Another car one - buying used car?

[MasFina]

It’s brief. My ancient golf is about to die and I need to buy a new used car. I took out a £7.5k loan 4 months ago to do this but held off due to the price hikes. This is costing me £144 a month. I figured that was a reasonable monthly amount to cover the costs of a new car.
I also have about £3.5 in a car savings pot which I can put in as well, so about £11k I’m total.
However, is it wise to put all this cash down on a car? I do need a new vehicle but it feels like a big outlay when things are so uncertain. Are there any other options? It doesn’t make sense (to me) to do more finance as I’ve already taken out the £7.5k loan.

What do you use the car for?

£7.5K sounds like a LOT of money to be spending on a car when it is money you haven't got.

Seems even odder to take out a loan before you have even decided / done the research / found the car

I'd spend the £3.5k on a car. I'm sure prices have gone up, but surely not THAT much that you can't buy a car that will be roadworthy and get through the next couple of MOTs with £3.5k

Things are too uncertain right now that I would keep my costs low

What do you mean by things being uncertain? Second hand car prices have really jumped and people are finding cars they bought two years ago are now worth more than they paid.
I need a newer car too and it is crazy!

It does sound a lot. But there seems no easy/cheap way of buying a car. I don’t like the lease arrangement, where you are basically shelling out a steep monthly amount to rent a car which you then give back with nothing to show for your £, and often overcharged for mileage, scratches etc. My preference has always been to buy an older low mileage ‘good’ car, like a vw for example, then keep it for as long as possible. I’ve had my last car for 8 years and now it’s at the end of its life, needs big money on it for a new clutch and other stuff.
With the £7.5k, the interest rate is low and the car will survive long past the repayment of the loan so I figured it stacked up. Not great, but maybe the best way to get a semi-decent used car. It’s not car dealer finance either which seems like a rip off.
I suppose by uncertainty I mean general economic uncertainty and rising prices of things ie it’s a good idea to have a cash buffer in case things get tough. Myy job is secure which is one good thing. I use the car partly for work but also dropping DC to school, general leisure use.

I’ve done a lot of research on the 2 makes/models I want to buy, and know pretty much what I want. The loan decision was pushed slightly as we have moved, and I wanted to apply from my previous address for credit rating purposes. It probably would’ve been fine anyway but still. I’d pretty much decided I needed a new car… but recently things seem so grim out there news wise.

If you like Golfs also look at Seat Leons and Skoda Fabias or Octavias depending on whether you want a slightly smaller or larger car, gives you a bit more choice and might find something slightly better for the money as, while they are seen as slightly less desirable, they have a lot of the same parts of engine/drivewise are effectively the same car.

If you effectively have £11k at your disposal and are likely to keep whatever you buy for the medium to long term, I'd maybe spend around £9-10k and keep a bit back for any servicing/repairs that the new car needs.

How old is your current car? It might be worth more than you think, so can be sold to add a bit more to the pot. Have a look at sold prices on ebay auctions for cars with a similar age/mileage and MOT remaining. There's such a shortage of cars at the moment that people are paying silly money and to the right people, an old Golf is desirable because they can fix it themselves and easily sell it for a profit. It's often a bit of a hobby/side business for mechanics to do at home or in their own workshops.

Depending what you mean by 'ancient' and 'about to die' another option might be to pay to do the work on your old car and run it for another year or two and see if things change, at least the car supply problem might ease (I've seen a few posts suggesting this) and second hand car prices will moderate.

Maybe repay the loan, keep saving and then possibly take out another loan later, you'll save interest in the meantime, or just put the loan in the best savings product you can find and take the small interest hit.

As youve already got the money and have researched the car id just buy it, otherwise what are you going to do with the loan? It will either sit there doing nothing or you'll dip into it and before you know it you'll have flittered it away on 'stuff'. At least with a car you can see where your money went and it will out live your loan repayments (hipefully!)

I would look to spend £5‐£6k on a car and keep the rest of the money back.

Look at Seat, excellent cars. VW chassis but a fraction of the cost. Very reliable.

We have had 3 Seats and will be buying our 4th soon.