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Car Loan / Finance or Pay Cash?

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  • 08-05-2012 8:27pm
    #1
    JohnK
    Registered Users Posts: 4,780 ✭✭✭


    I'm looking at getting a used car at the moment somewhere in the region of 5~15k and I'm just wondering if theres any benefit to getting a loan (car or personal)/financing of some kind or would I be better off just paying cash for it out of my savings?

    I suppose the way I'm thinking is: Am I better off having that extra few thousand in the bank as a bit of security should things go downhill? Or is there any actual benefit to borrowing for it? Obviously I realise I’ll end up paying more should I borrow for it but I suppose I'm wondering if having some sort of history of being able to pay back a loan could be beneficial in a few years should I go for a mortgage, that kind of thing.

    In case its relevant, I'm self-employed so should things go bad I wouldnt have any redundancy or dole to speak of which is why I’m sort of thinking that having money sitting in the bank might better situation.

    Any thoughts/suggestions?


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    #2
    StillWaters
    Closed Accounts Posts: 1,799 ✭✭✭StillWaters


    The financially prudent answer is to pay from your savings, you are earning 4% on those, and paying 14% on a loan.

    However in your situation, I would leave some savings intact, perhaps pay 50% cash, raise 50% loan.


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    #3
    RoverZT
    Registered Users Posts: 362 ✭✭RoverZT


    You don't need to spend 5-15k on a car.

    You can get something very reliable easily for 2k.


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    #4
    JohnK
    Registered Users Posts: 4,780 ✭✭✭JohnK


    StillWaters wrote: »
    The financially prudent answer is to pay from your savings, you are earning 4% on those, and paying 14% on a loan.

    However in your situation, I would leave some savings intact, perhaps pay 50% cash, raise 50% loan.
    Yeah thats probably the best idea alright to split between the two. On a slightly related note - whos giving 4%? I've my money in Rabo and they only give 3.1% on the first 20k then down to 2.4% after that. Should probably move it if theres better :D
    RoverZT wrote: »
    You don't need to spend 5-15k on a car.

    You can get something very reliable easily for 2k.
    True but I like a bit of luxury from time to time :o


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    #5
    StillWaters
    Closed Accounts Posts: 1,799 ✭✭✭StillWaters


    PTSB Regular Saver
    EBS Family Saver
    Ulster Bank Special Interest Deposit Account


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    #6
    JohnK
    Registered Users Posts: 4,780 ✭✭✭JohnK


    Thanks, will look into those :)


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    #7
    mitosis
    Registered Users Posts: 2,000 ✭✭✭mitosis


    Pay in cash if you have it. Why pay interest if you needn't?


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    #8
    chris85
    Registered Users Posts: 4,502 ✭✭✭chris85


    I would keep a few thousand in savings for a rainy day and use remaining savings to pay in cash for car. If you need a bit more funds get a personal loan for it, do not get fund on finance as secured on car and lot more hassle if you get in trouble paying it which I am sure you wont.


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