Too afraid to take out a loan!!

ferry

Hi all

I have been looking to take out a loan for around £7500 for home improvements and to buy a better car as theres no way we'd be able to save that amount at the moment and we need these now.The repayments come to around £150 per month over 5 years but...
I keep thinking what if somewhere down the line I fall into difficulties??I know that no one really knows what the future holds,but at the moment both myself and wife works and have always been quite good with being able to pay things...
Am I being too negative ??I know its not a tremendous amount and we have no other debts.
What did you all ask yourselves before you commited to a long term debt like this.?

Regards
Terry

fatboyonadiet

Well try to pay more and decrease the time, the shorter the period the less interest you pay. You could always take payment protection but personally I see this as a bit of a waster. How about doing a 0% shuffle on promotional rate credit cards? I recently bit the bullet to pay off an existing loan via this method, saved about £500 in interest.

Rafter

Terry,

If £150 is manageable for you and you both have good jobs and are employable then don't worry yourself too much.

This is an unsecured loan, so your house is not at risk if you can't keep up payments.

If you are really worried then take out insurance - but not from the loan company - it will be much cheaper buying it online from an insurance broker.

If the worst did happen you could always sell the car to repay a lot of the debt.

Good luck

R.

ferry

Thanks guys for putting another slant on it.

I think you are right.I'll seek out insurance which will go a long way to putting our minds at rest.
It's just a shame I feel that we need to take on a debt just to have the thing we can't really live without-a car..

Terry

tango

hi ferry,even though some of your loan is for home improvements, i wouldn't take out a loan over 5years for a car. as fatboyonadiet said,i would now, with the benfit of hindsite,!!!!!!!! make it over a shorter term if at all possible, nothing worse than still paying for a car when things start to go wrong!
but,thats just me,
good luck

Rafter

Good cousell from tango.

Many cars depreciate so fast that you could end up with a loan which is more than the value of the car when you come to sell it.

You should try to match your borrowing to the asset you are purchasing if possible.

If you are buying a second hand car and are planning to keep it for 5 years (and think it will last that long) then no problem.

If you plan to change your car every 3 years, have a look at something like parkers.co.uk and see what it will be worth in 3 years time. If it is less than 40% of what you are planning to pay, then you may want to reduce the term of your loan a bit to make sure when you sell the car, it covers the loan amount left.

Hope that makes sense.

R.

roswell

use a credit card or 2 to get the loans, no loan will beat the many 0% for X Months, and if you have extra money at the end of the month chuck it at the card if not pay minimum , as you knwo the loan would cost £150 a month you may as well pay that to the CC and if something does happen in the next 5 years you can just pay the minimum. theres details on how to do this on the site somethere.

roswell

Thanks to MSE DAN

Heres the link

http://www.moneysavingexpert.com/cgi-bin/viewnews.cgi?newsid1094822880,81886,