Buying a new car - finance or a loan?

[Biccaroo]

Hi, I am looking to buy a new car but the vehicles I desire are too expensive for me to purchase outright. It would seem that finance is an extremely popular option these days, but is it the best option? Put it this way, I own a car that's worth about £2,500 whereas the cars I would like to purchase are between £6k-£15k! What would you suggest? Should I be sensible and buy a slightly more expensive car, building slowly to the car that I desire or should I just throw caution to the wind and go for my dream car whilst I'm still young, free and single?! If I should go for the latter, what option should I take - finance or a loan?

I am of course aware that this is very much a matter of opinion, but any guidance would be much appreciated and is all valid!

[MagicalTrevor]

I've had my fingers burnt with finance and used a combination of savings plus a personal loan for my current car.

[Ozzie Osmond]

I am intrigued by this too. There seem to be stories of ultr-cheap finance to enable the purchase of new cars but I've never seen any concrete evidence.

[GroundEffect]

If you're buying new it's usually cheaper to go Finance. But used I've found pretty much always cheaper with a personal loan.

[roystinho]

Find the car you want, then investigate both options and see what's cheapest. I've bought with both and gone for the one with lowest APR, last finance I got was 4.0% which you won't get from bank. But used car finance is usually higher than the bank from my own experience

[cailean]

Interest rates are normally lower for new cars if arranged through the dealer, or even 0% finance if you have 30-50% deposit.

It is of course better to save and then pay cash.

[Biccaroo]

I should perhaps have mentioned that I'm not looking to buy a new car. I'm not sure I'll ever do that TBH. I just don't like the idea of losing thousand of pounds as soon as I drive it off the forecourt! Yep, used all the way for me. I'm looking at various cars, but my top target is a Porsche Boxster S. I've heard they're pretty sweet! So, when buying used it looks like a loan might be best?

[waterwonder]

I assume we're talking about used cars here?

If so then finance generally offers slightly more protection than a personal loan - google halves and thirds but is usually more expensive. My opinion is generally that if you think you will need to exercise this extra protection then you shouldn't even be considering finance. Therefore i'd go with the cheapest unless the difference is negligible.

As to whether you should or not well it depends if you can afford it. By which I mean not just the repayments but bailing yourself out if required. If you can set it up so you are unlikely to ever be in negative equity, then you limit the potential for major issues if your situation changes.

New car finance is a slightly different kettle of fish.

PH response: Never buy anything on the never never!

[cailean]

If you have a mortgage with equity in it and you can draw down, that may be the cheapest way.

[Biccaroo]

Hmm, I don't have a mortgage yet. The plan is to own a classy sports car for about a year, sell it and then consider saving for a mortgage. All I have is about £350 spare/month...

[james280779]

loan loan loan, would never touch finance again.

figures seem great but when you work it out its always cheaper to get a loan. If you decide to sell the car then you can. With finance your tied into the vehicle and once your in is hard to get out!

I would now consider a leased car. A friend of mine rang up to get a vauxhall insignia, they had some brand new merc estates and he managed to score one of those (top of range) for 259 a month!!!! Not sure of the exact model but it looks like an AMG (although its not). very impressed