Financing a performance car

[Biccaroo]

I am looking to purchase a performance car for between £5-8k (e.g. MX-5, Elise) but I do not currently have enough cash saved away to do so. However, I do have enough disposable income to afford between £150-220/month. What options do I have besides saving meticulously for 3-4 years? For example, would you recommend getting a bank loan or is hire purchase a better solution?

Thanks in advance for any advice you may be able to offer.

[Rawwr]

Don't forget to budget for running costs. An £8k Elise may be more expensive to run that you first imagine.

[300bhp/ton]

Biccaroo said:

I am looking to purchase a performance car for between £5-8k (e.g. MX-5, Elise) but I do not currently have enough cash saved away to do so. However, I do have enough disposable income to afford between £150-220/month. What options do I have besides saving meticulously for 3-4 years? For example, would you recommend getting a bank loan or is hire purchase a better solution?

Thanks in advance for any advice you may be able to offer.

I'm sure some will question MX-5 as a performance car but I know exactly what you mean and they are great cars.

In answer to your question - well it has to be up to you really.

No one else can tell you what is best.

That said this is my take on it.

-Can you truly afford this amount a month? What happens when the car breaks, will you have funds to sort it out?

-A loan is certainly 1 option and for certain cars the only real option

-kit and classic cars are hard to get on finance, as are imports and cars over 10 years old. It's not impossible, but a lot of mainstream financiers probably won't be interested unless it's fairly normal.

-How long do you plan to keep the car? This then dictates on how worthwhile it is to you to finance such a car and what sort of hit on depreciation and interest charges you'll be able to accept.

-Do you plan to mod the car or do other things to it? As in would the money a month be better served in different ways?

[Gizmo!]

Just a small note: get a few loan quotes before you definitely decide. The headline rates are almost certainly not what you'll be quoted.

I was going to buy a car a month or so back and despite having absolutely nothing dodgy on my record, and asking for a loan of ~10% of my take-home, I couldn't find a decent one...

[Biccaroo]

I've thoroughly considered my financial situation and I can afford to outlay the amounts specified monthly. However, you are certainly right to point out that running costs are of course a factor to think about besides the basic cost of the vehicle.

At this moment in time I am simply trying to weigh up my options. I am simply not 100% sure where my money will be best spent when it comes to financing my next car. I could, for example, get a loan of £6k which would cost me around £900 interest over 3 years. The problem with this option is that the £900 interest of course increases the overall cost of the used vehicle and, as such, I may be better off considering a 0% interest finance deal on a newer car which I could, in theory, upgrade every few years?

Basically, I am as indecisive as they come. All I really know is that I want to own a car that I love to drive!

[halo34]

Even with 0% interest you might struggle to find something new at that monthly budget range no?

You can also work with some dealers to factor in a servicing pack which might help in terms of budgetting.

I bought a volvo recently and took the set price servicing on offer which makes life alot easier to budget for. All I have to worry about for the next 4 yrs is tyres and wear/tear items such as brakes. Although the monthly payment was higher it means I know what I am dealing with monthly.

[halo34]

PS sorry I meant to say this

HP

Easier to sort and you are away with the car quickly
2/3rds rule applies normally
Interest rates can be better if the garage works at it

Bank Loan

Isnt on the car so you can sell without worries about declaring finance
Sometimes can beat APR of garages though its tough out there just now


Watch the flat and variable APR comparisons too - if the garage quote flat rate try and work out the variable using some online tools.

Banks seem to be around 8.9% APR variable at mo on average.

[Herbs]

Biccaroo said:

I've thoroughly considered my financial situation and I can afford to outlay the amounts specified monthly. However, you are certainly right to point out that running costs are of course a factor to think about besides the basic cost of the vehicle.

At this moment in time I am simply trying to weigh up my options. I am simply not 100% sure where my money will be best spent when it comes to financing my next car. I could, for example, get a loan of £6k which would cost me around £900 interest over 3 years. The problem with this option is that the £900 interest of course increases the overall cost of the used vehicle and, as such, I may be better off considering a 0% interest finance deal on a newer car which I could, in theory, upgrade every few years?

Basically, I am as indecisive as they come. All I really know is that I want to own a car that I love to drive!

you will lose a lot more than £900 in depreciation alone and certainly wouldn't get any decent type of drivers car for that budget.

I personally went the finance route and then when that was paid off took out another loan and added to my savings (each loan paid off over 3 years) and then after 9 years i spent £25k cash on a car with no finance owing at all - i've always looked at cars as my savings account - if i haven't spent it on a car repayment then i would have waster it on other crap over the years

[Defcon5]

Apparantly Lookers Renault have an excellent PCP deal on the RS Clio, about £200/month IIRC

[Biccaroo]

Herbs said:

Biccaroo said:

I've thoroughly considered my financial situation and I can afford to outlay the amounts specified monthly. However, you are certainly right to point out that running costs are of course a factor to think about besides the basic cost of the vehicle.

At this moment in time I am simply trying to weigh up my options. I am simply not 100% sure where my money will be best spent when it comes to financing my next car. I could, for example, get a loan of £6k which would cost me around £900 interest over 3 years. The problem with this option is that the £900 interest of course increases the overall cost of the used vehicle and, as such, I may be better off considering a 0% interest finance deal on a newer car which I could, in theory, upgrade every few years?

Basically, I am as indecisive as they come. All I really know is that I want to own a car that I love to drive!

you will lose a lot more than £900 in depreciation alone and certainly wouldn't get any decent type of drivers car for that budget.

I personally went the finance route and then when that was paid off took out another loan and added to my savings (each loan paid off over 3 years) and then after 9 years i spent £25k cash on a car with no finance owing at all - i've always looked at cars as my savings account - if i haven't spent it on a car repayment then i would have waster it on other crap over the years

I have to admit I am of a similar frame of mind right now. I'd rather know I've got a financial commitment that's worthwhile than spend my hard-earned cash on rubbish. As strange as it might sound, having this financial commitment would probably make me even more frugal with my cash.

[anonymous-user]

halo34 said:

PS sorry I meant to say this

HP

Easier to sort and you are away with the car quickly
2/3rds rule applies normally
Interest rates can be better if the garage works at it

Bank Loan

Isnt on the car so you can sell without worries about declaring finance
Sometimes can beat APR of garages though its tough out there just now


Watch the flat and variable APR comparisons too - if the garage quote flat rate try and work out the variable using some online tools.

Banks seem to be around 8.9% APR variable at mo on average.

Out of interest, what is the 2/3rds rule?