Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@. Skimlinks & other affiliated links are turned on

Search
  • FIRST POST
    • Giddy72
    • By Giddy72 17th Apr 18, 1:53 PM
    • 7Posts
    • 1Thanks
    Giddy72
    Saving for a car
    • #1
    • 17th Apr 18, 1:53 PM
    Saving for a car 17th Apr 18 at 1:53 PM
    So, I bought a new car in October which means 37 months after the agreement I will have to pay them , lets call it, 8,000

    I have been ring fencing 220 every month in my Santander Current Account @ 1.5% interest but I am saving for other things in this current account plus living my life and so I have decided I need to open some sort of savings account to separate it from everything else.

    So, I have a lump sum of 1,540 and then I want to save 220 each month.

    Any ideas as to the best way to do this? I had opened a Santander ISA with a lump sum but I wasn't able to add to it each month and so had to close it again.

    It's so HARD!!!!

    Any advice from you lot would be greatly received!!
Page 1
    • eskbanker
    • By eskbanker 17th Apr 18, 2:29 PM
    • 8,038 Posts
    • 8,957 Thanks
    eskbanker
    • #2
    • 17th Apr 18, 2:29 PM
    • #2
    • 17th Apr 18, 2:29 PM
    As a Santander 1-2-3 account holder you're entitled to 5% from their regular saver product on up to 200 per month: https://www.santander.co.uk/uk/savings/regular-esaver

    Other regular savers and interest-paying current accounts offer relatively decent interest rates, check out the quick links above labelled 'top savings accounts' and 'how to start saving'.
    Last edited by eskbanker; 17-04-2018 at 2:56 PM. Reason: Maximum monthly payment is 200 not 250
    • Alexland
    • By Alexland 17th Apr 18, 2:51 PM
    • 3,129 Posts
    • 2,465 Thanks
    Alexland
    • #3
    • 17th Apr 18, 2:51 PM
    • #3
    • 17th Apr 18, 2:51 PM
    As a Santander 1-2-3 account holder you're entitled to 5% from their regular saver product on up to 250 per month: https://www.santander.co.uk/uk/savings/regular-esaver
    Originally posted by eskbanker
    Santander's regular saver limit is 200 per month.

    But its still one of the best because like the 5% Nationwide regular saver it's easy access. Also worth considering the 5% Nationwide Flex Direct account to deposit 2500 for 12 months at 5% but sadly this is a one time only offer.

    Also if you have not yet bought a property you could consider using a HTB ISA for the good rates and then simply withdraw the money to pay for the car.

    Alex.
    Last edited by Alexland; 17-04-2018 at 2:55 PM.
    • Crystal_Pixie
    • By Crystal_Pixie 17th Apr 18, 3:40 PM
    • 78 Posts
    • 25 Thanks
    Crystal_Pixie
    • #4
    • 17th Apr 18, 3:40 PM
    • #4
    • 17th Apr 18, 3:40 PM
    When I started my car lease 3 years ago I had 2 regular savers (Lloyds and TSB) going to save up to buy another car outright.


    If you can afford it this is a good way of lowering your payments. I managed to save 4k as a deposit on a nearly new car instead of just going for another lease.


    A combination of current accounts and regular savers works well.
    • kidmugsy
    • By kidmugsy 17th Apr 18, 4:44 PM
    • 11,600 Posts
    • 8,124 Thanks
    kidmugsy
    • #5
    • 17th Apr 18, 4:44 PM
    • #5
    • 17th Apr 18, 4:44 PM
    ... I bought a new car in October
    Originally posted by Giddy72
    Well that's not in the spirit of MSE. Though if there is about to be a burst of 1970s-style inflation then I suppose it's all right. Maybe.
    Free the dunston one next time too.
    • AndyPK
    • By AndyPK 17th Apr 18, 5:42 PM
    • 3,228 Posts
    • 930 Thanks
    AndyPK
    • #6
    • 17th Apr 18, 5:42 PM
    • #6
    • 17th Apr 18, 5:42 PM
    I'm pondering a natwest builder saver.

    I think you can dump a lump sum in and add to it every month.

    need to pay in at least 50/month to get the interest 1.5% (on first 5K)

    1% on 5K-10K
    • Giddy72
    • By Giddy72 23rd Apr 18, 11:16 AM
    • 7 Posts
    • 1 Thanks
    Giddy72
    • #7
    • 23rd Apr 18, 11:16 AM
    • #7
    • 23rd Apr 18, 11:16 AM
    Well that's not in the spirit of MSE. Though if there is about to be a burst of 1970s-style inflation then I suppose it's all right. Maybe.
    Originally posted by kidmugsy
    I know!! What am I like??!!

