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Original poster

How to fund new car

54 replies

Starllight · 29/01/2023 15:32

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!)

OP posts:
KathieFerrars · 29/01/2023 19:46

We decided to go for the paying back savings route although it really worried me using them but sensible while we are still working and mortgage is paid. On a pcp - and Zrenault have 0% atm, you hVe to be so aware of your mileage, scratches, etc and I said we'd not do that again.

MyOldCaravan · 29/01/2023 19:48

Buy a one year old car for £12k and pay for it outright. It always costs more to borrow and when you add it up you'll probably be saving thousands.

Barleysugar86 · 29/01/2023 19:49

If you go for a mortgage they'd take into account any loan and reduce the amount they are lending accordingly... so I think using savings and then topping savings up would be a better idea.

Toddlerteaplease · 29/01/2023 19:50

Could you wait till a dealership has an 0% finance deal. That's what I did.

Toddlerteaplease · 29/01/2023 19:52

I got a really hood deal
For an almost new Hyundai i10
With bells and whistles I didn't think I could afford.

BarbaraofSeville · 29/01/2023 19:53

Do 0% finance deals (without any knock on increase in the price of the car) still exist now that interest rates have risen?

I've had a 0% PCP deal, and I also had a 2.9%APR personal loan to top up savings for an extension, but that was when the BOE base rate was 0.5%.

Original poster
Starllight · 29/01/2023 19:55

I’m glad I asked here! I’d been thinking about this for weeks.

I definitely don’t want to have unnecessary debt so I’d rather pay for it out my savings then still have a good deposit for a future home.

I know hardly anything about cars so now I’ll need to find something reliable for a good price!

OP posts:
UsingChangeofName · 29/01/2023 20:21

I would spend FAR less than that if I were saving to move house.
Spend £4K or £5K and even if you ended up with "expensive repairs" (which you won't necessarily) you'll still have £11K or £12K in your pocket to pay for repairs - I mean, not that you would, but you would still have spent SO much less.

Between you, you have a bigger / newer car should there be an occasion when you need it.

Floralnomad · 29/01/2023 20:27

We buy outright usually new or very nearly new , the last two times I’ve kept the old car and we’ve had 2 for a while ( we do currently) although we can manage quite easily with one .

Mexicocalling · 29/01/2023 20:28

I bought one my company cars when it was handed back, it was a bargain price as I paid just what the lease company settlement figure was and as I’d had it from new I knew it had been properly maintained and had no hidden issues. If you like what you’re driving now, enquire about a settlement figure and pay it from savings to avoid all interest charges.

Original poster
Starllight · 29/01/2023 20:55

UsingChangeofName · 29/01/2023 20:21

I would spend FAR less than that if I were saving to move house.
Spend £4K or £5K and even if you ended up with "expensive repairs" (which you won't necessarily) you'll still have £11K or £12K in your pocket to pay for repairs - I mean, not that you would, but you would still have spent SO much less.

Between you, you have a bigger / newer car should there be an occasion when you need it.

Thanks, we will still have a good deposit for future home. To confirm £16k isn’t the full savings pot, it’s around 1/4. I just feel like it would be a bit much to splash out any more than around £10k out the savings!

I have major commitment issues when it comes to big purchases…!

OP posts:
IForgotOurSong · 29/01/2023 21:02

If you’re looking at Corsas, you can get a brand new one on lease for about £210 a month with no/low deposit and keep you savings. You won’t own a car but you also don’t own any of the problems.

QueSyrahSyrah · 29/01/2023 21:08

Paying interest unnecessarily rages me, so if you have the money sat in your savings and could afford £250 per month repayment I'd take it from your savings and set up a DD of £250 back into your savings on payday. You'll ultimately save all that interest you'd be paying on finance or a loan.

I'd shop around too, I've never (with the possible exception of my very first car) had an unreliable car or one that's been a money-pit, and I've never spent more than £8k on one - albeit I tend to have small cars so maybe £10-£12k for an equivalent larger car.

pandora206 · 29/01/2023 21:15

There are many reliable cars for around £6k. Have a look at AA Used Cars as they have a wide range, many of which have AA inspections. You can choose the model, mileage, etc. when searching. It keeps me busy for hours!

Original poster
Starllight · 29/01/2023 21:26

QueSyrahSyrah · 29/01/2023 21:08

Paying interest unnecessarily rages me, so if you have the money sat in your savings and could afford £250 per month repayment I'd take it from your savings and set up a DD of £250 back into your savings on payday. You'll ultimately save all that interest you'd be paying on finance or a loan.

I'd shop around too, I've never (with the possible exception of my very first car) had an unreliable car or one that's been a money-pit, and I've never spent more than £8k on one - albeit I tend to have small cars so maybe £10-£12k for an equivalent larger car.

I think this is our best bet. Thanks!

