The Fixer: Car finance conundrum
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I need to buy a car as my current one has given up the ghost, but I do not have the cash to finance such a big purchase just now - especially with Christmas just around the corner.
I need a car to get to and from work, so going without is not an option. However, I do not want to pay more than necessary to borrow the money to buy a second-hand car to replace my old one.
I am planning to spend about £7,000 to £8,000 as I want a vehicle that will keep going for several years to come. I do not want a new car though, as I know that they lose value more quickly.
What is the cheapest way to fund a second-hand car purchase at the moment? Thanks in advance for your help.
K Holmes, Macclesfield
Dear Ms Holmes,
While car dealerships sometimes offer advantageous deals to finance the purchase of new cars, the terms available on second-hand car purchases are often less attractive.
However, the good news is that personal loan rates are very low at the moment, with Sainsbury's Bank, for example, offering loans of between £7,500 and £8,000 at a rate of just 5.5%, to be repaid over five years.
The total amount you would repay with this deal would be £8,568, meaning that you pay just £1,068 in interest.
Rates may vary if you have a poor credit score or want to borrow over a different term, though, while the cost of borrowing amounts of less than £7,500 is also higher.
I hope that helps.
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