what to do?

budsowna

hello people, new member to the forums so be gentle with me :rolleyes:

i've got 2 loans at the moment, one's got about £6k left to pay, the other's got about £2k left. i was looking at the idea of getting a loan to consolidate these two loans plus extra for a new car, because my car's just gone kaput (costing £800 to put right, ouch!)

i would need a loan for £18k to pay off the two loans + money for the car which would leave me with about £13k after selling my current car (hopefully!)

the £18k loan would be taken over 6 years and i would be paying just short of £300 a month, which is more or less what i'm paying now, just over a slightly longer period, is it worth it just for the piece of mind that i'll have a reliable car (for the first time!) and i can still afford the payments

any help would be appreciated

jonesMUFCforever

Oh come on now!
You have managed to get 2 loans al by yourself.
Contact your main bank and if your credit rating is good they will bite your hand off but beware of the hard sell on the insurance.
Eric

homersimpson_3

why do you need a new car (or any car at all)? i would if at all possible sell my existing car and pay off as much of the existing loans as possible.

budsowna

homersimpson wrote:

why do you need a new car (or any car at all)? i would if at all possible sell my existing car and pay off as much of the existing loans as possible.

i do need a car because i commute quite a way for work and i'm on shifts so public transport isn't an option and my family live all over the place and it would be easier to go and see them. being without a car for a week has crippled me!!!
i thought i might aswell get a nice, reliable car that will last me whilst i'm still fairly young (34!)

budsowna

ejones999 wrote:

Oh come on now!
You have managed to get 2 loans al by yourself.
Contact your main bank and if your credit rating is good they will bite your hand off but beware of the hard sell on the insurance.
Eric

i was only asking if it was a good idea to take the £18k loan over 6 years, chill! :cool:

YorkshireBoy

budsowna wrote:

i was only asking if it was a good idea to take the £18k loan over 6 years

The answer to your question is NO!

You currently have debts of £8K, and a car worth £5K (deduced from your first post). The car must therefore be "nearly new", or at most 3 years old.

An £18K loan over 6 years at 7.9% APR will cost you £314 per month. The total repaid will be £22,659, once interest has been added.

If you're able to re-finance the debt once you've sold your car, then a £13K loan over 6 years at 7.9% APR will cost you £227 per month. The total repaid will be £16,365, once interest has been added.

At the end of the loan period you will hopefully have a car worth £2K and no debt - but it will have cost you an awful lot of money to get there.

budsowna

YorkshireBoy wrote:

The answer to your question is NO!

You currently have debts of £8K, and a car worth £5K (deduced from your first post). The car must therefore be "nearly new", or at most 3 years old.

An £18K loan over 6 years at 7.9% APR will cost you £314 per month. The total repaid will be £22,659, once interest has been added.

If you're able to re-finance the debt once you've sold your car, then a £13K loan over 6 years at 7.9% APR will cost you £227 per month. The total repaid will be £16,365, once interest has been added.

At the end of the loan period you will hopefully have a car worth £2K and no debt - but it will have cost you an awful lot of money to get there.

if i get a loan for £18k and pay off my £8k of debts, that leaves me with £10k and my car is worth £3k = £13k

an £18k loan over 6 years at 5.8% (average %) will cost £295 a month, total repaid £21,266

at the end of 6 years i will still have a car that's reliable and, if i get the right car, one that will hold a fairly decent resale value, even if i dont keep the car 6 years i can always sell it, pay a big chunk off my loan to drop the payments and struggle through till it's paid can't i?

i know i make it sound simple and i know it isn't but i'd appreciate any comments in helping me make up my mind (i'm not asking anybody to decide for me )

black-saturn

I think you are trying to talk yourself into getting into more debt here.

There are people on this board who are struggling to get out of debt by scraping and saving every penny and then you come on here asking if we think it's a good idea to get into more debt. They (and me) all know how crippling it can be when you are stuck in a debt repayment. What happens if your circumstances change? If you lose your job, get married, get divorced, have children, lose your home? You don't know what will happen.

At the end of the day it's up to you but you should take warning from everyone else on here.

Here is what I would do:
Sell the car and buy a mini. They are the cheapest car to run, cheap to tax and easy to park. Ask your family to visit you wherever possible instead of you visiting them and get lifts with your friends to and from work wherever possible. Use that money to pay off some of your current debt. When you have fully paid the debt off start saving for a nicer car but DON'T buy it on credit.

YorkshireBoy

budsowna wrote:

...i'd appreciate any comments in helping me make up my mind (i'm not asking anybody to decide for me )

I wouldn't do it myself, for the reasons I gave earlier.

I'm 10 years older than you, and that level of debt, for a depreciating lump of metal, would prevent me sleeping at night. Do you realise that you'll have celebrated your 40th birthday before you've paid the loan off?

I bought my one and only brand new car 2 years ago (£4K down and 0% for 3 years) for £11.5K - and I had the money available in savings to cover it should I lose my job. I have no other debt other than a small mortgage which is paid off in 16 months.

My repayments are £200 per month, and someone said to me at the time I bought the car, "you can buy an awful lot of maintenance & repairs for £200 per month!" Think about that statement for a moment.....

To be blunt, I think you're crazy to go into that level of debt.

To be less blunt, why not take a look in the "debt-free wannabe" board and see the kind of situations people get themselves into going down the route that you are proposing.

black-saturn

YorkshireBoy wrote:

To be less blunt, why not take a look in the "debt-free wannabe" board and see the kind of situations people get themselves into going down the route that you are proposing.

That was exactly my point.

budsowna

i might be being daft (i'm sure someone will tell me!) but i really can't see much of a problem

i can afford the monthly payments over 6 years and if the worst comes and i need to sell the car, can i just pay a big chunk of the loan which will lessen the payments and everybody will be happy?

worst case scenario - get the loan = £21k (with interest), keep the car just one year (unlikely), sell it for £10k, pay off £8k of the loan leaving £2k for another car
minus 12 months of payments (£295 x 12 = £3540), leaving £9460 over 5 years = £157 a month
does this all make sense or am i being even more stupid than i thought i was in the first place? (probably!)