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Buying a Car, money advice

Discussion in 'Motors' started by fallbayuk, 25 Jan 2006.

  1. fallbayuk

    Wise Guy

    Joined: 7 Nov 2003

    Posts: 1,027

    Im 24. I really really want to buy a Fiesta ST, and can do so for a good price - £11300 (new). Over the past couple of years I've managed to save just over eight grand which i should probably put towards the car, but I'm thinking of taking out a loan to cover the majority of the cost of the car and only use a small part of my savings to cover the remainder. The thought of blowing all my savings in one go doesnt appeal to me, but if i've got the money it would probably be more sensible to use it than take out a loan. However, paying off a loan each month for a good few years doesnt appeal to me much either. Basically I cant make my mind up and im going round in circles, what would you fellas/fellaettes do?
     
  2. Ollie's Gadgets

    Hitman

    Joined: 28 Sep 2005

    Posts: 569

    Location: Surrey

    Use your savings as you will have to pay interest on the loan which will be typically of a higher rate than your savings will give you. How about looking at a second hand 1 year old fiesta st? Let someone else take the depreciation hit and save some money.
     
  3. James_N

    Sgarrista

    Joined: 25 Jan 2003

    Posts: 9,469

    I agree this seems the best option :)
     
  4. mattx2

    Wise Guy

    Joined: 21 Jul 2005

    Posts: 1,220

    Location: New York

    You could get a 0% credit card to cover the shortfall then hop cards till you paid it off.

    If it was me however I wouldn't be spending 11k on a new fiesta
     
  5. NiCkNaMe

    Mobster

    Joined: 17 Jul 2005

    Posts: 3,187

    The ST's are lush though, I love em.. and are one car i'l consider changing to when I next change (year or so, so others can take the depreciation ta :p)
     
  6. Big Spender

    Wise Guy

    Joined: 31 Oct 2004

    Posts: 2,317

    seconded :)

    maybe he wants the facelifted version, so a 1 year old one wouldnt really do as the facelift model only came out a short while ago. but then again he might not be bothered with what kind he gets.

    check out this place if you want some more info, i think theres a guy on there selling his just now http://www.rsstoc.com/
     
  7. TripleT

    Sgarrista

    Joined: 24 Oct 2002

    Posts: 9,424

    Location: Manchester City Centre

    Yep, taking a loan out when you have savings is just bonkers really :)

    No-one likes the thought of spending THAT MUCH of their own money though, suck it up man :p
     
  8. Big Spender

    Wise Guy

    Joined: 31 Oct 2004

    Posts: 2,317

    so spend what, 8k on say the deposit then get the other 3500 on finance? but depending on how you look at it, it might turn out cheaper to take out a loan than do it through finance, depends who gives you the better apr.
     
  9. Goliath

    Wise Guy

    Joined: 20 Aug 2003

    Posts: 2,139

    Location: The Republic

    Spend your savings on the car and cover the rest via a personal loan (for the interest reasons stated above). Remember to hold back enough of your savings for the first year's insurance etc. Try to get the loan over as short a period as possible (i.e. work out what you can afford to pay off each month and stick to that).
    If you keep the car for three years, and you pay your loan off in 2 years, for the final year stick what you would have been paying for the loan into your savings account - when you come to change you will have whatever you get for the car + what you have saved for a year to spend on its replacement.
     
  10. eidolon

    Capodecina

    Joined: 31 Oct 2002

    Posts: 13,865

    Location: Newcastle upon Tyne

    ^^^^^^^
    What everyone else said.

    I was in the same position a while back. I considered getting finance only for the reason that it sometimes gives you more ammunition when going to a dealers (ie. they'll do you a better deal if you take their finance) however Honda couldn't care less if I paid in full or took their finance so I just paid on my switch card :)
     
  11. Jonny69

    Man of Honour

    Joined: 3 May 2004

    Posts: 17,668

    Location: Kapitalist Republik of Surrey

    £3K Finance = 20+% apr, paid off over 3 years will cost about £4K+

    £3K Loan = 7% apr, paid off over 3 years will cost £3500 approx

    Just as a rough idea.
     
  12. eidolon

    Capodecina

    Joined: 31 Oct 2002

    Posts: 13,865

    Location: Newcastle upon Tyne

    Honda were quoting me 6% finance when I bought the CTR, I don't think anyone (other than "YES" have APR anything like 20%)
     
  13. Tesla

    Capodecina

    Joined: 19 Jan 2003

    Posts: 17,404

    Location: Bristol, UK

    I still don't think any car is worth getting in debt over.
    Don't get me wrong, I absolutely love motors. Just I wouldn't be happy getting a £4k loan out to buy one.

