Paying for a new car

gt568
gt568 Posts: 2,497 Forumite
Name Dropper First Post First Anniversary
in Motoring
Am looking at borrowing about 20k to pay for a new car, the rest made up with savings...

What is bets to fund this...HP (dealer finance) or a bank loan? Is it as simple as going for the lowest interest rate?

MTIA.
{Signature removed by Forum Team}
«1

Comments

  • neilmcl
    neilmcl Posts: 19,460 Forumite
    First Anniversary Name Dropper First Post
    How much savings are you putting towards the car?
  • thescouselander
    thescouselander Posts: 5,542 Forumite
    Name Dropper First Post First Anniversary Combo Breaker
    edited 10 February 2018 at 11:35AM
    It can be complicated because of all the incentives offered to take finance. Also different finance schemes work differently and with some of them you won't own the car.

    The best thing to do is work out the total costs for all the different financing options (of which there are many) over the period you want to use the car and go from there.

    Personally I've found a bank loan to usually work out more expensive than the dealer finance but it all depends on the deal at the end of the day. Also bare in mind you get added protection if the finance company has an interest in the car which probably won't be the case with a bank loan.
  • gt568
    gt568 Posts: 2,497 Forumite
    Name Dropper First Post First Anniversary
    neilmcl wrote: »
    How much savings are you putting towards the car?

    About 10k.
    {Signature removed by Forum Team}
  • neilmcl
    neilmcl Posts: 19,460 Forumite
    First Anniversary Name Dropper First Post
    Well you have a choice, the MSE thing would be to forget about a new car and get a used car for the £10K. However, if you really are intent on getting a new (or nearly new) car I'd get a bank loan and buy the car outright rather than chuck £10K onto a finance deal.
  • thescouselander
    thescouselander Posts: 5,542 Forumite
    Name Dropper First Post First Anniversary Combo Breaker
    neilmcl wrote: »
    Well you have a choice, the MSE thing would be to forget about a new car and get a used car for the £10K. However, if you really are intent on getting a new (or nearly new) car I'd get a bank loan and buy the car outright rather than chuck £10K onto a finance deal.


    That's not MSE at all. MSE is about buying what you want while saving money. If the OP buys an old car which they don't want that's not MSE - that's just buying something else that doesn't really meet the requirement.
  • RichardD1970
    RichardD1970 Posts: 3,795 Forumite
    First Anniversary Name Dropper First Post
    If you can get good discounts/incentives for using the dealer finance but can get a better APR for a loan elsewhere, then it may be worth taking the finance then cancelling it and paying it off with the loan.
  • jimmy_cricket
    jimmy_cricket Posts: 382 Forumite
    First Anniversary Combo Breaker
    You could take out finance with the dealer to get the discounts/cash back. I did this and got a 2k !!!8216;contribution !!!8216;. I then paid it off. I think the consensus is to do this within 14 days. I did it within five. There is a daily interest rate which for me was 50p a day.
    If you need finance, then you could pay the dealer finance off with the bank loan.
    There are however, interest free deals from manufacturers at time to time.
    Whatever you do, don!!!8217;t ask the advice from the dealership. They will tell you to take whatever makes them the most commission. They lie with impunity.
    Do your own homework and work out what is the cheapest.
  • parking_question_chap
    parking_question_chap Posts: 2,694 Forumite
    First Anniversary Combo Breaker First Post
    Why do you need a £30k car?
  • RichardD1970
    RichardD1970 Posts: 3,795 Forumite
    First Anniversary Name Dropper First Post
    parking_question_chap wrote: »
    Why do you need a £30k car?

    No one needs a £30k car but if that is what the OP wants and can afford then that is their choice.
  • parking_question_chap
    parking_question_chap Posts: 2,694 Forumite
    First Anniversary Combo Breaker First Post
    RichardD1970 wrote: »
    No one needs a £30k car but if that is what the OP wants and can afford then that is their choice.

    Yes agreed.

    But 66% is going to be on finance.

    Crazy imo.

    If they have a good job then save up and no need to worry about interest rates.
This discussion has been closed.
★ ★ ★ Meet your Ambassadors

Categories

  • All Categories
  • 343.2K Banking & Borrowing
  • 250.1K Reduce Debt & Boost Income
  • 449.7K Spending & Discounts
  • 235.3K Work, Benefits & Business
  • 608K Mortgages, Homes & Bills
  • 173.1K Life & Family
  • 247.9K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 15.9K Discuss & Feedback
  • 15.1K Coronavirus Support Boards