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Best way to Finance a Nearly New Car

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Looking to get a nearly new car in the near future so wondering which finance option is best. Credit history is improving only average at the moment so will a unsecured loan from a bank etc or a car … Read More
markluk Avatar
8m, 1w agoPosted 8 months, 1 week ago
Looking to get a nearly new car in the near future so wondering which finance option is best. Credit history is improving only average at the moment so will a unsecured loan from a bank etc or a car finace deal be my best bet? Also is a lease option any better? Any feedback will be appreciated.
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markluk Avatar
8m, 1w agoPosted 8 months, 1 week ago
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#1
Are you able to purchase outright? Maybe a lesser model
#2
My advice to anybody is stay clear of finance, buy only what you can afford. A car is not worth getting in debt for, just buy a little banger and work your way up.
If you have zero money get a small bank loan and I mean small, just something to get you going.
But if your set on finance there are absolutely hundreds of different places, online when you search cars they'll always pop up on the left or right hand side offering finance and stuff.
How much you actually wanting to spend?
#3
Buy what you can afford without a loan
#4
car finance isnt always a bad thing, especially if its PCP or similar. it gives you stability and predictability of monthly expenses whereas a cheap banger could cost a fortune in repairs within a short period of time.

if you have a less than excellent credit score, car finance would be easier to obtain than an unsecured loan from a bank as it is at least secured against an asset (even a depreciating one).

bear in mind though used car finance usually has a higher interest rate than new car finance due to additional risk/lower resale so do the maths. a nearly new might end up costing more than a brand new due to higher interest, at least in my experience.
#5
adamspencer95
car finance isnt always a bad thing, especially if its PCP or similar. it gives you stability and predictability of monthly expenses whereas a cheap banger could cost a fortune in repairs within a short period of time.

if you have a less than excellent credit score, car finance would be easier to obtain than an unsecured loan from a bank as it is at least secured against an asset (even a depreciating one).

bear in mind though used car finance usually has a higher interest rate than new car finance due to additional risk/lower resale so do the maths. a nearly new might end up costing more than a brand new due to higher interest, at least in my experience.


but obviously, make sure you can afford whatever choice you go with.
#6
Agree with @adamspencer95 here in that a new car could end up costing less overall once you factor in the interest. You'd crudely expect 4-5% APR for a new car and anywhere between 8-12% for a used car so depending on the model you go for (and depreciation rates which are publically available) you can work out the rough total cost.

"Buy anything that appreciates in value, lease anything that depreciates in value". Some great deals with maintenance included can be found.

Good luck!
#7
Thanks all for the comments. I can afford a montly expense and I would save up to buy outright but my existing car wont last another year I dont think. I see a newish car being like a mortgage as a monthly bill you have to pay, I am bored of the worry of an older car and when will the next £500+ bill come.

Nice points about a new car being a possible 'cheaper option', what are main dealers like with avergae credit ratings though?
#8
Another option to consider is a Peer to Peer loan from a provider like Zopa.

Usually have very competitive interest rates and there are no penalties for early repayment. As an example, I took out £11.5k with them for 3.3%. As others have said above, interest rates through car finance specialists are usually much higher.

Finance/loan isn't always a bad option as not everyone wants to spend a huge lump of their savings in one go on a car. Others, like myself, prefer to keep those savings locked away in case of a real emergency and pay off more expensive purchases in affordable monthly chunks.
#9
markluk
Thanks all for the comments. I can afford a montly expense and I would save up to buy outright but my existing car wont last another year I dont think. I see a newish car being like a mortgage as a monthly bill you have to pay, I am bored of the worry of an older car and when will the next £500+ bill come.

Nice points about a new car being a possible 'cheaper option', what are main dealers like with avergae credit ratings though?


main dealers arent usually too harsh with credit scores as at the end of the day, something like 70% of new car sales are through finance. if they were too strict, they'd lose lots of sales. as long as you have no recent defaults and you can prove affordability, you'd probably be okay
#10
adamspencer95
car finance isnt always a bad thing, especially if its PCP or similar. it gives you stability and predictability of monthly expenses whereas a cheap banger could cost a fortune in repairs within a short period of time.
if you have a less than excellent credit score, car finance would be easier to obtain than an unsecured loan from a bank as it is at least secured against an asset (even a depreciating one).
bear in mind though used car finance usually has a higher interest rate than new car finance due to additional risk/lower resale so do the maths. a nearly new might end up costing more than a brand new due to higher interest, at least in my experience.

I agree with the above also and factor in Gap insurance as well. If you owe nothing on a car and it gets written off you are the one out of pocket with the difference being paid out. If it was on PCP or similar and you where covered by RTI gap you are not out of pocket if any should happen (which off course we all wish would never happen). Sometimes big deposits don't work out best.

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