR you are getting for the loan, as this is based on your credit rating)

2.) Use the M&S Car Buying Plan which works like Ford Options you pay for 4 years for example and have a lump sum to pay at the end of this term

(may be a better option than ford options because of the lower APR at 6.2%)

3.) Put the £11,000 on a 0% interest credit card, then BT this over to the Texaco card which offers 3.9% APR for the life of the BT


I would appreciate your thoughts, views and advice please

Thanks

johannamse

Do the cheapest...so option 3. But you are unlikely to get a large credit limit straight away, so you could do a mixture of 1 and 3.

or...just save up...11k is ALOT to spend on a car, are you sure you can afford it? Do you really need an 11k car. Go over to the debt free wannabe board and read about all the people in debt, many of whom have brought expensive cars. Good Luck.

cheggers

Nothern Rock on charge 5.7 based on your credit rating and if you take out the payment insurance, so they are not the cheapest.

Have a look at Nationwide 6.7 %, everyone gets that rate regardless of your credit rating.

Good idea about using a credit card @ 0% then transfering to Texacco at 3.9%. However most garages now charge 2-5% credit card charge (£220-550, not so cheap now). Also heard that texacco were not taking the 3.9 balance transfers at the moment.

Rafter

Personally I would not rely on 0% credit card offers to finance a car. The best thing might be a truly flexible loan from the likes of cahoot and then use 0% cards or good life of balance offers where you can.

The M&S deal doesn't sound too bad either. You seem to be on the right track though - just don't be tempted by misleading 'dealer' offers without checking the true APR.

Good luck.

R.

YorkshireBoy

Alternatively, do like I did and take a dealer's 0% offer...

Mondeo 1.8LX (list £14,995), I got it for £4K down & 0% over 3 years, total £11,495 (2 years ago)

You have to wait and buy at the right time though, and now is not a good time due to the new 55 plates.

Just a point about the "saving up for it" suggestion. This can be a good way to "save" money in the long run because I *guarantee* you will NEVER part with £11,000 of your OWN money on a new car. Most people only do it because they're spending somebody elses cash - at the outset at least.

cheggers

Yokshire Boy, a 1.8 Mondeo are you mad, its a bit of guzzler. Go for the Diesel version.

You'll need a bigger loan to cover the poor MPG you'll get out of the 1.8 petrol engine

Pricy147

idv wrote:

3.) Put the £11,000 on a 0% interest credit card, then BT this over to the Texaco card which offers 3.9% APR for the life of the BT

This is your best bet.....BUT......you need to work the system.

Apply for an 11k offset loan (e.g. https://www.if.com, and there are others). Then, apply for the credit cards @ 0% until you cover your 11k in the offset current account.

This way, you pay no interest on your loan while you have 11k (or the equivelant of the outstanding loan) in your current account, plus the security, that if you cannot renew / extend you 0% credit cards (or get any others), you can always fall back to paying the normal interest rate on the loan (e.g. 8.9% or whatever it is now).

I have done this on a 15k car loan, and have been repaying for about 4 years. I have payed max £200 interest on this loan since I have had it.

You also benefit from interest payed on your current account if you have more than you owe on the loan. For example - 11k loan, 15k in your current account. You pay no interest on your loan, and receive approx 5% gross interest on your 4k left over.

Win Win solution!

Good luck

PS. You can do this with a mortgage - but need a lot of credit cards (certainly enough to cover a high percentage of your mortgage as offset mortgages are not the most competitive).

YorkshireBoy

cheggers wrote:

Yokshire Boy, a 1.8 Mondeo are you mad, its a bit of guzzler. Go for the Diesel version.

You'll need a bigger loan to cover the poor MPG you'll get out of the 1.8 petrol engine

Seeing as we've already tabled a good few suggestions for the OP, I'll take this slightly O/T...

Just turned 20K miles this week, and fuel consumption has averaged 38mpg since new. When I bought mine, diesels were £1,750 more. I couldn't justify it on 9K miles a year and anyway, I get reimbursed for a good few of them at 40p a mile.

What I'm trying to say is I did my sums - I'm an MSE.

skintchick

johannamse wrote:

Do the cheapest...so option 3. But you are unlikely to get a large credit limit straight away, so you could do a mixture of 1 and 3.

or...just save up...11k is ALOT to spend on a car, are you sure you can afford it? Do you really need an 11k car. Go over to the debt free wannabe board and read about all the people in debt, many of whom have brought expensive cars. Good Luck.

I have to agree with this. I bought a new Skoda for £10,500, used all my savings as a deposit, got 0% finance from VW for the rest - £173.67 a month for three years.

I still have 17 payments to go

In the interim I lost my job, got another but paying £5,000 less :eek: , and am now really struggling with the payments as well as everything else. It's my only debt other than my mortgage.

Think very carefully about spending this much cash on a car that will depreciate as soon as you leave the dealer's forecourt.

I do love my car, but I could have got something older and cheaper that would do the job just as well. And then I wouldn't be eating baked beans all the time...

idv

YorkshireBoy

When is the best time to buy a new 55 plate then?

YorkshireBoy

idv wrote:

YorkshireBoy

When is the best time to buy a new 55 plate then?

The honest answer is I don't know. However, in my opinion (and based on when I got mine) the best time to buy any new car is the 3rd week in June (so that'll now be an '06' next year).

My logic is...

1. Most people want to own a "brand new" car for the "full" 6 months of the reg period
2. You're mid-way through the 6 month reg period and sales have slowed
3. Little money around (people have paid for their summer holidays in May and are saving hard for their spending money)
4. It's 3 weeks into the month and dealers have targets to meet
5. It's a week away from 1/2 year end and, as well as dealers having their targets to meet, as large concerns they may be looking to bolster their 1/2 year results for the shareholders/bankers

Having said all that, my Mondeo was a 2003.5 model year from a storage compound (although it's build date was March 2003 IIRC) and they were about to launch the 2004 model year with "minor" refinements in September 2003.

However, only you can decide when the best time for you is but, having decided I wanted a brand new car, I'd definately spend a good while following the market and prices before committing myself.