OP posts:
QueSyrahSyrah · 29/01/2023 21:56

@Starllight If you're saving to buy a house it's worth bearing in mind any debts or loans will be considered in your mortgage application too, so the less of them you have the better Smile

Amboseli · 29/01/2023 22:41

I've always had Hondas. Very reliable.

confusedlots · 30/01/2023 09:27

I've never understood why people look to buy expensive cars when they don't have the money. £16k is a lot of money for a car.

I had to get a new car when we in the process of buying a house and I went for a great little car at £3.5k as that was all I could spare at the time.

I've been saving since then and now am in a position to change it and I'm looking at cars around £10k which will be the most money I will ever have spent on a car in my life. But there's no way I would be looking at cars in that price range if I didn't have the money to pay for it.

SleepingisanArt · 30/01/2023 09:42

Look for 'used approved' cars from dealers rather than private sellers. They are serviced and have an MOT before you get them plus usually have a decent warranty with them. Recently bought a used approved Audi, they refurbed the minor curbing, corrected some scratching, serviced and MOT'd the car. We got a 1 year Audi warranty plus a year of Audi Assist (like the AA but they can jump the queue for getting you into the garage if you break down). The car is quite low mileage, excellent spec with full service history. We used savings which we are paying back interest free.....

UsingChangeofName · 30/01/2023 14:02

Thanks, we will still have a good deposit for future home. To confirm £16k isn’t the full savings pot, it’s around 1/4. I just feel like it would be a bit much to splash out any more than around £10k out the savings!

Yes, I realised that, but what my thinking is, is it would be daft to take out a loan, when you are on track to buy yourself a new home in the next few years.

I mean, personally, I always spend hundreds on my cars, rather than thousands and it has worked for me for decades, but I realise the concept horrifies many MNers. However, there is a vast difference between spending £4K - £6K on a perfectly serviceable car, still having the rest of the £10K you are thinking of using kept in your saving and not taking on any debt, against using up £10K of your savings and taking on a loan when you clearly don't need to. I can't understand why you'd even be thinking about doing that.

Original poster
Starllight · 30/01/2023 18:02

UsingChangeofName · 30/01/2023 14:02

Thanks, we will still have a good deposit for future home. To confirm £16k isn’t the full savings pot, it’s around 1/4. I just feel like it would be a bit much to splash out any more than around £10k out the savings!

Yes, I realised that, but what my thinking is, is it would be daft to take out a loan, when you are on track to buy yourself a new home in the next few years.

I mean, personally, I always spend hundreds on my cars, rather than thousands and it has worked for me for decades, but I realise the concept horrifies many MNers. However, there is a vast difference between spending £4K - £6K on a perfectly serviceable car, still having the rest of the £10K you are thinking of using kept in your saving and not taking on any debt, against using up £10K of your savings and taking on a loan when you clearly don't need to. I can't understand why you'd even be thinking about doing that.

Ah, understood. Apologies for misunderstanding.

DP had a Vauxhall Astra which he sold for £3k a year ago with 72k miles on the clock. It ended up being a money pit in the last year with oil leaks etc. That’s what puts me off buying a cheaper car in as I’d imagine they’re generally older with more miles on the clock. I could be wrong though!

OP posts:
QueSyrahSyrah · 30/01/2023 18:24

@Starllight Not necessarily! I've just recently part-exchanged my old car for a 'new' one as we need 5 doors now. It's the same age as the old one and has over 1/3 less miles on the clock.

There's a hell of a difference between a second hand car valued at £3k and one valued at £10k!

There's really no need to spunk the best part of 20 grand on a car when your next home is obviously more important, and a well chosen £10k car could last you years.

superdupernova · 30/01/2023 18:29

I bought a car on PCP. It was £13k new, I put down a deposit of £1,500, paid £150pcm for 4 years. At the end, the balloon payment was around 3k but entering details on we buy any car they were willing to pay £9k. It was when second hand car prices went crazy. I decided to get a low interest loan for the balloon payment. I still have it and don't regret paying it off. I'm glad I didn't go for a lease.

Original poster
Starllight · 30/01/2023 18:35

QueSyrahSyrah · 30/01/2023 18:24

@Starllight Not necessarily! I've just recently part-exchanged my old car for a 'new' one as we need 5 doors now. It's the same age as the old one and has over 1/3 less miles on the clock.

There's a hell of a difference between a second hand car valued at £3k and one valued at £10k!

There's really no need to spunk the best part of 20 grand on a car when your next home is obviously more important, and a well chosen £10k car could last you years.

You’re right. This post has made me realise there’s no need to spend over £10k on the car for what we need it for. Thanks!

OP posts:
Winter2020 · 30/01/2023 19:39

If you are buying a car old enough to have an MOT history enter the reg here and you can see why it failed MOTs and any advisories.

www.gov.uk/check-mot-history

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