When you are looking at cars it is so easy to get carried away and want to spend more than you can afford. After all, a newer car is likely to have fewer problems and has all the gadgets.
Showrooms have a way of trying to push you to sign up for their finance. Here I will share with you why I think you should get a loan instead. Personal loans for buying a car are in my opinion far better than finance.
Summary of Contents (Quick jump links)
Why choose personal loans instead of finance?
If you are struggling to afford a car then you need to consider carefully the repayments. How long will you be paying back what you owe? What are the monthly required payments?
With a loan, you usually get lower interest rates which means that in the long term you will be paying less for your car. Ensure you check out not just the monthly payments but how much you will pay by the end of the plan. It can be surprising how a little difference monthly makes a huge difference over 5 years!
With a car loan, you may be able to include other costs of buying your new car for example the tax, insurance etc. This is usually not included in finance. If you are struggling to pay for those and need help for them too then a loan means only one debt rather than two.
The ongoing cost differences
If you get a car on finance you often are committed to also getting the car serviced from the garage you purchased it from. If this is more expensive than your choice of the garage this will soon add up. Additionally, do you have to commit to a gold service or their most expensive service? If you feel this isn’t necessary then this additional cost will soon add up.
With a bank loan, you borrow from a bank you trust and know the reputation of. There is always the financial ombudsman you can turn to if needed and there is much more in the way of regulations. I know personally, I would rather borrow from a name I trust.
What are your thoughts or experiences?
Do you have experience of either and would recommend any particular way of paying for a new car? I guess the idea is always to be able to pay for a car outright but this is rarely possible is it. I know I would much rather have a loan and go on holiday than spend all my money on a car. Do you worry about car maintenance too? Remember to allow a budget for this.
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