Welcome to this week's Finance Fridays. Last week we were looking at Smart Meter usage and for this week we're looking at ways to buy a car.
With the 1st of
March passing this week it means that the new '16' plate cars will be
taking to the roads. I can't be the only one who likes to spot a new
plate! Whether you buy a brand new car or a used one cars are pretty
pricey items so getting together the money can be quite tricky. Have
a look at some of our tips for car finance options.
Cash – I've bought
all of my cars for cash. I did save for many years before buying my
first car and by the time I passed my test I had enough to buy a
small but new car. I was also able to reap the benefits of a three
year warranty, no MOT for three years and a year's free car insurance
for myself and my husband – this alone was worth about £1,000 at
the time. Once I've bought a new car I start saving up for the next
one. Setting up a regular savings plan for your next car purchase can always be a good idea.
Car dealer finance –
Car dealers are in the business to sell cars and so will be very
willing to provide finance for you. Obviously they will be making a
good profit on any finance agreements and you can't blame them for
making money. Do check the interest rate and payment period rather
than just the monthly payment amount to see if it is competitive. If
you're trading in your old car make sure you know how much it is
worth beforehand so the full value is properly offset against the new
car. If you are looking for a used car try to search for a local used car dealer so you can easily go back to them if necessary.
Bank loan –
Interest rates are still very low and most high street lenders are
keen to offer loans for whatever you wish to purchase. However, with
years of financial uncertainty they will only be wanting to lend
money to customers with good credit histories. If it's been some time
since you checked your credit score have look to make sure you can account for all the entries
in your name.
Leasing – If you
want to want to have use of a new car but don't have the finances
then leasing may be an option for you. If you take out a Personal
Contract Hire (PCH) agreement you basically rent the car for a set
amount and time and then hand it back at the end of the lease period.
With a Personal Contract Purchase (PCP) you buy the car at the end of
the lease period. Quite often you will be limited to the number of
miles you can drive without paying a supplement so check the fine
print.
Bad credit - If
you're looking for bad credit car finance there's plenty of options these days.
One of the problems with having a car is that you come to rely on it
so if it dies on you and you need to buy a new one if you have a bad
credit record this can be a problem. Sometimes your bad credit
history has arisen due to not keeping up repayments on another loan
or simply a missed payment. Quite often if you've never taken out any
form of credit before it can be difficult to obtain credit for the
first time especially for the first time.
Interest rates from such
specialist providers can be much higher so factor this in when
choosing your new car. Also be wary of long payment terms for car
finances as the car you want to buy now may not suit your situation
in five years time and if you have bought a second hand one it may be
ready for renewal before then. You don't want to still be paying off
a car you which doesn't work for you.
How do you finance your car
purchases? Do you like to buy from new or second hand?
We were joined last week by
Jane of Maflingo
who has been looking into the cost of contact lenses. If
you want to join in with this week's Finance Fridays then add your
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I remember saving up to buy my first car, now though we use finance. Mainly down to the fact I need to drive to work every day or do the school run, a new car is much easier without the worry of any problems. With changing family it also means I can change to a different car every 3 years, it does work out more expensive but if you haggle and shop around you can usually get a good deal. I will definitely be on the look out for a new number plate :)
ReplyDeleteWe bought ours second hand and with a part-exchange. That really helped. Great tips here.
ReplyDeleteWe normally try and part exchange and only ever buy second hand.
ReplyDeleteLike you I have always bought the car after saving for it for years.
ReplyDeleteThese are things I will need to keep in mind when I finally go for lessons
ReplyDeleteGreat tips. I didn't know there was so many options available out there!
ReplyDeleteI've always saved hard to pay cash for any new car purchases and I' m not averse to a spot of haggling with the salesman to get a great price!
ReplyDeleteI did save as you earn through work which saw me buy shares and save them. If you saved for 5 years you get them tax free so we normally got around 5-6K depending on share price
ReplyDeleteI'm really not a fan of getting a car on finance but if you do, make sure you pay the extra so that your car is fully covered should it be written off. If your car gets written off then your insurance company might pay out less than you are so you'll still owe money even though you won't have the car x
ReplyDeleteI think that when it comes to spending that much money, it pays to take financial advise. We bought our last car with cash, but I know that is unlikely the next time!
ReplyDeleteWe've never bought a new car or a car on finance. It's always been second hand with cash. Luckily, we've had good cars that haven't given us problems. The only car we've bought that we have regretted it the current one. It doesn't give us any problems except for the fact the husband doesn't like the way it dips down at the front and you can't see where the car ends. He has difficulty parking so we're thinking of selling it and buying a new one. Luckily, his mum will lend us her car while we shop around for another one because she hardly ever drives hers.
ReplyDeleteWe have always bought our cars with cash. Always second hand also, as we had never seen the point in taking a loan for something that loses its value as soon as you drive it out of the dealership.xx
ReplyDeleteWhen I was younger, I always would love spotting all the new-reg cars when they came out! We bought our latest car (a year old) using finance - it was the only way for us to do it.
ReplyDeleteWe always buy ours second hand with cash. Mind you we also seem to pay for a lot of repairs!!
ReplyDeleteIt can be difficult to know which route to go down when you need to buy a car. These are great tips... thanks!
ReplyDeletewe go my husbands car work scheme at work and we love it as we don't have the garage bill worries .
ReplyDelete