Hi,
The company I work for has just scrapped the company car scheme and is moving everyone over to a car allowance scheme instead. I'm already on the car allowance scheme anyway so it doesn't directly affect me but several of my mates are now wondering what to do when their existing company car leases expire.

So the question is:

What is the most efficient method of paying for a new car?

The main options (asuming you don't have 15-25k under the mattress) are:

1. Personal Loan (loads of offers for loans at around the 6.3% APR mark)

2. Personal Contract Purchase

3. Personal Contract Lease

4. Traditional Hire Purchase

Anyone out there looked into this in any great detail and able to advise?

I took out a personal loan with the AA when I got my car allowance and the idea is that the car allowance covers the cost of my repayments which it does but then there are repairs, servicing, tax, insurance etc.

Looking at one or two PCP/PCH companies they seem to show an APR interest rate of 9% - 11% depending on the list price of the car so it doesn't on the face of it look like the cheap option and yet I keep hearing that it is cheaper... How can it be if the APR is 50% higher than a typical personal loan?

Anyone able to explain this?
Cheers,
Craig.

50% higher, i hope thats a typo, 6.3-9/11 is only about 5% or do you mean half as much again

Yes I meant the interest rate was 50% higher (ie. 150% of 6.3% = 9.45%) which in turn would make the monthly repayments more or less 50% higher each month. Yes I know APR's don't directly equate to monthly interest/repayment costs but loosly speaking higher APR's are not usually an indication of a better deal...

Cheers,
Craig.

Not directly related, but for any loan or the like, the bank will be the best bet by far, regardless of what anyone else offers.

Pat...

Pat,
How do you define "the bank" these days? It seems like everybody and their dog is offering loans and many of these companies are owned by high street banks.

Also, I have never been able to get as good a deal from my bank as I can get from the likes of the AA or Egg. Even the "special" rate I get from the Royal Bank of Scotland for being a Royalties Gold customer doesn't compete with many of the other lenders out there.

Cheers,
Craig.

Have a look here

http://www.lingscars.com/

Great web site, good deals too - look under 'Private User Car List'

Have a look at the Cahoot flexible loan.

Have a look at these, biggest in the buisiness. GF leases a MX5 1.8 from them for £159/month.
I did the maths, and if you need a new car it works out cheaper to lease a new one every couple of years than buying one. after you factor in interest charges and depreciation of the vehicle.

http://www.companycarleasing.com

Why buy new when you apparently can build your own for £ 250, saving a whopping £ 14,750.

There's a book about it so it must be true

quote:

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Originally posted by andyharding
Have a look at the Cahoot flexible loan.

---

How about getting an interest free credit card then pay for it on the CC then just swap the card after 6/9 months or what ever the deal is then its a 1-2% fee usually which would still be cheaper than the equivilent repayment for APR?
its a bit more hassle i suppose.

[Edited on 8/6/06 by Gav]

Hi,
Thanks for the replies guys.

Yes the Cahoot Flexible Loan sounds good although in effect I can ask for more cash from my AA loan at any time. In fact they keep pestering me to take more...

Regarding the CC option, I tried to pay this way recently when I bought a car for my wife but the dealer said they couldn't do it (Bickets SEAT of Kilmarnock). In the end I got a good finance deal which was marginally cheaper than a 6.2% personal loan. I think this varies by dealer though.

Does anyone out there know much about the PCP/PCH scheme's?

Cheers,
Craig.