    If I was in your situation I would save a little longer. By the time you probably have £9000-£10000 I imagine that the Fiesta ST (current shape) will be available second hand or ex-demo and therefore you can also save on the massive depreciation hit.

    If you take a loan to buy the car to pay the difference that loan is basically covering the depreciation cost which isn't that nice a thought.
     
  14. Tesla

    Capodecina

    Joined: 19 Jan 2003

    Posts: 17,404

    Location: Bristol, UK

    The woman who used to own that Rover I got back on the road bought a Ford Ka for £4k on credit.

    We knew the credit rate and term so worked out it's going to cost her around £8k after interest has been paid.

    She has bad credit, even yes wouldn't give her any.

    I still don't know why she didn't get the Rover fixed. Would of probably cost £400-£500 if a garage did all the work.
     
  15. Maz

    Soldato

    Joined: 18 Oct 2002

    Posts: 7,387

    Location: Newcastle.

    Some of you guys are SO naive when it comes to Finance!!

    Who these days can get away charging 20%+ APR?

    I sell cars day in day out and on finance and not on finance, I did a deal yesterday the APR was 3.9% on a PCP!!! Name me a Bank where you can borrow money as cheap as that?

    It worked out that over 36 months that £9000 PCP on 3.9% Apr you paid back a total of £400 in interest how cheap is that?

    Best way to buy a new car is to buy on a PCP - Personal Contract Purchase,

    For example

    Car is £9000

    You borrow £7000 of it over 3 years and you leave £2000 as a optional final payment or guaranteed future value.

    After you pay back the £7000 over 3 year you owe £2000 but your car is worth £3750 for example which means that you have £1750 equity in the car which can be used to upgrade to a model that cost £10750 for the same monthly payment or can be used as a deposit on a similar priced car to bring your monthly payments down.

    This means that you only spend an agreed monthly payment all the time, and that you have a Brand New car every 3 years which has full warranty, roadside cover etc.
     
  16. Tesla

    Capodecina

    Joined: 19 Jan 2003

    Posts: 17,404

    Location: Bristol, UK

    That's all very well Maz but you never actually own the car...

    (I used to sale a lot of Credit too, albeit 29.9% and 24.9% apr :eek: )
     
  17. Nozzer

    Banned

    Joined: 17 Oct 2002

    Posts: 9,495

    Location: Sunny South-East

    I'd rather take a loan from a bank, even at 1 or 2% higher rate so I can walk in to a sale with cash in hand. I prefer buy my cars privately and never underestimate the power of putting a cheque under the seller's nose with a "this is how much I'm prepared to pay for the car, let me know when it's cleared".

    Plus, when you come to sell the vehicle on, you don't run in to finance issues on the HPI check, as that chap did with the S3...
     
  18. Maz

    Soldato

    Joined: 18 Oct 2002

    Posts: 7,387

    Location: Newcastle.


    Thats not a bad thing, would you like to OWN a 05 plate MG ZT for example knowing full and well that you lost an absolute fortune since you bought it?

    With HP and PCP you have the flexibility to hand the car back should something like what happened to Rover happen.

    Banks don't offer this.

    Cash works well in Private sales, but does nothing for dealers.

    The finance companies fund dealer stock, and should the dealer sell a certain amount of finance this funding is done for free.

    And your not very likely to buy a Brand New car from a Private seller like the OP is wanting to do.

    Selling a car privately with finance owing on it is such an easy an simple process, obvious the seller has to be 100% honest when doing so.

    IIRC Fox bought his Xantia of a guy who owed finance on it, I'm sure he can back up how easy it can be.

    The thing that makes it difficult is that the public have the perception of "OMG!!! Its got finance owed on it walk away NO RUN!!11!"

    When in reality it takes the seller one telephone call in front of the buyer to settle this finance and let the buyer take the car away Simple...
     
  19. Jez

    Caporegime

    Joined: 18 Oct 2002

    Posts: 32,353

    You really are a salesman arnt you :D
     
  20. Maz

    Soldato

    Joined: 18 Oct 2002

    Posts: 7,387

    Location: Newcastle.


    :D :D

    My excuse is I get paid for it.