Bank loan for a new car or buy cash?

[Lilacbluewaters]

So we are currently looking to buy a new car, when I say new I mean up to 8 years old.
we don’t have a lot of money but I have saved 5 thousand and I was looking at buying a car outright with that money however with the costs of second hand cars rising I just can’t find anything within budget that is right for us.
i looked at finance through dealerships but the APR is too expensive. I saw you can get a bank loan with a representative apr of 3.4%
so I am just wondering what would you do? I would be paying off the loan over 3-4 years and then we could have a better family car or if I buy outright we will have to get something a lot older which we don’t want to as our current car is a 2008 and is completely falling apart now. Literally. The windows don’t work, the boot doesn’t open, the car leaks so badly in winter and the list just goes on…

any help please!!

Well, if you mean cash in hand they won't take it, as bank transfer it would be fine.
The loan option would mean you have some savings if needed, but could affect other credit if you needed it in the 3-4 years.
If you don't foresee needing to remortgage, get a credit card or loan for something else during those 3-4 years, it should be fine.
Is there an option of doing half and half? So a shorter loan period and interest paid, but getting the security of an ok savings pot still?

Keep saving and keep looking and pay cash, loans for cars are a bad debt ( they don’t build equity like a house does)

@AlmostAJillSandwich who won’t take cash ? I’ve just bought a car for £10,500 cash x

definitely buy out right we always do I just cannot pay intrest we hate intrest lol

Moon when we bought our last one it couldn't be bought with physical cash because of money laundering rules. Bank transfer yes, but not cash in notes in hand.

Oh I have cash in hand note but mine wasn’t a garage it was a private sale and I bought from the sellers home x

Hi OP,
As you are probably looking for a fairly small amount of cash (as personal loans go) another option is to use a credit card offer. Either a 0% purchases offer, balance transfer offer or a money transfer offer.

If you are buying privately you will need a money transfer offer (cash in your bank). Do you already have credit cards? If you do look/ask what offers are available to you. E.g. my husbands Barclaycard has offers this month of 0% on money transfers until Dec 2023 for a 3.1% fee or an alternative offer of 0% on balance transfers until June 2024 for a 3.1% fee.

I think these types of offers are cheaper than personal loans as the fee is one off not apr.

To use the balance transfer you would buy on one card and then log into the card with a balance transfer offer and using that offer pay off the balance on the other card.

Once your balance is on the 0% deal you can pay it off flexibly as long as you always pay at least the minimum payment on time (otherwise you will lose the offer and the borrowing will become expensive)

Money Saving Expert (as well as other sites I'm sure) has best buy credit card tables and info on how they work. I think they also offer a soft search to see what you might ne accepted for without affecting your credit rating.

You definitely shouldn't take out a cash in hand or Pay Day, loan, that's really dangerous and could land you in some serious trouble. For a long while I struggled to understand a lot of financial stuff and was quite afraid of taking on debt. However, I did find some fairly good brokers (loan-broker.uk) who tidied me over a while. That said, beyond a mortgage it was the first time I had ever taken out a short-term loan. Thanks Covid!