Car loan or use savings?

EngTech

Hi,

I'll be buying a car shortly and I'm unsure of how I will finance it.

I will need about €12k for the car but I have about €20k put away in savings.

Considering I may be applying for a mortgage in the next couple of years, would I be better off using my savings and having no financial obligations or is it better to have as large a savings deposit as possible but while also having a loan to pay back.

My preference is to use the savings as they are making little or no interest at the moment and I would probably have enough left over for an emergency. But I am worried reducing my savings will damage my chances for a mortgage in the future.

Any thoughts?

gogo

IMO use your savings, you will pay 10% or so interest on a loan, but your clearly not making this on your savings.
What i would do, is set up a direct debit or standing order into your savings account, and treat this payment as a loan repayment, ie, as a means to build back up your savings.
i hope this makes sense, treat it as if you have borrowed from yourself, and go about repaying your self. You will have no obligation to the bank only to yourself.
Also speak to your bank about the rate your getting on your savings, if your not happy look around for something else, especially if you do continue to save, there are some great new saving opportunities at the moment.
hth:)

EngTech

Setting up a DD on the savings account sounds like a good idea alright.

I've my savings with Rabo at the moment just for security reasons until the banks sort themselves out. I'd prefer to take a hit on interest for peace of mind.