    It's lovely though
    • Giddy72
    • By Giddy72 23rd Apr 18, 11:17 AM
    • 7 Posts
    • 1 Thanks
    Giddy72
    • #8
    • 23rd Apr 18, 11:17 AM
    • #8
    • 23rd Apr 18, 11:17 AM
    I'm pondering a natwest builder saver.

    I think you can dump a lump sum in and add to it every month.

    need to pay in at least 50/month to get the interest 1.5% (on first 5K)

    1% on 5K-10K
    Originally posted by AndyPK
    That's a poor return though?

    Is there nothing that will beat inflation?
    • Giddy72
    • By Giddy72 23rd Apr 18, 11:18 AM
    • 7 Posts
    • 1 Thanks
    Giddy72
    • #9
    • 23rd Apr 18, 11:18 AM
    • #9
    • 23rd Apr 18, 11:18 AM
    As a Santander 1-2-3 account holder you're entitled to 5% from their regular saver product on up to 200 per month:

    Other regular savers and interest-paying current accounts offer relatively decent interest rates, check out the quick links above labelled 'top savings accounts' and 'how to start saving'.
    Originally posted by eskbanker
    I have one of there, but there is a maximum of 200 a month and no lump sum at the beginning
    • ValiantSon
    • By ValiantSon 23rd Apr 18, 12:13 PM
    • 2,537 Posts
    • 2,511 Thanks
    ValiantSon
    That's a poor return though?

    Is there nothing that will beat inflation?
    Originally posted by Giddy72
    Other than regular savers, no, there are no easy access accounts that will beat inflation, other than a Nationwide FlexDirect current account, which pays 5% on 2,500 in the first year. It also gives you access to the 5% regular saver (250 per month).
    • eskbanker
    • By eskbanker 23rd Apr 18, 12:24 PM
    • 8,038 Posts
    • 8,957 Thanks
    eskbanker
    As a Santander 1-2-3 account holder you're entitled to 5% from their regular saver product on up to 200 per month: https://www.santander.co.uk/uk/savings/regular-esaver

    Other regular savers and interest-paying current accounts offer relatively decent interest rates, check out the quick links above labelled 'top savings accounts' and 'how to start saving'.
    Originally posted by eskbanker
    I have one of there, but there is a maximum of 200 a month and no lump sum at the beginning
    Originally posted by Giddy72
    Good that you have a Santander regular saver, but it obviously would have been better to mention it in the first place when you were stating that your monthly savings were still in your current account and that you were looking for somewhere separate for them:
    I have been ring fencing 220 every month in my Santander Current Account @ 1.5% interest but I am saving for other things in this current account plus living my life and so I have decided I need to open some sort of savings account to separate it from everything else.
    Originally posted by Giddy72
    • DrEskimo
    • By DrEskimo 23rd Apr 18, 12:52 PM
    • 236 Posts
    • 167 Thanks
    DrEskimo
    So, I bought a new car in October which means 37 months after the agreement I will have to pay them , lets call it, 8,000
    Originally posted by Giddy72
    Is this a new car you have bought on a Personal Contract Plan (PCP)?

    I.e. did you put down an upfront payment, pay a fixed amount per month, then will be left with a balloon payment of around 8k at the end?
    • Giddy72
    • By Giddy72 30th May 18, 4:11 PM
    • 7 Posts
    • 1 Thanks
    Giddy72
    Is this a new car you have bought on a Personal Contract Plan (PCP)?

    I.e. did you put down an upfront payment, pay a fixed amount per month, then will be left with a balloon payment of around 8k at the end?
    Originally posted by DrEskimo
    Yeah.
    500 deposit, just under 400 a month and an 8k payment after three years
    • DrEskimo
    • By DrEskimo 30th May 18, 6:26 PM
    • 236 Posts
    • 167 Thanks
    DrEskimo
    Yeah.
    500 deposit, just under 400 a month and an 8k payment after three years
    Originally posted by Giddy72
    OK. So is this saving money to be able to buy the car at the end, or saving money to be able to buy another car when the PCP term finishes...?

    You are aware that you don't have to pay the 8k at the end? You can sell it privately, you can sell it to another garage, you can trade it in to the same dealership, or you can just hand it back to the finance company.

