Advice on Finance for New-ish Car

[SarahStrawberry]

Hi All

My Maths isn't great at the best of times so I need some help.

I am hoping to change my car soon and the dealer has said they will offer me between £4,500 and £5,000 for my current car which I am delighted with and its more than I expected (but i haven't told them that!).

I have had Finance on this car since I purchased it but I am paying it off now because it was through another company and I don't want to stay with them. I thought I would have to get Finance from the new company on the new car but because it's quite a good offer for mine and i only want to spend £6000 in total I don't qualify, they only give you finance for more than £2000. I am pleased because I have enough money in my savings to pay the balance on a new car but I don't want to take it out in one go so I was wondering what the best thing to do is.

Should I get a credit card with 0% for 12 or 13 months on purchases and then pay it off monthly over the year or should I look at car loans?

[shirlthegirl43]

I guess the credit expert chappie would say if you were definately going to pay it off in the time and you can get the card with 0% then go that way - at least you won't have any interest to pay.

[chris]

Is there any reason why you don't want to take it out now? The interest you'll gain on ~£2k is hardly worth keeping it in the bank. Personally, I'd pay it off now.. unless you're very disciplined with money, having 2k on a credit card / loan with the ability to pay it off can mean that you'll dip into it by say £100 for a new outfit/night out/whatever thinking it's only £100. Next time it may be £20, etc et c- money is easy to spend, but hard to make -- as I'm sure you're aware, not being patronising.

I work on the basics that we save up for what we want, and when we have enough, we'll buy it. I did the same thing when we bought our new car, got less than I wanted for my part ex'd car, but was prepared to be offered £500 lower than they offered me (in terms of having enough in the bank to make up that extra £1.5k that I was prepared to drop by)..

My vote would be, unless you can tuck it away somewhere and not access it - pay the loan off now. At least it's out of your hair then, and that's one less (or total?) debt to worry about

However, I don't know your finances, you may need the it as a sort of nest egg.

[SarahStrawberry]

Thanks both.

I don't really want to keep it for the interest, I know it won't make much. I would just quite like to have it available as emergency cash if required. I am good at being disciplined and I don't think I would increase the amount on the credit card or leave it without a lot of serious thought. I am lucky enough just now to be in a job where it is reasonably stable and secure, as much as it can be at the moment, so I know I should be able to pay something every month to pay it off.

[Plot10]

The finance "deal" from the car dealer will hardly ever beat what you can get from your bank or other reputable company and a loan from a bank is not secured on the car, which your dealer's finance deal may be.

I'd get the car with 0% card, then cast around for another deal a few months before the offer finishes, then either get another 0% transfer deal or a bank loan for the remainder (take into account transfer fees and other one off fees, 0% rarely means totally free).

[Mikey]

Having financed two vehicles in the last twelve months, I would stay clear of finance on the vehicle, you can swop finance from one to the other but the rate at present is roughly 10% upwards, not a good idea.

If you can pay it off I would go with a interest free card, bear in mind though that most car dealers will charge roughly 2% for paying by credit card, so make sure you add this into your equation.

[Mikey]

I'd get the car with 0% card, then cast around for another deal a few months before the offer finishes, then either get another 0% transfer deal or a bank loan for the remainder (take into account transfer fees and other one off fees, 0% rarely means totally free).

Most deals for cards without transfer fees have gone these days, average seems to be around 3%, there are a few that offer 6 months but most need you to be an existing card holder, rather than a new customer.

[Two_Sheds]

the dealer has said they will offer me between £4,500 and £5,000 for my current car

That'll be £4,500 then. They never give you the full value (why should they?) but at least you get rid of it without the hassle of a private sale.

It wouldn't hurt you to get it valued, for free, on the Net so you have a good idea what it's worth (use several sites as they do vary)

[Pies]

moneysavingexpert.com they have a very good forum for finance

[SarahStrawberry]

Thanks all for your assistance. I've decided to get the 0% credit card and take it from there.

Two Sheds

That'll be £4,500 then. They never give you the full value (why should they?) but at least you get rid of it without the hassle of a private sale.

It wouldn't hurt you to get it valued, for free, on the Net so you have a good idea what it's worth (use several sites as they do vary)

I've got quite a good idea of what it's worth. I've taken it to 2 other dealers and had a look on the 'net so even if it is £4,500 I'm quite happy with that.

Mikeywills Having financed two vehicles in the last twelve months, I would stay clear of finance on the vehicle, you can swop finance from one to the other but the rate at present is roughly 10% upwards, not a good idea.

I completely agree!