Car on finance or used car?

I'm about to take my test soon & I've been looking into used cars mainly as I want something cheap & efficient for a first car. The insurance on used cars seems a lot more manageable.
But quite a few people have new first cars on finance which have cheaper road tax & MOTs sorted, which sounds a lot easier than the risk of repairs with a used car.

Which option would work out cheaper & is more suitable for a new driver?

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Reply 1

Kre

New cars depreciate in value 30%+ after their first year on the road. If you want to finance a car, finance a fairly new but used car. All new cars don't need an MOT for their first 3 years and the road tax depends entirely on emissions. Granted, newer cars will be much more environmentally friendly but it can vary. You won't have to fork out on repairs on used cars if you know what you're doing when looking at potential purchases.

Reply 2

Jordanaimee

True new cars to depreciate a lot , bit because noone is buying new cars atm they are doing a lot of good deals. Some offer lifetime warrantys and 0% Apr and most new cars are pretty good on fuel and the road tax is low. With a used car you may be looking at Apr of 6% and more ( approx) so are gonna end up paying a lot more for the car in the long run. Also you aren't going to get a warranty with some as they may stick to the 1st keeper only.

Best deal out there I reckon atm is a brand new Chevrolet spark for 99 a month 1300 deposit 5 year warranty. Over 5 years. But its always good to shop around :smile:

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Reply 3

Maccees

Couple of questions you need to ask yourself:

1) Do you really need a car?
2) Are you going to be able to repay it for the next 2-5 years without missing a payment, or being in the situation where you are paying for a car instead of make up, food etc?
3) Are you even going to be able to pass finance?
4) Is the monthly cost + yearly manufacturer servicing to keep up the warranty really going to be cheaper than just getting a cheap and cheerful old car to start with?

Reply 4

JC.

From purely a financial point of view new cars NEVER make sense UNLESS you're having a comercial vehicle on contract hire. Then it kinda pays for itself. This is from someone who used to sell them for a living.

The big risk is getting into the finance trap - i.e you get to the point where you can never quite save up enough to buy a new car outright because you're having to come up with the payment every month.
At the end of the term you haven't got the cash to pay off the baloon so you end up getting sewn into a new car and on the cycle goes.

Reply 5

Grimezy

I've thought about this alot. I'm looking for my second car now as I've been driving for about 15 months and I'm bored of my impulse buy punto! What I'm probably going to do is save up for a chunky deposit and then take out a loan for £2000-£4000 to make up for the rest. The problem with new cars is you're getting like a 1.2 corsa for like £8000-£9000ish, that's paying like £200 a month for 5 years after APR, etc... if you really think you can afford it then go for it but it is one hell of a lot of money. Take in mind my dad just bought a 2007 audi A4 for very similar money. Get yourself a banger for a couple of years and then buy something you really want once insurance isn't such a pain!

You will NEVER 'save money' on a new car like you imagine you will. Buying a £1000 corsa will never end up making you spend £7000 on repairs, MOT's, Services, etc to equal the cost of a new car. Just make sure you know what to look for when looking at a used cars, i.e. full service history, possibly some warranty from a garage, cambelt changes, etc.

Reply 6

Interrobang

Original post by Grimezy

You can often get new cars on 0% finance. I did and my car wasn't quite new. It's worth slightly more than that, and I'm paying £180 (including a couple of extras, would be about £170 without) a month for 5 years

Reply 7

Grimezy

Original post by *Interrobang*

That's fair enough but what car is it? Can you really not see yourself being bored after a year or two?

I've looked at getting new corsa's and ibiza's, etc but when I think that I'm gonna have to pay around £8000 for one that's probably a very low spec engine I'd much rather buy a runaround and save for a couple of years for something like a 5-6 year old civic or a3.

Depends what your preferences are really and what you drive for!

Reply 8

Nuffles

Original post by *Interrobang*

You saying that, I would never drop anything like £180/month on my Golf. Bought for just over £600, so that's what, four instalments of £180? In the last year and a half I've not spent more than a few hundred on it - new radiator, new front wishbone, new back box. I reckon I'm still under a grand so far, if not then only just over, including the car. Being an 18 year old car, it may not have all the toys of a modern car, but I can connect my iPod to my HU, and the sound quality out of my HU and speakers is easily better than most modern cars. All the toys I do. I've also got plans to fit electric windows as a little project over the winter, so we'll see how that one goes.

Reply 9

Interrobang

Original post by Grimezy

It's a 5 door 1.4l petrol corsa. I use driving as a means to an end, so I don't think I would get bored of it

Reply 10

becci1608

I have my car on finance, pretty cheap tbf!

2012 plate ford KA zetec
I'm paying 96 quid for 2 year then pay the final payment by trading my car in and the rest will go to a new one.
Deposit was 3000

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