lurcher

It's a while away yet and not the most interesting discussion topic, but what is everyone planning finance-wise? The way things are looking for me I'd be putting a quarter of the cost down at the start and taking out a loan for the rest.

I had a quick browse last night looking for deals, and the best I found was (surprisingly) Tesco with 7.3% APR. The AA came a fairly close second with 7.7. Most of the banks are well into double figures. It's been quite a while since I took out a big loan so I'm out of the loop on where the best deals are. Any recommendations?

DoomWolf

Have a look at http://www.moneysupermarket.com . You can do a comparison of most lenders.

Lensman

I intend trading in my seven year old Rover 214 Sei and then paying the remaining £399 in cash.... Uhrmmm, that'll work right?!

lurcher

Thanks DoomWolf, looks like I'll be able to do a little better than that 7.3%.

And Lensman, no, I don't think that plan's a winner. I'd hold onto that Rover as an investment, sure fire classic car in a few years I'm tellin ya.

Got to work out what to do with the MX-5 as well, be a shame to see it go, the GF has her eye on it but the 25p she'd be able to scrape together by Oct/Nov just isn't doing it for me.

jimbobjoe

I'll be financing about £15k for this car.
At 7% over 5 years that's less that £300 per month. Now that can't be bad..

Lensman

BEWARE!

I've been investigating this today and you should be very careful about assuming that a better interest rate will result in less to pay. For example:

DirectLine loans at 6.9% with payment protection will cost you £26423.52 for £20,000 over 4 years.

Tesco loans at 7.3% with payment protection will cost you 26176.32 for £20,000 over 4 years.

ie: the payment protection is being used to offset the lower interest rate. It's the total amount to pay that's the important thing. CHECK!

lurcher

Look at how much extra you pay in general for payment protection though. Reminds me of the "extended warranties" where places like Dixons make most of their money. Separate loss of income insurance policies are better value IMO, or invest the money saved and cash it in if/when you need it.

MarkW

I used to have a personal loan with Tesco for my current car, but I changed my mortgage last year and as well as my main mortgage I get an agreed 'reserve' amount to spend on what I like.

My Tesco loan was 7.8APR, so I paid this off with my mortgage reserve which is at 4.7APR. I pay the same amount off every month so the theory is that as there is less interest I will pay it off quicker.

The advantages of this are that you get a much lower rate than is possible elsewhere and you can pay off as much (or as little) as you want. As you pay it off, the money goes back into your reserve, so when you change car (ie for the RX8), I can just draw off the extra I need and carry on paying the same every month.

The main disadvantage is that it is obviously secured on your property and as it it officially over the term of the mortgage, there is the temptation for some people only to pay off a small amount each month.

With regard to payment protection, I personally would not take it out as they charge through the nose for it. Worst case scenario if I cant afford the payments would be to sell the car and just pay off the debt anyway.