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Discussion Starter · #1 ·
Hi guys, as some of you will know, I have been toying with the idea of getting a new car recently.

I am looking to buy something in the 10-12k bracket, and my current car is probably worth 6500.

I am leaving uni this May, and I am taking a gap year until the following summer. Therefore I am thinking that the best way to finance my new car would be to use the money that I will get from the sale of the current one to pay the finance repayments over the next year.

However what would be my best route to take? I do not know that much about car finance, and whose cheapest etc. I see it that I have three main options

a car loan from someone like the AA

buying the car on HP

or leasing a car?

Which would be the best one? Are there any other options?

Many thanks in advance guys

Sam
 

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Discussion Starter · #3 ·
Interesting one...... what are some good hp companies? I dont know where to start looking.....

Anyone else got any opinions?
 

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My 2 pennies worth.

Sell your car and use the money you get as a deposit for your next one, personaly I wouldn't use a HP company as interest rates are normally higher than a bank,.

I would go for a bank loan as there are some great rates about. If you increase your loan amount a little and tell them it's for the car you will have a little pot of cash for mods.

http://www.cahoot.com/

http://www.alliance-leicester.co.uk/home/index.asp?page=home&src=schec12857latgooglebrand16687&exp=60

http://www.northernrock.co.uk/loans/quote/quickQuoteIM.asp?Ref=655-0001

http://sainsburys.getcheaper.co.uk/?key=sains12

http://www.tescofinance.com/personal/finance/home.jsp

There are loads more, you will just need to do a little research to find the best interest rate with a company that will give you a loan. Best advice I can offer is look at the total you will end up re-paying not just the interest rate.

Gap insurance is a good point though.

Carl
 

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I can recommend AA loans, they make it nice and easy, you can get the loan approved on the phone and if your in a hurry they will courier the cheque to you next day. The rates are'nt bad either but always check for the best deal.
 

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Mate, what are you going to do in your gap year.....? Chill, work or travel? If its travel, just dont buy the new car......!! You will be finished uni in two months, if you then aim to go away, your new car will just depreciate quicker than your current one! So either sell before you go travleling and stick the cash in the bank, or just leave it at home while away.

If you plan is to work part time or soemthing, then you will have this cash available to repay the loan for the car. But then you have to ask yourself do you really need a 10k plus car if you are on a gap year....?? (I mean I htought all you students were riddled with debt following uni!?)

Rule with loans for cars etc is borrow as little as you need to over as short a period as possible. Personal loan should be cheaper than anyhting else unless you have a mortgage and can stick a bit extra on that, but I presume you dont. If you do you need ot be careful to pay off the extra part over a certain period, or it will stay on there for e25 years and you will pay a massive amount of interest!

TBH although I have a fair few toys kicking about in the garage, the thought of buying a car as my main run about for over 10k is a bit scary. A 10k car will cost about ?2.5k a year to own, (not including normal serviceing and fuel costs). Its a lot to lose while its sat in the airport car park!!

Also, what is your current car? Make sure you are realistic (almost pessimistic) on its value when sizing up the cost to change and overall cost to you of getting rid of it and having a newer car. Sell for a grand less than you planned, and buy for a grand more than you planned, and the cost per month can be pretty significant.

Oh, BTW, I think you can 5.5% APR loans from moneybank. But in reality a tnth of a percent here and there is negligible over a reasonable period. It all helps though!

good luck
 

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Ermm just a thought, but you may find it difficult to raise 10k from a bank if your not working in your Gap year?  Then your into the league of HP companys where the loan in secured on the car, and the interest rates are sky high.
 

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I have to agree with simch here. Why do you want to buy a newer car if you're off on a gap year, I presume, to travel? If you need a car during your gap year (to travel) and you own your current car outright (assuming it is ?6500 of VW metal) it is surely reliable enough to last a further 12 months? I assume you don't have ?10k cash sitting around to pay for a change outright hence your finance question.

I wouldn't waste the cash now on changing cars and finance for what (and this is not meant to sound rude or condescending) appears to be the vanity of owning a newer car. I would wait until you start your career next year. After all, if you have any, student loans will need to be paid back as well when you start (career) work. Them and repayments on a ?10k loan will not leave much left over out of your pay packet (I speak from experience).

Good luck with your finals and enjoy your gap year.
 

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I have to agree with simch here. Why do you want to buy a newer car if you're off on a gap year, I presume, to travel? If you need a car during your gap year (to travel) and you own your current car outright (assuming it is ?6500 of VW metal) it is surely reliable enough to last a further 12 months? I assume you don't have ?10k cash sitting around to pay for a change outright hence your finance question.

I wouldn't waste the cash now on changing cars and finance for what (and this is not meant to sound rude or condescending) appears to be the vanity of owning a newer car. I would wait until you start your career next year. After all, if you have any, student loans will need to be paid back as well when you start (career) work. Them and repayments on a ?10k loan will not leave much left over out of your pay packet (I speak from experience).

Good luck with your finals and enjoy your gap year.
Agree totally! [:)]

~ Maxie
 

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When i bought mine i took out a graduate loan from natwest as i had my student account with them, borrowed 5 k and paid back over two years and paid back ?5390, so if i was you, you wont be able to get a graduate loan, but try asking your bank who you have a student account with for a loan, the interest rates are pretty low - also shop around!!!
 

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Discussion Starter · #14 ·
I am going to be at home for the major proportion on next year guys......

I am taking a gap year mainly because I didnt get the graduate training scheme job that I wanted so I am having a rethink, working for the year, and maybe doing a months skiing and say a month in auz.

Therefore I will be at home for say 9-10 months, and I will be earning far more than I plan on spending........
 

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Right,

My advice would be...if you are planning anything financial in the next few years, like a mortgage or something like that, go down the HP route where the loan is secured on the car. It may cost more, but...

I swapped my HP loan onto a 0% credit card for the reason that it would cost me less. However, it now effects my mortgage and what I can borrow. Basically that credit card with 6k on it is now unsecured, it does not relate to anything. If it was the same amount on a HP loan, secured against the car, it would not effect my borrowing, as they see it as secured on something, not just a personal debt.

Something to think about anyway.
 

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Just like what W36 said, I paid 5k on a credit card to fund the balance of my purchase, I then transfered that balance to a 0% card which cost me nothing to borrow thw money. Everyone has different commitments, but I only had my mortgage as my only other form of credit, if you can disicpline yourself you could have the car paid of before the 0% rate runs out, otherwise you'll need to find another card to transfer to.

I you use your card at the dealers then they may try to charge you about 2%, as they are charged by the banks for the credit card service, luckily they forgot to charge me, and I have got a new car that paid for now.

Good luck what ever you decide to do [:D]
 
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