How to finance buying a car?

Muhren

My old banger of a car has just packed up on me so I am looking to buy a used car. I plan to spend around £13,000 which I have in savings.

What would be your advice to me, Use my savings to buy the car or try and get a good finance deal to purchase it that way?

The problem being is that I am also saving a deposit for a house. My thinking is that the way the housing market stands at the moment and my wages not set to go up significantly for about 2 years the best option is to use my savings which could be built up again over those 2 years.

Any comments much appreciated

MonkeySaving?

Buy a "nearly new" car, if you buy new then as soon as you drive off the forecourt you have wasted at least 3K out of that 13k.

Conor_3

Buy something around 3-4 years old. You should be able to get a very good car for around £5000 and if you're canny in what you buy, you should be able to sell it again in 12 months time for roughly the same price, thus making it a free car. Wash, rinse and repeat every year.

Markyt

Use an interest free deal credit card. That way you don't touch your savings and don't pay interest on a loan - make sure you pay as much off the card each month as you can though. If you don't pay it off in the free year, swap to another or use your savings to pay it off.

AdrianHi

Muhren wrote: »

I plan to spend around £13,000 which I have in savings.
...
The problem being is that I am also saving a deposit for a house. My thinking is that the way the housing market stands at the moment and my wages not set to go up significantly for about 2 years the best option is to use my savings which could be built up again over those 2 years.
..

OK so jumping into the housing market again when it starts to recover is the strategy. That happening about 2 years down the line is as good a guess as any. To get the best possible mortgage deals the biggest possible deposit is advised and then there are all the other expenses to deal with.
Let's try and not sink that 13K into a car so you can keep your options about when to buy into the housing market open and try and maximise the deposit you have.

What kind of car do you actually need?
I recently looked up details on leasing an entry level Vauxhall Corsa, for 10K miles a year it's your to drive for 127 a month VAT and road tax included (4572 for 36 months). Buying new paying list price the depreciation alone on that car is 163 a month over 3 years. No amount of 0% finance (Vauxhall are offer it with 20% deposit on Corsa) will compensate for the discount you get access to via this leasing option here.
The leasing option means you can hold onto your savings for something more important and since cars don't last forever they are only ever a monthly expense to you in the end anyway, so who cares if you never actually "own it". With a new car you also have the guarantee that the expenses are predictable. If you need something bigger leasing other Vauxhalls also seems very good value, cheaper than buying them and very likely no more expensive than the 3 or 4 year old in terms of long term average monthly outgoing.
If you are buying a 3 or 4 year old car make sure it is one than holds no more than about 42% of it's value at 3 years (What Car has this info.) because a residual % higher than this invariably makes the same car under warranty bought at 3-6 months old cheaper in the long run. But I bet it won't beat the ridiculously cheap Vauxhall lease deals.
The only other way to get into a bigger car on the cheap is to pick up a good 5-7+ year old that's pretty much stopped depreciating and get lucky with no nasty repair bills.

Interest free credit is all well and good, but it does not guarantee the cheapest long term cost of use of a car so long as you are not fussy about exactly what car to have. Finding a way to beat depreciation is orders of magnitude more important than avoiding finance charges.

codsmall

AdrianHi wrote: »

OK so jumping into the housing market again when it starts to recover is the strategy. That happening about 2 years down the line is as good a guess as any. To get the best possible mortgage deals the biggest possible deposit is advised and then there are all the other expenses to deal with.
Let's try and not sink that 13K into a car so you can keep your options about when to buy into the housing market open and try and maximise the deposit you have.

What kind of car do you actually need?
I recently looked up details on leasing an entry level Vauxhall Corsa, for 10K miles a year it's your to drive for 127 a month VAT and road tax included (4572 for 36 months). Buying new paying list price the depreciation alone on that car is 163 a month over 3 years. No amount of 0% finance (Vauxhall are offer it with 20% deposit on Corsa) will compensate for the discount you get access to via this leasing option here.
The leasing option means you can hold onto your savings for something more important and since cars don't last forever they are only ever a monthly expense to you in the end anyway, so who cares if you never actually "own it". With a new car you also have the guarantee that the expenses are predictable. If you need something bigger leasing other Vauxhalls also seems very good value, cheaper than buying them and very likely no more expensive than the 3 or 4 year old in terms of long term average monthly outgoing.
If you are buying a 3 or 4 year old car make sure it is one than holds no more than about 42% of it's value at 3 years (What Car has this info.) because a residual % higher than this invariably makes the same car under warranty bought at 3-6 months old cheaper in the long run. But I bet it won't beat the ridiculously cheap Vauxhall lease deals.
The only other way to get into a bigger car on the cheap is to pick up a good 5-7+ year old that's pretty much stopped depreciating and get lucky with no nasty repair bills.

Interest free credit is all well and good, but it does not guarantee the cheapest long term cost of use of a car so long as you are not fussy about exactly what car to have. Finding a way to beat depreciation is orders of magnitude more important than avoiding finance charges.

Do you have any links for leasing Vauxhalls plz

Pew_Pew_Pew_Lasers!

You're kidding yourself if you think that house prices are going to plummet anytime soon.

Buy another banger, and invest the savings in something that will actually appreciate in value. Cars generally don't do that.

thescouselander

I would say it all depends on weather you think you will be buying a house soon or not. House prices may go down or they may not - one thing is clear though, it will be harder to get a mortgage compared to recent years. You will need the biggest possible deposit to get a good deal - to be honest £13k isn't that big a deposit for a house - you could probably do with double that.

Also, be aware that mortgage lenders will also look at what other loans or liabilities (leasing agreements) which you need to pay each month.

I would say that if your priority is to get a house then dont spend so much on a car and build up your deposit as much as you can.

If your priority is the car it might be best to spend your cash unless you can get a good finance deal.

AdrianHi

codsmall wrote: »

Do you have any links for leasing Vauxhalls plz

I found this when browsing cars on www.whatcar.co.uk, when you bring up the details on a car, there is a "lease this car now" link on the right hand side. Corsa, Astra and Vauxhall all seem to have very good lease rates.
Here is the Corsa example, entry level Corsa with air con is now up to 133 a month
http://www.whatcar.co.uk/contract-hire-results.aspx?pg=2&RT_ID=886

AdrianHi

Pew_Pew_Pew_Lasers! wrote: »

Buy another banger, and invest the savings in something that will actually appreciate in value. Cars generally don't do that.

Buying something 7 years old which has stopped depreciating is always the cheapest option, but is it reliable (can be!) and is the crash protection up to a good standard.
If you can find a 7 year old car that you know this history of then go for it.

Double £13K deposit is going to be a big help for that future house purchase, I just don't think blowing it on a "depreciating asset" car is a good idea.

The thing about issues like leasing agreement costs is if you write a letter along with your mortgage application explaining why you lease a car and why you didn't sink cash in to the car because leasing was so much cheaper, makes you car costs predictable and protects your income as you can reliably get to work I think you can pursued them to ignore it. All you have done with a lease is made the ever present monthly depreciation expense that every car owners has more visible, do they ask other mortgage applicants what their monthly car depreciation expense is and subtract that from their borrowing capacity? No they don't, but they probably should.
I had different circumstances under which I wrote a letter to support my last mortgage application and they accepted my arguments and I got the mortgage I needed. 6 years later and I'm still in control of my mortgage, not the other way round

Pew_Pew_Pew_Lasers!

AdrianHi wrote: »

but is it reliable (can be!) and is the crash protection up to a good standard.

It always puzzles me why people worry about crash protection, and never do anything to improve the standard of their own driving.

The best crash protection is not to crash in the first place.