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I start a new job end of Jan and I may be given a car allowance. If I were to take the car allowance I would most likely use a hire purchase finance scheme. I see a few banks offer respectable interest rates albeit for their customers only. SO my question is, would you recommend a car finance broker who can offer advertised rates around 4%? The main ones on google offer interest rates double/triple this so naturally i would like to avoid these if possible.
Depends on credit score. Moto Novo are 6.9
I can recommend Oracle
Most of the finance brokers I know won't touch consumers anymore sadly. Only B2B.
Your Bank is the obvious answer, Lloyds for example have a car finance configurator on their app which is fun for window shopping.
That said, if you're going down the HP route, unless you've got less than perfect credit history, a personal loan can be just as cheap.
Why car finance specifically? If you are taking out HP rather than PCP then you'll be paying off whole car. Sainsbury's bank will lend up to around 25k at 2.5% which is cheaper than any car finance product.
Because i have enough unsecured debt on my credit file
Maybe PCP?
APR is not always a great indicator of cost.
Because PCPs come with goodies from the dealer / manufacturer e.g. deposit contribution, whilst the interest (APR) may be higher, the overall loan cost may be smaller as you're borrowing less.
Also, with PCP, you're only borrowing approx half the vehicle value (assuming 3 year PCP), so again whilst the APR might be higher, total interest / finance cost might be smaller than an HP or loan.
I'm not advocating PCP full stop, but don't count it out as APR is not the only thing to consider. PCPs are also secured against the car, so you may find PCP is more easy to come by than an unsecured loan.
Because i have enough unsecured debt on my credit file
Have you considered running a cheaper second hand car and slamming down that unsecured debt a bit? What's your probation and notice period in this new job? If you lose the new job, can you keep up the repayments along with your other obligations?
Sorry for going full dad mode - I appreciate you may be driving as part of your job and need something reliable, comfortable etc.
But bear in mind you have an 'extra' monthly source of income in the form of this allowance that might help you escape that unsecured debt and get to a point where, if you need to borrow for a car, you can get a better deal than that available from a specialist finance place or HP arrangement. I suppose it comes down to whether you need that new car, or want the new car.
[Edit] I borrowed from M&S at about a third the rate of the dealer's 'best' finance deal and paid in cash at the last minute. For a not-very-expensive second hand car, this has saved me a ridiculous amount in interest.
‘ Have you considered running a cheaper second hand car and slamming down that unsecured debt a bit?’
The unsecured debt is invested and I don’t want to cash in the investments as they are easily outstripping the cost of the debt; I’m aware of the risks.
Look for new car deals with 0%? We got a Mazda 3 like this a few years ago
If the car allowance materialises are you required to use it to buy a car?
Do you have a serviceable car?
Does new employer have any stipulations about your current car - if you have one and choose to use it - age, condition, anything else?
If answers are no, yes, no - take the money and spend/save as you see fit.
If you really want another or new(er) car - your mind is made up.
The unsecured debt is invested and I don’t want to cash in the investments as they are easily outstripping the cost of the debt; I’m aware of the risks.
Isn't that what caused the great depression in 1920s America?
Are there any actual answers to the question?
I dunno, I borrowed from the bank at 3.4 when all the bank PCP deals were 7% or so.
There were loads of answers?
There are loads of car finance brokers out there, Zuto & Car Finance 247 operate via Auto Trader & Motors.co.uk on line platforms. Most car dealers deal with at least 1 broker, Evolution funding for example will use a panel of lenders and deals are placed with the most relevent lender to the end users circumstances. Some operate a rate for risk policy, some offer low Apr deals. In my years of motor finance industry experience, use your own bank.
Does new employer have any stipulations about your current car
I had £5k a year company car allowance that went towards running my ex-military 110 Defender that I'd already owned for years. Thankfully I didn't need to actually drive anywhere on business in it. Did look good parked among a sea of BMW's and Mercs in the office car park.
It really depends on your situation and the value of car you’re financing. I assume you’re most interested in PCP finance?
For new cars, the manufacturers PCP finance deals are nearly always the cheapest.
If used and less than three to five years old, there are finance brokers who will get you a better PCP rate than most dealerships but these are still typically in the order of 6%. There are some offering better rates but beware as they offset this by offering low GMFV meaning they can actually be more costly over a fixed term than higher rate deals.
If you’re properly affluent and financing down genuine exotica then significantly better rates are accessible.
If you can give an idea of the sort of age/model you’re looking at I can make a couple of recommendations.
Thanks Tallpaul. So say about 16k car, 4 year period, 10% deposit, HP not pcp. BMW 520d touring. Appreciate your help
As above Sainsbury loan
Or go on Money Saving Expert
Why the need to make it a secured loan ? If you are in debt up to your eyeballs then the fact is you shouldn’t be taking out another loan
You won’t get secured finance at anything like a personal loan rate for sums less than £25K.
Is there a monthly payment amount you’re trying to keep to or another reason you’re interested in HP?
The unsecured debt is invested and I don’t want to cash in the investments as they are easily outstripping the cost of the debt; I’m aware of the risks.
If I'd the cash, I wouldn't be getting a loan.
What car have you at present, and could you just use that until these investments have delivered their returns?
If you are in debt up to your eyeballs then the fact is you shouldn’t be taking out another loan
It sounds like he's in the black overall.
I currently have a company car, so i will have to return it upon changing jobs.
HP because i am assuming i wont get another unsecured bank loan as i already have a decent sum of money lent to me and i dont want PCP.
Yes i could buy a car outright, but as said previously, i borrowed money to invest it and i dont want to cash in the investments and lose the ISA status yet.
16k doesn't go far on a 5 series. By the time the 4 year term is up it is going to be pretty old. Is secured finance on cars that age actually a thing?