New car / Finance question

Eliot

Eliot

Eliot

Soldato
Joined
29 Mar 2005
Posts
5,792
The classic sub 30 year old scenario.

Being a 25 year old working in London I am farming every single cent of my spare change into an ISA so that I can one day (perhaps when borderline retired) get a house.
Anyway, I fancy a new car.

The financial situation above (i.e me not wanting to dip into savings)
Means I cant turn up with a 5k deposit or anything like that,
Also means that I can't really by anything decent out right.

Car's I like:
M235i - This would be my first choice
M135i - The price of these on the second hand market makes the above a lot harder to justify I think?
M3 (E46) - I think I have missed the boat on these? They have become much more expensive than when my brother bought his last year and as a result I'm not sure I can justify when the below is available and not a whole lot more...
M3 (E90-E92) - Only really in the list due to the above.

I would be looking at getting one of the above on some form of finance.

I don't really know how much I should be expecting to pay as this would be my first time I haven't paid full price for a car.

Just kind of looking for advice really.
 
Last edited:
The price of the cars you listed vary quite a bit.

When are you planning to buy a house? Since any outstanding loans will be taken into your affordability calculation and could reduce the amount you can borrow.

Do you have any idea how much you want to borrow? Or even a monthly figure in mind.
 
If you're not buying a house anytime soon then I dont see any point in borrowing money at a higher APR than the cash sat in your bank account is making. You could be putting the same amount as you're planning to spend every month on a finance agreement back into the savings account
 
Sorry I meant to include that, I think I can spare about 320 a month.
I guess it wouldn't be difficult to find 3k to put down.
Thing is I'm not sure what that add's up to in terms of affordability/outright cost.
Other than when I see these deals on a Golf R or the like at similar prices (on a 30k new build car)
 
Last edited:
iaind said:
If you're not buying a house anytime soon then I dont see any point in borrowing money at a higher APR than the cash sat in your bank account is making. You could be putting the same amount as you're planning to spend every month on a finance agreement back into the savings account
Click to expand...

In fairness I'm not sure what i'm going to do with that money,
I'm currently trying my luck with the Share to Buy (essentially a lottery in London)

Or buying a house in Wales and renting it out with a view to selling and using as a deposit further down the line.

I think I need it sat where it is for the time being.
 
Depends how long you want to have the loan for. Ideally before you buy your house, in which case as iaind said you're better off buying out right and paying the £320/month back into the savings.
 
I think you need to decide first before looking at additional borrowing. You're just paying interest for the sake of it if you end up getting a loan for a car and have the cash sat in the bank for 5 years earning 1%
 
Eliot said:
Thing is I'm not sure what that add's up to in terms of affordability in outright cost.
Click to expand...

320 quid a month will likely have a significant impact on how the bank assesses you for a mortgage, assuming you're not on a massive salary. Stick the figures into any of the online calculators and see what effect it has. If you're looking to buy a house in the next couple of years, you probably don't want to be tying up your finances in a car that you probably don't need. Again, unless you have otherwise tiny overheads and a healthy income.
 
mulpsmebeauty said:
320 quid a month will likely have a significant impact on how the bank assesses you for a mortgage, assuming you're not on a massive salary. Stick the figures into any of the online calculators and see what effect it has. If you're looking to buy a house in the next couple of years, you probably don't want to be tying up your finances in a car that you probably don't need. Again, unless you have otherwise tiny overheads and a healthy income.
Click to expand...

Depends on what healthy income is classed as I suppose?
My gut feel is that I need the lumpsum I have currently to stay where it is so that I can move quickly on a "share to buy" place if I do luck out and get accepted for one.
I am way in the safe zone on affordability for one of them it's just actually beating the 80 other people that end up viewing....

The mortgage would be not bad at all on one (again if I get it).

SO what I want to know really, Is roughly how much can I expect a 19k used m135i to cost?
 
iaind said:
I think you need to decide first before looking at additional borrowing. You're just paying interest for the sake of it if you end up getting a loan for a car and have the cash sat in the bank for 5 years earning 1%
Click to expand...

Unless you are quite silly why would your cash be earning only 1%? It's very easy to get a better return than that - some current accounts will pay 3%.

With current accounts paying as much as 3% and banks lending at an APR as low as 3.3% the potential net cost of borrowing could be as low as 0.3% APR (Depending on your tax status and savings amounts) so the decision is far less clear cut than you are presenting it.

Obviously dealer finance on a used car will have a hilarious rate and should be avoided.
 
To give you a starting point £11,000 over 3 years is £321/month @ 3.4% APR. Which doesn't give you enough for most of the cars you listed.

£18,000 over 5 years is £326/month @ 3.4% APR.

You can play with the figures all day really.
 
Last edited:
LiE said:
To give you a starting point £11,000 over 3 years is £321/month @ 3.4% APR. Which doesn't give you enough for most of the cars you listed.
Click to expand...

Yes, the issue here is going to be the reluctance to have any form of deposit. This is very foolish - always have a sizable deposit as it gives you flexibility.

The last thing you want is to need to move the car on but be unable to make enough money through it's sale to clear the finance or loan you've got in order to buy it.

IMHO if you can't or won't put up a deposit can you really afford the car?
 
Missed the part where you said you could put £3k down. So using the above £11k that would give you a total budget of £14k. Still not really enough. The £18k + £3k would be a different matter.
 
Ok that's fair enough.

So how much deposit do I need? For a car with a price of 19k assuming I have 300 pounds a month to spare?
 
Like I mentioned, you can play with the figures all day long, it comes down to what you think will work for you.

£15,000 over 4 years is £334/month and would need £4,000 from savings.
 
Regardless of what you do you should aim to get a house first, then get a car. Mortgage lenders like to see first time buyers with no substantial debt.

After you have shown you can pay a mortgage for 2/5/10 years when you renew they dont mind so much, plus your salary should increase.
 
You must log in or register to reply here.
Back
Top Bottom