    I'm guessing you want to keep the car though, is this right?

    If so, why not just make overpayments on the PCP? Do you know what APR you are being charged? There is a common misconception that you can directly compare APR between standard loans, and PCP style loans. Since you are paying interest on the full amount (including the balloon payment), and only paying down the capital on the difference between the invoice price and balloon payment (i.e. the expected depreciation based on the mileage you agreed), the amount of actual interest you get charged is much higher relative to a standard bank loan of the same amount, with the same APR over the same term.

    As such, overpaying the PCP loan could yield much higher returns than you would get from savings accounts. I would need to look at the figures more closely though.

    If you want to give details on the invoice price you agreed, the exact monthly payments, the APR and the exact balloon payment agreed, I will be more than happy to go through more definite figures with you if you want more in depth explanations.
    • kidmugsy
    • By kidmugsy 30th May 18, 6:51 PM
    • 11,600 Posts
    • 8,124 Thanks
    kidmugsy
    If you want to give details on the invoice price you agreed, the exact monthly payments, the APR and the exact balloon payment agreed, I will be more than happy to go through more definite figures with you if you want more in depth explanations.
    Originally posted by DrEskimo
    By God that's a generous offer. Bravo.
    Free the dunston one next time too.
    • fiisch
    • By fiisch 30th May 18, 7:41 PM
    • 319 Posts
    • 183 Thanks
    fiisch
    You think you want to keep it now the car is new, but I!!!8217;m three year!!!8217;s time there!!!8217;ll be another model. That!!!8217;s how they get you! (Voice of bitter experience- I!!!8217;m terrible for it!)

    PCP is not an especially efficient way to buy a car, but unless you!!!8217;re on a 0% finance deal, it is most efficient to overpay your PCP which can usually either come off the balloon or reduce monthly payments (you!!!8217;ll save more interest paying off the balloon, but that allows you the least flexibility I.e.: if you want the money for something else).

    Personally, enjoy the car, save as you would anyway and see what three years brings. Worst case you can always refinance the balloon (preferably via a cheap loan).
    Save 6k in 2018: 1651.19 / 6000
    • DrEskimo
    • By DrEskimo 30th May 18, 9:03 PM
    • 236 Posts
    • 167 Thanks
    DrEskimo
    You think you want to keep it now the car is new, but I!!!8217;m three year!!!8217;s time there!!!8217;ll be another model. That!!!8217;s how they get you! (Voice of bitter experience- I!!!8217;m terrible for it!)

    PCP is not an especially efficient way to buy a car, but unless you!!!8217;re on a 0% finance deal, it is most efficient to overpay your PCP which can usually either come off the balloon or reduce monthly payments (you!!!8217;ll save more interest paying off the balloon, but that allows you the least flexibility I.e.: if you want the money for something else).

    Personally, enjoy the car, save as you would anyway and see what three years brings. Worst case you can always refinance the balloon (preferably via a cheap loan).
    Originally posted by fiisch
    I'm pretty skeptical that "0% interest" are in fact interest free.

    A lot of the time you can get the car a lot cheaper than the RRP. Online brokers are great at giving you a ball park figure of the discounts you can achieve, and depending on the car they can be quite large. I would be interested in the data of what the average saving is (not that dealers will ever disclose this data...), but I imagine the popularity of these online brokers is making it more common.

    Anyway, my point is that I doubt you are able to take advantage of these 0% finance deals, on top of these large discounts. In effect, by not being able to take advantage of the large discount, you are just paying the interest through a higher purchase price.

    Of course I could be mistaken. I only bought one new car on PCP (and regret it...) and it didn't have 0% finance. I got a large discount, but still cost me a fortune...!
    • fiisch
    • By fiisch 30th May 18, 10:47 PM
    • 319 Posts
    • 183 Thanks
    fiisch
    I'm pretty skeptical that "0% interest" are in fact interest free.

    A lot of the time you can get the car a lot cheaper than the RRP. Online brokers are great at giving you a ball park figure of the discounts you can achieve, and depending on the car they can be quite large. I would be interested in the data of what the average saving is (not that dealers will ever disclose this data...), but I imagine the popularity of these online brokers is making it more common.

    Anyway, my point is that I doubt you are able to take advantage of these 0% finance deals, on top of these large discounts. In effect, by not being able to take advantage of the large discount, you are just paying the interest through a higher purchase price.

