To pay for a car - car loan or savings???

I want to buy a car - approx €20,000.

I have no personal debt of any kind and have sufficient savings over and above the €20,000.

Should I take out a car loan and pay interest for the term at x%
Or should I pay from my savings, thereby losing the interest (currently at 4.25%) for the term and beyond?

Which is the best option?

Unless you get a car loan for less than the 4.25% - which is highly unlikely - you should use the money from savings.
Also think will be be replenishing these savings? You could always save what you would be paying on a loan if you had to get one into the savings account.

You may be able to get 0% finance like this [broken link removed] and this [broken link removed] or 4.9% here [broken link removed]
and here http://www.renault.ie/finance/

Point taken Sean, but a number of issues in relation to this:

(1) it is likely to be a secondhand car that I will buy and not a new one, therefore this type of finance may not be forthcoming on a used car
(2) I would prefer to deal in cash when negotiating with the salesperson
(3) I don't want to limit myself to a few makes/models
(4) I don't want to limit myself to a few garages or main dealers

Hi,

Assuming you are paying regularly into your savings, then you could split the cost of the car between a short term loan and savings (50/50 split?) - not hugely impacting your savings & the money that would be going into savings normally can be redirected to your car loan... Just an idea...

I was in a similar situation. I used my savings for a good half of the amount required, and the rest is a loan. I wanted to keep some of my savings for a rainy day - no use having a car paid for, if the roof starts leaking.