How to fund new car

[Starllight]

I’m totally stumped with how to fund a new car. I’m hoping for some advice.

To give some background info, DP owns his car outright. I‘ve always had a company car but will be moving jobs next month and need a new car.

Here are my options;

• get car on PCP (budget of around £250 per month)
• take out a £10k loan and pay off over 3 or 4 years. (Loan rate around 5% interest). Self fund around £6k. Total value £16k for car
• fund £16k entirely from savings and ‘pay’ savings back over the next few years to top savings back up.

I’m put off by PCP due to never owning the car at the end of the deal so essentially forevermore having a car payment. I’m reluctant to take £16k out of my savings as we are looking to buy a new home in the next few years.

Would taking a loan be a wise option?

Any advice would be much appreciated! (Also open to suggestions for what type of car to get as I’m clueless!)

Do you need such an expensive car? Can you buy a cheap but reliable second hand car?

What do you need the car for? If it's just a small commute, and you don't need to stash kids, sports equipment, buggies etc or go into a charging zone, then I'd buy and older car with smaller engine and a year's MOT, cheap as possible.

Thank you, I’m deterred from getting a cheaper car with higher mileage etc in case it develops expensive issues.

I’d like a car which will allow for a car seat and the dog. At least a 1.2 engine as I travel to a city 150 miles away around once a month

There are decent Corsa’s coming in at around £12k which id consider. Still undecided how to find it though!

0% credit card?

I have a jazz - really reliable.

high mileage is not always a bad thing if a car has been doing what you intend to do 150 miles trips regularly it is fine, driving up and down motorways is not what wears cars out, it is constantly stopping and starting and driving in low gears ie city centre driving. You definitely don't want a car that has done 3 x 2 mile trips a week ie engine never properly warms up or at the opposite end has been a taxi ie constant low speed low gear driving

you can definitely get a pretty reliable second car for under 10K sometimes you can be lucky at under 5k but you would really need to know about cars and how to check them out

How long do you plan to keep it?

watching this with interest over the way to fund, Ihe price of cars is madness and I feel the same as OP about PCP

I always get a bank loan. My current car cost £23k. I used £13k of my own money and got a £10k bank loan over four years at 3%.

My Ex had a PCP car. He paid about £320 a month for four years and handed it back/started again.

I prefer to own my car, be free to change it if my driving needs change, not worry about excessive wear and tear costs (or someone's perception of them).

I usually buy something about six months old and keep it for seven years.

I avoid PCP like thr plague, it's a honey trap for motorists and at the end of it your thousands of pounds down with zero to show for it.

We always get a loan, my car was £26k. We need a 7 seater and I do a lot of driving so wanted something like new, and reliable. We found an ex display model car and its a total dream to drive.

Would £16k clear out your savings? If not I'd be tempted to buy using savings, at least you've bought it outright with no ongoing monthly payment and can save as and when you can

Thanks all. Some really good advice here.

I must admit the majority of the time the car we buy would just be doing short trips ie 20 mins here and there and one or two times a month we would be taking it for longer trips.

£16k wouldn’t clear out my savings however I’d like to keep as much as my savings in tact as possible to put towards a deposit for a bigger house in the next 2-3 years.

Is there anything I should be looking out for then? ie a car with full service history, under X amount of miles on the clock? Thanks

Also, we would be intending on keeping the car for 5-7 years and probably average 12k miles a year

Personally I would just buy a car for £6k. But I very much dislike debt.

Full service history is a desirable feature. Kia cars come with a 7 year warranty when bought new and if you buy a 2 year old Kia from a Kia dealer it should still have a 5 year manufacturer's warranty.

A newer car could quite feasibly develop terminal issues too. A car is always a depreciating liability, try to think about it that way.

I think about my a car as a tool for life/work. It needs to be safe and reliable and I want it to be comfortable.

I would just buy a £5k car from savings and pay money back each month. I can't imagine taking a PCP or bank loan when money is available to buy a car.

I would take a bank loan than PCP any day. Can you take £8k of savings and £8k loan? Although you'd need to play with figures, last time I looked I had to borrow over £7999 to get the cheaper APR.
Do you have 0% interest offer on a credit card?. Ive used a combination of savings and credit card before.

Hmm. If I were you, I'd simply buy the car I'm about to hand back.

4 year old Ford. Only owned by me. Fully serviced by Ford. You're looking about £7k. 36000 on the clock, you know everything is spot on.

I'm only upgrading to get a slightly bigger vehicle but my plan for this one is to pay it off and keep it for the next 10+ years until it literally dies on me!

Buy a car you can afford now and then replenish your savings.

(I've had 4 cars in 30 years and never paid more than 12k. Choose carefully and you don't need to spend mega bucks to get a reliable car)

I did PCP for 4 years x 2 cars then the second car I paid for outright at the end. I am now semi-retired so drive a lot less miles which is why I decided to buy. Unfortunately since I bought it a year ago I have spent about £1000 in repair bills on top of the annual service cost. I paid £16,000 for it and was paying about £4500 a year on the PCP, but that was including repairs. I do still love the car so I hope it will last me long enough to make buying it worthwhile.

In your position I would a £6k (or less) car. Plenty of good cars around for that kind of money.

I’d suggest as others have. You can get a very good and reliable car for less. I’d spend £10k from savings, build them back up as quickly as you can then start a car fund for when you want to change.

Could you buy a very small car, then use your DPs car when you need to make the longer trip and he uses yours?

1 or 2 car seats will go in any car, but obviously it depends how big your dog is.

Thank you, I think if I was going to fund it solely from savings I’d probably rather pay up to £10k for the car. Then just pay the savings back every month to top it back up