The Student Room Group

Finance or outright first car

Hiya, I’m a 22 year old female, graduate.
I’ve just passed my driving and looking to get a car but I’m a bit stuck. I’m not sure if I should buy it outright or go with finance..

I do work, and earn very well. The nature of my job does require me to work but not soo essential… (social work)

I’ve heard different opinions on whether I should finance or not. Currently one of my friends is and she seems pretty set on it, however some of my other friends bought theirs outright. What do you all think? Open to hear opinions etc..

The car would be an Audi A1
You will pay a lot more in the end by going the finance route, so if you can afford to buy a car outright then do that (or take a personal loan, which will be cheaper than car finance). I'd recommend that you look at insurance quotes before deciding on an Audi A1. Ideally as a new driver you should be looking at cars in the lower insurance groups (1-5). An A1 is probably in groups 15-25. Insurance costs for young drivers have doubled this year.
xxxx
If you can afford to buy outright, do it.
Original post by missykissy123
Hiya, I’m a 22 year old female, graduate.
I’ve just passed my driving and looking to get a car but I’m a bit stuck. I’m not sure if I should buy it outright or go with finance..

I do work, and earn very well. The nature of my job does require me to work but not soo essential… (social work)

I’ve heard different opinions on whether I should finance or not. Currently one of my friends is and she seems pretty set on it, however some of my other friends bought theirs outright. What do you all think? Open to hear opinions etc..

The car would be an Audi A1


Id buy outright. Especially for your first car.
You will pay a lot more in the end by going the finance route due to paying the interest so if you can afford to buy a car outright then do that (or take a personal loan from a bank or wherever, which will be cheaper than car finance).
It really depends, it might be cheaper to buy a car outright but you would be responsible for all of the repairs and maintenance which could be a lot depending on the condition of the car you buy and how long you are going to be keeping it. If you go down the finance route it depends on which finance option you choose PCP or PCH or leasing. Out of these leasing might be the best option as you don't have to worry about any of the maintenance, servicing, MOT, insurance etc as this is covered in the monthly cost and you will be able to change car to a newer model after so many months or years which is good.
outright. 😀
Reply 7
I read somewhere that a financed car is the number one wealth killer in England. If you can afford, buy it outright. I'd probably would go with something cheap as it's your first car, and put the rest in some kind of investment. That is purely my opinion though.
(edited 3 weeks ago)
Reply 8
Original post by rolandka
I read somewhere that a financed car is the number one wealth killer in England. If you can afford, buy it outright. I'd probably would go with something cheap as it's your first car, and put the rest in some kind of investment. That is purely my opinion though.

I agree.
Many people find out the hard way that you can't buy your way into luxury, but dealerships phrase the repayment terms very alluringly (imo)

If that were me, I would look into some kind of 0% credit cards to pay off the balance and put the money into an index tracker (assuming OP has good credit) for a couple years or even a personal loan from friends / family. Why pay someone else interest when you could make your money work for you?
Reply 9
Original post by Anon2463
I agree.
Many people find out the hard way that you can't buy your way into luxury, but dealerships phrase the repayment terms very alluringly (imo)
If that were me, I would look into some kind of 0% credit cards to pay off the balance and put the money into an index tracker (assuming OP has good credit) for a couple years or even a personal loan from friends / family. Why pay someone else interest when you could make your money work for you?

Yep, that is actually another way you can do it. I’ve done this multiple times. I mean getting the 0 credit card and then using my money to invest.

However, I think the word of advice here is to be careful with promotional periods and minimum repayments per months. Some banks are strict about them and if you miss then you might end up with a hefty interest rate. Make sure you can pay it back if needed or get another 0 balance transfer card.

You can get good deals but make sure you plan ahead. There are plenty of comparison sites for these type of cards.

Again, be careful, as it’s easy to mess it up.
(edited 2 weeks ago)
Original post by rolandka
Yep, that is actually another way you can do it. I’ve done this multiple times. I mean getting the 0 credit card and then using my money to invest.
However, I think the word of advice here is to be careful with promotional periods and minimum repayments per months. Some banks are strict about them and if you miss then you might end up with a hefty interest rate. Make sure you can pay it back if needed or get another 0 balance transfer card.
You can get good deals but make sure you plan ahead. There are plenty of comparison sites for these type of cards.
Again, be careful, as it’s easy to mess it up.

Again, agreed.

I'm planning to treat myself to a nice merc in a couple of years time and I've been looking at ways to minimize the cost. A lot of the 0% cards I saw stipulated that in order to be exempt from the interest, the cardholder would need to make the minimum payment of 3.5% per month, and the APR on those cards is excruciatingly high - i believe around 38% or so on the one i saw.

I.e. If OP maxes out the credit card (lets say credit limit of £10,000; whether or not dealerships will accept is a different story), they'd be liable to pay £350/mth as a minimum without fail, and defaulting/paying late would mean an interest payable balance of £3800! For one month!!!!!

I thoroughly feel that unless you're organised and OCD down to a fault, the safest option would be to take a loan from friends / family (if your network are fortunate enough to have that kind of disposable income).
Outright if you've got the income to do it.
Original post by Anon2463
Again, agreed.
I'm planning to treat myself to a nice merc in a couple of years time and I've been looking at ways to minimize the cost. A lot of the 0% cards I saw stipulated that in order to be exempt from the interest, the cardholder would need to make the minimum payment of 3.5% per month, and the APR on those cards is excruciatingly high - i believe around 38% or so on the one i saw.
I.e. If OP maxes out the credit card (lets say credit limit of £10,000; whether or not dealerships will accept is a different story), they'd be liable to pay £350/mth as a minimum without fail, and defaulting/paying late would mean an interest payable balance of £3800! For one month!!!!!
I thoroughly feel that unless you're organised and OCD down to a fault, the safest option would be to take a loan from friends / family (if your network are fortunate enough to have that kind of disposable income).

Ehh crazy high that interest rate…. makes all this headache pointless if you make a mistake.

In the worst case scenario, it’s always possible to get a 0% balance transfer card with promo periods of 12+ months, there are a few with even 0% transfer fee costing you nothing.
(edited 2 weeks ago)

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