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Best way to finance a new car?
Former Member
Posts: 1,876,323 The Mix Honorary Guru
Ok.... so I'm looking to get a new car. I have my trusty old peugeot which I plan to use in part exchange- or I could sell her privately for around £900. I want to get a Nissan Figaro and the going rate for the type I want is £5000. So basically I don't know what's the best way to fund it- get a loan, get a car on finance- I don't really car so long as I don't get screwed over on interest :crying: My bank have offered me a loan- which is great- but its at 20% APR. The problem is I don't really have a credit history- I don't have a mobile contract, or an overdraft, and I've not borrowed money before. So yeah- any ideas?
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If you get a loan or finance the car with the dealer for the full amount then at the end of the day you will get a car that you can sell on... another option for you would be to in effect lease the car which is what I am doing - basically I pay a monthly sum for 3 years and at the end of it I can hand the car back, upgrade to another car without having to pay a deposit or pay the balloon payment (what is left on the finance) and keep the car (this is also an option if you are looking to sell it privately).
If you think that you will want to change your car every few years then the balloon leasing deal could work for you...
The way I see it is that if you buy the car in full you will be paying a much higher monthly charge but will have a car at the end of it, if you lease then your monthly payments could be much lower but then you don't have anything to show for it...
Kinda the same idea as renting/buying a house!!
To be honest, i would avoid finance from dealerships - you tend to be screwed over by the interest rate. Get your money in place, buy the car and then sell your own car privately and use that to reduce the amount of the loan. It's a little more effort but worth it for what will probably end up being at least £500
20% APR is shocking.
Car dealerships can be a bit of a skank, unless the manufacturer themselves are running a decent scheme (which you usually won't get on used cars)...
20% APR over 12 months, say, isn't that extortionate, because of the way APR is calculated. On an aside, one of my clients was paying 325% APR on a car loan :eek2:
Try and avoid Hire Purchase (HP) as much as possible. Under HP agreements you do not own the car until the final payment is made, and as such the car can be repossessed- if you've paid less than 1/3 of the total, they can do it without a court order. An unsecured bank loan is the best way, IMHO.
im currently on quite a good wage but when i bought my latest car i had to go for finance, cos banks aint my best friend at the moment, had bad credit in the past which is currently almost repaired.
i got the finance through the car dealer and it hasnt worked out too bad at all, i used my previous car as part-ex which acted as deposit on the loan as well.
watch out tho, sometimes your first finance payment can be quite high because you pay all the admin costs and stuff (well at least i do), now i only pay something like £90 a month over 3 years.
I forgot to say - funny looking cars, those Figaro things. There's a few around Ealing, and they confused the hell out of me when I first saw them.
Not overly keen, to be honest, and strangely enough, there was one shown on 5th Gear this evening.
Carcrafts cars are well overpriced and their finance rates are usually extortinate.
I was in deprete need for some transport back an too from uni a while back. A car just wuddent of been realistic, so i decided on a small motorbike. Cuddent afford straight off though, so had to get a loan.
Anyway, i used - http://www.moneysupermarket.com/loans/SecuredLoansFinder.asp to find mine. Prob worth a look for help with your car
A Figaro is a classic car and will never depreciate in value. If anything they'll go up in value, not many were made and they're very sought after. If OP buys one, make sure you get classic car insurance (Footman James are the cheapest) which will save you a lot of money. Although as they're all Japanese imports that won't help your insurance. Figaro's do look pretty cool, my neighbour had one for a few yrs but got rid of it... parts are expensive though I've heard. But if you get a good one a Figaro is probably a good investment; if you take care of it it'll run and run, Japanese cars are v.reliable, it shouldn't rust and it probably won't lose value. And they're way cooler than a Fiesta! Although I'd never swap my old mini for a Figaro!
As for financing it, some dealers take credit cards....if you're buying from a dealer that takes cards, apply for a credit card with a long 0% on purchases... check moneysavingexpert, but I think the longest is like a year or something. You prob wouldn't get a limit big enough to put it all on a card but you could at least put some of it on the card...and then you'd have a year to pay it off without interest. Next best option would prob be dipping in to your overdraft if you've got one, as I think overdrafts are usually lower interest than loans. Otherwise bank loan but you could do a mix of loan, overdraft and credit card. Just be very careful with loans and credit cards! Make sure you keep up with repayments, etc and know exactly what the interest rate is.