What's the cheapest way of financing a car? Is it normal to pay back double what you borrow?

[CovidCorvid]

Need to replace a car urgently and looking at monthly payments. Seen a car for 4.6k. Says it needs a 1k deposit. So 3.6k left to finance. total repayments over 48 months will work out at £6,142.24.

So close to double! Seems crazy. Is this normal?

No, not normal at all. Can you get a loan instead? There are some good deals about.

Bank loans are often better when buying a second hand car, you also have greater flexibility in paying it off earlier.

Absolutely not normal.
How are you paying for the car? Is it a bank loan or car finance.
Car finance is usually cheaper as it's secured on the vehicle should you become unable to pay.
It will also depend on your credit rating. You will get a better rate of interest depending on how good your rating is.
See if your bank is offering car finance deals too to look for the best deal.

This was from the garage selling it. I've just looked at Tesco though and I can borrow 4.5k and only pay back 5.2k which looks a lot better so will investigate bank loans more. Thanks. Am panicking as current car has gone bang big style and need this sorting in a hurry.

God no, I borrowed 4K recently and it's going to cost me £302 extra by the time I pay it back.

@Grizalda

God no, I borrowed 4K recently and it's going to cost me £302 extra by the time I pay it back.

I borrowed it through Zopa which was recommended for me by Experian.

You could buy it on a credit card then quickly do a balance transfer to a zero percent interest one. However that depends on if you already have a a credit card with enough of a limit on it and can then be accepted for one with an interest free offer

And also most only have interest free periods of 2 years max. So your payments will be higher although interest free. You could try and swap it when your interest free period is almost up but risky as you could get declined I suppose.

Maybe a bank loan would be better 😂

So if I get a bank loan do they put the money in my account and I effectively pay cash or do I need to get the loan provider to talk to the garage?

You get it in cash and pay the garage. Look at first direct, loans have a low interest rate at 3.3% I always get mine over a longer payment term with low monthly payments but overpay it so if I ever get in financial trouble redundencies etc I can afford it.

Bank or other loan, they just put the money into your account and you pay the car dealer. I used Ratesetter, but check money saving expert for the best deal for the amount you need to borrow, and bear in mind that there are often thresholds for better rates. Eg rates can be better if you borrow £5k, so if you only needed £4.8k, it might, MIGHT work out cheaper to borrow £5k

First direct loan, borrow £7000 to qualify for 3.3% which would cost £93 a month over 7 years or £7836 if you took the full time to pay it back.

Pay back instantly the money you dont need so you aren't tempted to spend itand then pay back, if you want to pay it back early they calculate the final amount (including 2 months interest).

For £4.5k you could get it on a credit card and pay it off before the 0% rate finishes. Mbna offers 20 months.

@HPandTheNeverEndingBedtime

First direct loan, borrow £7000 to qualify for 3.3% which would cost £93 a month over 7 years or £7836 if you took the full time to pay it back.

Pay back instantly the money you dont need so you aren't tempted to spend itand then pay back, if you want to pay it back early they calculate the final amount (including 2 months interest).

Fab, thank you. That sounds good.

Even a credit card over 22 months would be a lot lot cheaper than that!

We put ours on a credit card. It was 0% and as it was a supermarket credit card we got points! We didn't get as long to pay it back as you do on a car loan else it accrues interest, but 2 years interest free then the balance with interest is still cheaper than the offer you have!

Virgin do a loan at 3.4% for 5k. Thats what I was looking at for a car. Interest is nominal and if you pay it off early the early repayment charge is about 12 pounds.

Money Saving Expert has a soft search loan eligibility tool.

Need to check out the interest rate.

Have a look for a good 0% interest credit card. I found one that was 0% for 3 years so spread the cost over that time period and paid it all over before any interest was applied. Much cheaper than any finance deal.

You will need to check the price of the car though as if you are effectively paying by cash as you have got finance elsewhere rather than taking their finance they often charge more for the car. Its possibly the only time cash buyers pay more!

Do you need such an expensive car? There are plenty of great cars around that will absolutely do the job for much less money, that way you have a much better chance of buying out of savings or paying back sooner meaning less interest.

www.moneysavingexpert.com/credit-cards/best-0-credit-cards/

It all depends on available credit OP. If you are overstretched or have a poor rating you will not get a good finance deal. It is possible to buy a car for £1000 that will be reliable and will not be expensive to maintain but you need someone who knows about cars, a reliable mechanic and to buy something cheap to maintain and keep on the road. My last car was a trusty rusty and, including deprivation, I did not loose money. Upgraded to a 5 year old fabia when it finally died. I cannot bring myself to take out a loan or finance on something that looses value.

We took out a bank loan for £7.5k for a car a few years ago and only paid a few hundred in interest. It was definitely cheaper than getting finance through the dealer.

@willstarttomorrow

It all depends on available credit OP. If you are overstretched or have a poor rating you will not get a good finance deal. It is possible to buy a car for £1000 that will be reliable and will not be expensive to maintain but you need someone who knows about cars, a reliable mechanic and to buy something cheap to maintain and keep on the road. My last car was a trusty rusty and, including deprivation, I did not loose money. Upgraded to a 5 year old fabia when it finally died. I cannot bring myself to take out a loan or finance on something that looses value.

This is to replace a £1500 car I bought 8 months ago. Was fine for a few months and has finally died today. My credit rating should be good, no loans, etc and a good income.