I will stand by Daves opinion, avoid borrowing if you can pay cash, at the end of the day the interest on finance is higher than interest on savings.

"I cant spend my savings on something that will depreciate but will pay interest on it????????? 

 If your roof collapses, you must have  insurance and your isa can also help. 

I'm with JJ on this one.

I bought a brand new car - that feeling of driving off the forecourt is awesome - with money left to me by my aunt, who wanted me to spend it on something I would enjoy and have fun with, rather than saving it up or paying off debts with it. 

And I did.  And I would say that a new car is more a concept than an actuality - does that make sense?  There is no rationale for buying brand new when a 6m old vehicle makes so much more sense.  even though I did it, I fear it is dumb!!!  But driving your brand spanking new vehicle to collect your kids and watching them puff up with pride upon hearing all the other kids say 'Wow!!'??  Priceless. 

Just IMHO.  I would use the finace, get the free deal and pay the ineterst.  And assume in your head that the interest is your payment for that 'Wooooo' feeling when you pick your car up!

Cat

yep just that, whether I would be able to save that amount. Who knows, I could lay out all that money in one go and find that my roof collapses or something.  Well going to pop over in a bit to the garage.  I've worked out I could potentially put down up to 5½k deposit which would obviously bring down the payments and using only a bit more savings.  Could always pay off early if all went well.

I know the money is there to be used, just hate seeing it go. Was bad enough when I used 30k of it for my house deposit.

I'm certainly no expert, but if I had spunked, say, 15 grand of my savings on a car then found it was worth 5 grand after 3 years, I'd be wondering why I used my savings on it and had a rubbish kitchen and bathroom.

Having said that, if you were disciplined enough to save the amount that your monthly payments would be then you'd be back up to your original outlay without ever having been in debt to anyone.

JJ

jjnaughalty:

I'm not sure I could spend all my savings on something which is going to depreciate so rapidly, I think I'd use a portion of savings and use someone elses money to pay the rest. It might cost you the equivalent of a few quid a month (interest earned v interest paid) but at the end you have your car and some savings, rather than a car (worth 30% of your outlay) and no savings.

Just my thoughts....or am I being absolutely stupid there?

JJ

Ok thanks JJ, so you are agreeing with me.  Getting so confused here.  Normally I wouldn't care, just buy it, but now I've got a new flat, need to make correct decisions.  Would also be using savings for a new Kitchen and Bathroom as well.

I'm not sure I could spend all my savings on something which is going to depreciate so rapidly, I think I'd use a portion of savings and use someone elses money to pay the rest. It might cost you the equivalent of a few quid a month (interest earned v interest paid) but at the end you have your car and some savings, rather than a car (worth 30% of your outlay) and no savings.

Just my thoughts....or am I being absolutely stupid there?

JJ

ok thanks.  Feel that does make more sense, but felt nervous about spending out £9500 in one go.  Free servicing is obviously there as an incentive, but then they obviously trick you with this.

Felt that by doing it the other way, I would be keeping a nice lump of savings and therefore gaining interest on that, but I suppose the interest I'll be paying on the loan would far out weigh that.

Which I could understand how to calculate the interest and APR

My personal view is that it is always better to avoid borrowing if you can.  So my advice would be to pay the £9495 out of your savings (which still leaves you £2.5k for emergencies, before even touching the ISA).

You can then build your savings back up by putting the full £350/month into it.

The amount you will save by doing this will more than cover the £500 servicing saving. 

Can you help please.

I currently have a situation where I'm planning on purchasing a new car to a value of £13350.  I've had finance quotes from the garage for an 'options' scheme where with my deposit of £3500 (px value) I willl be left with a final balance of £9495.  Out of this would be a final rental of £5244 with my payments before then being in the region of £204 at 9.8% APR.

I've just recently purchased a new flat, all's going well and should comfortably still be able to save in the region of £350 a month.  I also have savings of £12000 and an ISA of £6800.  My plan was to take the finance payments out of savings (which I'm guessing would involve direct debits from savings to current account to cover) and then still save back my £350.  Therefore with car payments, I would still be looking at saving around £150 a month.

I thought about it this way as I would still have my nice lump of savings and gaining interest on that and it would still be growing, as well as having a nice backup should anything go wrong. I've looked at personal loan though of 6.3% and for by using an additional £3000 of savings, for £213 a month, I would own the car in 3 years and not have the final £5244 to worry about.  The advantage of buying the car through the garage on the 'options' scheme though, is that I get 3 years free servicing, probably worth around £500.

Can I have your advice please as to which would be the best way to go around this.  Obviously interest rates are only different by a couple % and I could put down some more deposit to bring the garage quote down.

Thank you