How should I fund new car?

[Smedsmoos]

I currently have an 8 year old car which I own outright however is an absolute money pit. I now need to think about getting rid of it and getting a new car. Every time I drive the current car I’m filled with worry that it’ll collapse in a heap!

I have never had a car on finance but I can’t afford to buy a car outright (unless it’s a cheap runaround which I don’t fancy as I’d worry it would have potential to become a money pit).

My car is worth approx £6k.

My options are as follows:

1. Take out £10k bank loan and buy a car outright at £16k with low mileage and a couple of years old.
2. Take out PCP deal on a car that is a couple years old with low mileage. Only pay small deposit and use the £6k from sale of my car to cover a year or two’s worth of payments.
3. Lease a new car

I’m really stuck and would appreciate some advice or words of wisdom!

I also am considering an electric car. I drive around 80 miles a week to and from work and just use it for driving locally. My DH has a normal petrol car that we could use for longer journeys

Have you looked at the interest on loan vs PCP? I would start there

I would do 2. I paid 1k deposit for my car and £186 a month for 4 years then there’s a couple of k at the end. It is 6 years old on 40k miles

Loan is cheaper than PCP and you own the car, unlike with PCP where you have to meet the balloon payment at the end.

I’d be getting a loan for 6.9% and PCP would be 9.9%

Thank you. I’m really clueless when it comes to things like this!

I'd go for a personal loan. If you get an electric car will you be able to charge at home?

Where in the UK are you? If in Scotland you can get 0% electric car second hand loans for some postcodes and salary brackets via energy saving trust, that’s what I recently did.
but previously I’ve done a bank loan over pcp, better payments and just owning the car

Out of interest, why is your 8yo car a money pit? Cars that young shouldn’t be breaking down frequently. Has it always been maintained and serviced? Is it a diesel that’s only used for short distances?

I would do the loan then

it’s not electric but I have a similar budget and am looking at a Kia pro ceed which gets me a 2yo one with under 5k miles on

Go for option 2.

You can get a lowish mileage 3 year old Toyota with a service plan and they will extend the warranty up to 10 years old or 100k miles.

Only question is whether to use their finance or a bank loan to finance the difference

I recently changed my car for one which is just under 3 years old with low mileage.

I did this with combination of trading in old car, using savings and putting the rest on a credit card which is 0% interest for 24 months - from M&S. I applied for the credit card for this specific purpose.

It’s been well maintained and only has 50k miles on the clock. It has cost me £1100 in repairs in the last year and in the two years prior a further £1000.

thank you @Ouygl I am in Scotland, will have a look!

@Smedsmoos https://energysavingtrust.org.uk/grants-and-loans/used-electric-vehicle-loan/ try and get this is you can then! They also do grants for the home chargers too.