    Of course I could be mistaken. I only bought one new car on PCP (and regret it...) and it didn't have 0% finance. I got a large discount, but still cost me a fortune...!
    Originally posted by DrEskimo
    The way to get best deals is to use a site to compare different dealer prices for the same spec vehicle (e.g.: Carwow). Then you can get an idea of the initial "best" price that the dealers can offer the car for, which usually leaves a fairly small margin before they've uphold the GAP, paint protection etc.

    Then, when you visit your local dealer, you can usually leverage the same price, before even discussing payment options. If the manufacturer happens to have a 0% offer on at the time, then you're quids in, however admittedly 0% finance offerings are fairly slim pickings at the moment.

    Additionally, if you're daft like me you buy a car with your heart not your head, the respective APR does little to sway me one way or another!
    Save 6k in 2018: 1651.19 / 6000
    • DrEskimo
    • By DrEskimo 31st May 18, 1:09 PM
    • 236 Posts
    • 167 Thanks
    DrEskimo
    The way to get best deals is to use a site to compare different dealer prices for the same spec vehicle (e.g.: Carwow). Then you can get an idea of the initial "best" price that the dealers can offer the car for, which usually leaves a fairly small margin before they've uphold the GAP, paint protection etc.

    Then, when you visit your local dealer, you can usually leverage the same price, before even discussing payment options. If the manufacturer happens to have a 0% offer on at the time, then you're quids in, however admittedly 0% finance offerings are fairly slim pickings at the moment.

    Additionally, if you're daft like me you buy a car with your heart not your head, the respective APR does little to sway me one way or another!
    Originally posted by fiisch
    Yes this was my tactic for buying my last new car. CarWow quote, which I got my local dealer to match.

    As mentioned, it's not so much the APR that has put me off, but the actual interest charged. The quoted APR is actually not a good indicator of how expensive the loan is, since it is made up of two parts essentially; a traditional capital and interest repayment loan on the difference between the invoice and the GFV, and a interest only repayment loan on the GFV.

    As an example my last PCP was a 47k Audi S5 that I got discounted to 38.5k. I put 6k as a upfront payment (not calling it a deposit..!) so was financing 32.5k. The quoted APR was 5.8% and this was on a 24month term.

    A standard bank loan to borrow 32.5k at 5.8% over 24months would cost you 1,947.65.

    However, on my PCP loan with a GFV of 27k, I ended up making 23 payments of 381.14. Those payments, plus the 27k final payment totals 35,766.22, which is 3,266.22 in interest!

    That's makes the PCP loan 67.7% (1,319.22) more expensive than the 'standard' loan, even though they are both at the same APR rate and over the same term and borrowing the same amount of money.

    That's why quoting the APR can be misleading, and overpaying the PCP can result in much higher savings than the APR would suggest. But this is of course entirely dependent on the price, the GFV, the APR and how much you are financing.

    As aside, please say you didn't pay the dealer the ridiculous prices for those awful insurance product and add-ons...? The GAP is often marked up 4x the market value (and generally a worse product), and the paint protection is IMO borderline fraudulent...

    Going OT here, but I have come to the conclusion that there are much much better ways to buy/finance a car that doesn't result in paying the dealership thousands in interest charges. Namely buying nearly new/used with personal loans will be many times cheaper, will give you 99% of the same experience, and will leave you in a better position financially each time relative to PCP on brand new (i.e. needing to borrow less each time you want to change).
    • Alexland
    • By Alexland 31st May 18, 1:29 PM
    • 3,129 Posts
    • 2,465 Thanks
    Alexland
    Going OT here, but I have come to the conclusion that there are much much better ways to buy/finance a car that doesn't result in paying the dealership thousands in interest charges. Namely buying nearly new/used with personal loans will be many times cheaper, will give you 99% of the same experience, and will leave you in a better position financially each time relative to PCP on brand new (i.e. needing to borrow less each time you want to change).
    Originally posted by DrEskimo
    Or borrowing as much as the dealership will allow at 0% on an interest free purchasers credit card over circa 3 years, making just over the minimum payment each month and regular saving the repayment money in parallel to earn some interest before repaying the full balance before the CC offer expires...

    Maybe not advisable if you have other needs for credit in the near future.

    Alex.
    Last edited by Alexland; 31-05-2018 at 1:34 PM. Reason: added caveat
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

137Posts Today

1,338Users online

Martin's Twitter