Most sensible way to purchase a car

[KnackeredOldWoman01]

Without being in the position to purchase it outright? I need a new car, current one is on its way out and becoming unreliable and no longer value for money. I'm not in a position to buy outright so i'm wondering what to do.

I'm thinking my options are to get a bank loan or a finance deal from the dealership? Some of my friends lease their car so I'm considering this to, I know a few people that do this, but can anyone educate me on the pitfalls? The thought of having a new car without having to worry about MOT and servicing etc sounds appealing but I know there will be a catch.

Any advice gratefully appreciated! Thanks

Hi OP. Have you looked at the money saving expert site? That does comparisons of the different options. I had the same dilemma as you and the mse advice was helpful in weighing things up.

I wouldn't advise looking at bank loan's only because as lenders they tend to have really silly interest rates. My DH has fantastic credit but his bank would have cost around £13K for a £7.5K loan! Shop around looking at different lenders (as PP said, money saving expert has a lot of recommendations.
We ended up using a company called Zopa which offered us the £7.5K with just a £9K payback. Now it's almost paid up we're thinking of another loan for something next year and the repayment will be much, much lower because we are existing customers.
It was a far better deal than buying a car on finance. The other car we did already have on finance had a massive chunk of cash required for the final repayment. It wasn't mentioned anywhere in the paperwork but our £160 a month repayment suddenly jumped to them wanting a £600 final payment. Thankfully we took a loan for the 2nd car and had enough to cover the finance final repayment.

Leasing or PCP can be a good option and not necessarily more expensive than an older car that might need a lot of repairs.

I'm just coming to the end of a 3 year PCP deal with a Skoda Citigo, that's cost £130 pm for 10000 miles a year, with no deposit and free servicing and breakdown included. It's likely that when I hand it back, the tyres will be just above the limit so I haven't had to replace/repair anything. The finance has been 0% and it was actually cheaper than paying cash outright because you had to take the finance to get the free service plan.

I'm only handing it back because I'm getting a company car, if not I would probably have bought it and run it for a good few more years. Downside is that if you hand the car back, whether or not you take out another new car, it has to be in pretty good condition but a lot of dents and scrapes can be repaired fairly cheaply by someone like Chipsaway.

If a Skoda Citigo is too small (it was OK for me but rear legroom is quite limited so no good if you are driving round with teens in the back for example) the Fabia would probably only cost a little more each month and Skodas are great cars and excellent value.

If looking at leasing or PCP look at the deals rather than go in for a specific car. The deals can save you a fortune.

Last time I bought a car we used a bank loan with low Apr. Time before put it on a 0% credit card but have to be very displinced this way. Didn't cost us a penny in interest.

Allot will depend on your credit worthiness. As if not very creditworthy every option would be more expensive.

I've always bought a car on finance
I pay it off over 3/4 years but usually keep the car for 10 years or so
It's worked out well for me so far
Obv not an option if you want latest models

Depends on how much it us to fix your car.

Might even is cheaper to fix than buy new.

I spend about £200 a year "fixing" my 15 year old car.

Would cost me that a month or more for a new one.

That's fine binary. And with a 15 YO car if you get a big bill, you can just scrap it and get another one. 15 YO cars may be reliable and cheap, if you're lucky. But if you need a reliable day to day car for work or whatever, they can leave you in the shit unexpectedly.

What I was talking about was spending say £5-10k on a 3/5 YO car and then hoping that the clutch, engine, gearbox, suspension, diesel filter thingy etc doesn't go, leaving you with a bill of hundreds, if not £1k+.

You can't scrap the car you've spent thousands on, so you're forced to spend much more money fixing it up. Plus you lose on depreciation too.

A small newish car is affordable to me and many others. The tax, insurance and fuel consumption is often lower than very old cars too.

If it wasn't, I would probably go the bangernomics route in preference to the example of a 'medium' aged car instead, especially as we now have a reliable, honest garage locally.

I'd recommend finding a loan with a good rate. Finance is usually easier to set up but more expensive.

I got a new car this year so did a fair bit of research beforehand. All the different finance options on new cars work out expensive- new cars cost a lot more and the cost of massive depreciation needs to be covered. You also need to bear in mind all the additional costs if you do too many miles or end up with a bump or a scratch.

If you need more of a budget option, look at slightly older cars. E.g. 2-3 year old cars cost a lot less and they'll still be very reliable.

For example, the current offer on the Skoda Citigo is £712 up front and £155 for 41 months. At the end of it, you don't own the car - that would be another £3.4k. Now looking at Autotrader, you can get a 14 reg Citigo for 4-4.5k. If you put down the same £712 and got a personal loan paying the same £155, you'd repay the car completely within 2 years. Obviously, it'll be even cheaper if you can get a 0% credit card.

With regards to the cost of repairs, it can vary. E.g. my last car got to about 6 years and in the last year of ownership, I needed to spend almost a grand...

I've never really had a problem for reliability. I have a Toyota Yaris and it just keeps going and going.
Sure, I have had to replace parts (exhaust and suspension) over the years. But nothing hugely expensive. Again, much cheaper than buying anew car. It has genuinely never been a massive issue - garage has courtesy cars, and we can cope for a half day without a car if needs be.
It's no more hassle/inconvenience for me than having it in for a service or MOT really :)

We have a jazz previous one went from buying at 3 years to 13 years old with no issues except the usual brake pads / discs etc. We have just bought another 3 year old one and hope it lasts as long!

I'm another Jazz owner, mine is 14 years old this year and I am just thinking about getting a newer one as it is starting to cost me about £700 a year to get it through its MOT. I plan on getting a bank loan but I am lucky I guess in that my DP can get a preferential interest rate through his work so the APR is only about 2.4%. So I will borrow about £5-6k, pay it off in 3 years and have a car that I will own outright and should run for about 10 years. I looked at PCP and it does make sense as a car is not going to appreciate in value, but personally I would prefer to have the comfort of knowing that the car is mine.

Spent £3000 on a 3 year old Chevrolet 9 years ago. The most I've spent on it for an MOT so far is about £200. And it has had a new clutch. Hope I can get as good a deal next time !

I lease and have had no problems, been leasing for 5 years so I'm on my second car now. Don't accept the first price, they can always do a deal and will take your old car on part exchange.

I love getting a new car and I need a reliable one for work. I also have business insurance for free, which I need, and don't need to worry about anything other than taking it in for a service once a year.

It's easy to hand the car back too. I can either exchange, hand it back and walk away or buy it from them for the remaining price.

If you have good/decent credit rating then look at money saving expert and the 0% deal credit cards.
You can get enough to buy a decent 3 year old car interest free.

That is as long as you pay it off in the term given, which can 24 or 30 months in many cases.

Kia’s have a 7 year warranty with them.

Interest free on a credit card and pay monthly?

If you take the HP option it will affect your ability to get a mortgage. The total debt is also looked at by some lenders against your salary, if it’s too high in comparison to your income it can stop you getting a mortgage. (This may not matter to you).