Loan or Finance?

[GlasgowTitan]

Its about time I got rid of my old X reg mondeo and got something and bit newer. We have just had a baby and I'd feel better about taking the wee man out in a car that isn't full of dents, a dodgy handbrake and rusty holes all over it. I was considering a budget of around £6-7K for which various comparison websites quote around £200p/m and a total charge of around £800 for the 3 years, which we can cover fairly easily including our mortgage etc. We have a small lump sum which can be used for a deposit if required.

Is the general consensus that finance is the Devils work and therefore avoid at all costs or will you get good deals at this sort of budget? Was thinking of a similar car to the mondeo, maybe a newer model/accord/vectra or maybe something smaller like a focus/astra.

Cheers

 

[Hilly]

Finance isn't the devils work, if you take everything into consideration. What you need however is to find out the rates of which the finance being offered to you is, compared to the rate of a loan and essentially go for the lowest one, and the lowest repayment period which you can afford.

 

[[TW]Fox]

For this car at this age and this money, personal loan every time.

Nobody is going to offer you stonking finance deals on a £7k Mondeo.

Also, always make sure you have a decent deposit - big enough that you always have sufficient equity in the car that you never owe more than its worth and can sell the car and pay it off at any point.

Nothing sucks more than still paying £200 a month to drive an old Mondeo worth 1500 quid.

 

[PMKeates]

Taking out a loan to finance part of a car is a pretty reasonable thing to do. How long do you think you will keep this car for? You could finance the same amount over a longer period and calculate the remaining finance and early repayment charges to be approximately the same as the car's residual value once your intended ownership period is over. The positive effect of this is that the monthly repayments are lower, but the negative is a slightly increased financing cost (the amount of which depends on your circumstances). You may find that you can pay, say, £50 per month less but the total cost of acquiring the car is only £100 more over 3 years.*

*Numbers pulled out of you know where as examples.

 

[GlasgowTitan]

Cheers for the help, as for deposit it would be about 2k just now so was probably thinking along the lines of a loan to top it up to the 7k budget. Had a quick look round some dealer websites in my area and as Fox said there isn't really very much exciting, I think there is much more options open to choice of cars if I walk in with money in hand rather than relying on finance.