Would you add to debt to save money in the long term?

gilly1964

I very rarely post but thought I would get your opinion on this dilemma

We have admittedly an expensive car, BMW 525, which we bought 2½ years ago, but due to the price increases it is now costing us around £85 per week just for fuel. Tyres are over £120 each, servicing is about £300 per year, car tax is currently £210 but going up to £400 in the next price rise. The next service will be more as it is due a cam belt change, needs front pads and 2 tyres, £750 or thereabouts . The car is 6½ years old and has over 75000 miles on the clock.

We have seen a 1½ year old Ford Focus with 20000 miles, which we can trade our car against but would have to add £3000 to it.
Comparing this to my brother's car, also a Focus, which is 6 months older it would only cost us around £40 per week in fuel and the car tax is £170 for the year. Annual servicing is £155, tyres about £50 each.
We would also save the cost of the latest service on the BMW.

We could take out a loan but the small amount results in higher interest rates so not ideal

We also have the available credit on cards and have a 0% card which we could transfer it to for 9 months.

I suppose what I am asking is would you do it?

If we go ahead the plan is everytime we fill the car, we would pay the difference between that amount around £60 for the full tank and the £85, so £25 off the credit card, plus the minimum repayment on the due date.

All opinions gratefully received.

Thanks
Gilly

newyorkcitybride

Hi Gilly,

I would say in principle, yes it makes sense, however you have to be very sure that any difference you save, is really put against the increased debt.

My OH did exactly the same thing and then found (for some time) that the money he was saving he was spending as he had extra cash available... took a long time to make him see sense on that one! So now he puts half the difference to the increased debt, and half to his spending... which seems to work for him.

Was the £3000 to add to it the best deal they could give you? Have you had a good look round at what else is available? Is the fuel economy going to work better for the kind of trips you do?

If you have honestly thought about it, looked at the numbers and have an agreement about where the additional savings on car costs are going to go, then I say go for it.
Maybe call your 0% card and see if they will increase your limit to cover the whole £3000, as opposed to splitting it between lots of cars?
I would avoid (if you can) getting a loan on it, simply because some of them can be a pain to overpay on, and the interest rates arent generally that favourable to those applying for lower amounts.

HTH, good luck xx

kizzykizzywizzy

Do you need that new a car??

I've got a P reg Nissan Primera & it's absolutely fine ( touch wood ) there are no guarantees that just because a car is newer that it won't get problems. Could you get one slightly cheaper? or get your bargaining head on - watch "don't get done get dom" for some tips!!
I think you are probably right about changing your car though;)
Good Luck:A

gilly1964

newyorkcitybride wrote: »

Hi Gilly,

I would say in principle, yes it makes sense, however you have to be very sure that any difference you save, is really put against the increased debt.

My OH did exactly the same thing and then found (for some time) that the money he was saving he was spending as he had extra cash available... took a long time to make him see sense on that one! So now he puts half the difference to the increased debt, and half to his spending... which seems to work for him.

I know I have the willpower. The OH will be the one who wants to spend, so I will keep an eye on this and maybe use your OH's idea if needs be.

Was the £3000 to add to it the best deal they could give you? Have you had a good look round at what else is available? Is the fuel economy going to work better for the kind of trips you do?

This is definitely the best deal. Other garages were offering £4000 trade in, this one is £5500. We know we are losing money compared to selling privately, but to do that we would have to do the service, tyres etc, so in theory we are saving another £750 and advertising costs.

If you have honestly thought about it, looked at the numbers and have an agreement about where the additional savings on car costs are going to go, then I say go for it.
Maybe call your 0% card and see if they will increase your limit to cover the whole £3000, as opposed to splitting it between lots of cars?
I would avoid (if you can) getting a loan on it, simply because some of them can be a pain to overpay on, and the interest rates arent generally that favourable to those applying for lower amounts.

The 0% card will cover the full £3000 on balance transfer, but not purchases. If we go down this route it will go on a card which gives bonuses for purchases - similar to cash back but in vouchers we do actually use. Then be immediately transferred to the 0% card.
HTH, good luck xx

Thanks for your input. :T

Gilly

gilly1964

kizzykizzywizzy wrote: »

Do you need that new a car??

I've got a P reg Nissan Primera & it's absolutely fine ( touch wood ) there are no guarantees that just because a car is newer that it won't get problems. Could you get one slightly cheaper? or get your bargaining head on - watch "don't get done get dom" for some tips!!
I think you are probably right about changing your car though;)
Good Luck:A

We don't especially need that new a car, but the thought process is that if we are going to give up a fairly luxury car, there must be some incentive to do so.

Believe me, I think the dealer and the OH thought my name was Dominic Littlewood - I was like a terrier.
If we go ahead the deal is based on the £5500 trade in, full service, year's tax, full tank of petrol, new mats.

The original offer was £5000 and the service.

Thank you for taking the time to reply.

Gilly:T