How to pay for new car

[billandtedsexcellentadventure]

I need a car. What’s the best way to pay for it? I’ve seen hire purchase or pcp or bank loan. Cannot get money any other way.

I’ve never had a car via hire purchase or pcp. From my understanding they work out more expensive over time. If you can get a bank loan with decent interest rate that might be the way to go. Historically I’ve got a car via cash transfer with a Cc. It was however an offer and 0% interest provided you payed it off during the offer period. Even after the transfer fee is worked out cheaper than a bank loan.
No sure if you mean new car or new to you car. I wouldn’t buy brand new personally, they depreciate far too quickly.

Sorry, I did mean a used car. Definitely don’t want a brand new one. Employer doesn’t offer a salary sacrifice.

I thought a bank loan would be better. Never thought about a CC to be honest. I do have an excellent credit score. But recently paid for something large with my savings which finds myself here.

I've bought my secondhand cars with a bank loan. Works out cheaper than finance and you have complete control, can pay it off early if you get a bit of a windfall. That's for amounts around £10k - £15k which gets you a pretty good car.

Get a bank loan as then you’ll actually own the car. I got a 10K bank loan for my last car, I’m 4 years into the 7 year period but the payments are low and affordable (only £135 a month on a low interest rate). I bought a second hand car that was 5 years old and had low enough mileage to last me more than the length of the loan term. In all I’ll have the car for 10+ years. I’m actually in a position to pay the loan off early and plan to do this next spring.

I got an interest free credit card specifically for buying my car - it covered about a third of the cost, the rest being trade-in of old car, and cash.

The zero rate lasts for 2 years and I'm making the minimum payment every month. Have a look on the Money Saving Expert website for credit card deals - that's where I found mine.

Bank loan. I always buy a car 2/3 years old. I then buy it “outright” with a loan and make the monthly payments that way. I get the loan over five years, which makes the payments more manageable. Once the loan is paid off, you don’t have the outgoing for it. You also have the flexibility to pay it off early, or make overpayments (I recently did this and paid £3K off it).

Interest rates are low at the mo for loans - have a look at the loans section (and borrowing generally) on MoneySavingExpert.

Also have a look on Hotukdeals. There are often amazing pop deals posted and also very cheap new electric car deals if you daily mileage isn't massive.

It also means you can use the car money as a part exchange for when you want/need a new one. If you had PCP/finance, you need to find a new deposit each time.

thank you all. It’s all really useful and good for thought. I will check out Martin Lewis and see what’s coming out best.

A bank loan will probably be cheapest and most flexible.

Also most likely to be shorter term than the lifespan of the car meaning you can then save up for the next one without a loan.

Watch out for interest rate tiers and anomalies in repayment amounts eg it can be cheaper to borrow larger amounts because the interest rate drops so you pay less back even when you've borrowed more.

@Bjorkdiditthank you. That’s useful to know.

I got a bank loan as the interest rates were more than half of all the other finance options. It also allowed me to get something a bit newer and more reliable. I also managed to save a few thousand which helped.

I would take a bank loan for the lowest possible amount that will get you a decent reliable car that will last longer than the pay off period ( obviously no guarantees) but a 2022 car should last till 2032 and well over 100k miles
keep up with maintenance
and start saving so the car after this you buy with cash plus trade in value so you never need another car loan so if you pay off loan in 3 years keep saving that same amount for the next 3 years into a savings account so come 2032 you have 3 years worth of savings
do you have any savings at all ( not including emergency fund)
do you have a car currently and if so does it have a value how quickly do you need a new car?

There was a period of time where car manufacturers offered a lot of very cheap car lending to boost their sales and also to:

• normalise borrowing to finance ever unaffordable premium brand cars and hide the huge increase in car prices over time
• trap people in a cycle of 3 and 4 year leases of brand new cars, constantly financing high depreciation rather than the cheaper long term cost of owning an older car outright
• break the habit of saving to buy a car, and increase the expectation of buying one immediately

They are now increasing the costs of financing and most people are finding themselves pay larger and larger monthly premiums.

If you possibly can op, hold off as long as you are able to save money to buy an older, non premium marque car outright. Something reliable like a mazda or honda.

Current car has a little bit of value to it

What’s your available budget?

I’ve got about £2500 deposit. So looking to borrow about £7k

How long will current car last? any car with an MOT is worth 1000-1500 so you should get minimum trade in of 1000 but you would probably get more selling old car on eBay or Facebook and using the cash to increase deposit make sure there are no penalties for paying loan off faster. So that gives you 2500 deposit plus 1000+ from sale so more towards new to you car. 10000 total should get you a very nice used car, just beware of the very low mileage 5 year old car as it has probably only done miles around town and no long trips this is not necessarily a good thing

And what would you get for existing car?