Get a loan or use savings??

[ginmakesitallok]

We're buying a new car. DM is gifting us some cash towards it and after trading in a car we'll be left with about £5k to find. We could use savings - which would deplete savings, but leave us with some. Or we could get a loan over 3 years (paying about £155 per month). I'm thinking we should use savings and set up a standing order into the savings account for £150 a month - so savings would be up to same level after 3 years? If we desperately needed £ in that time we could always take out a loan then??

I hate the thought of using our savings - but it probably makes more sense than getting a loan?
What would you do??

Exactly what you've said as the interest on savings is minimal right now.

What would happen if the main earner in your household lost their job tomorrow, would you manage financially without that £5k savings for up to 3 months of unemployment (some would say 6 months)? If so, then I think your plan (use savings now & standing-order to build it back up) makes perfect sense.

The likeliehood of losing jobs is low (I hope!!!) - and yes we'd probably manage somehow (I guess we could always sell the new car!). If we lost job then the £5k would be the least of our worries I think...

Getting excited now. Just need to tell DP I've found our new car!

The interest rate is so low at the moment it hardly seems worth having savings except for the rainy day aspect. I think I'd probably use part of the savings so I could have a smaller loan and get it paid off quicker. We've not had a loan for a long time and they always seem to go on for ever.

Definitely use savings. You'll end up giving loads more to the bank than you would in interest.

ugh
...than you would lose in interest