Advice on getting my first loan, please?

Beast

It may do, but ultimately that borrowing is still going to represent around 45% of your joint income given the relatively low salaries.

Kirsty1988

Ok thankyou for all your advice

Beast

No problems - I don't mean to put a negative spin on what is clearly something you've thought out and are excited about but (if the 1988 in your name is your date of birth), I'm a bit older but not much and have pretty much played out the situation you're in at your age. Looking back would I borrow money again whilst on a low salary to buy a car I want but don't really need? Not a chance.

AlwaysPondering

I would be rather concerned at getting such a loan for a car, even a newish car. It does sound like you have been unlucky with the 2 cars you have had so far. In contrast my wife bought her car for £4k around 8 years ago, and apart from servicing, and the normal wear and tear (tyres, brakes, exhaust etc), it's going strong and is getting 68+mpg.

The road tax issue is interesting, because although you quote the low £35 per year, my wife's car costs £205 a year - strange I know. However although you are saving on the road tax with such a new car, the biggest cost to you is likely to be deprecationon such a new car.

Just thinking out allowed here.. You are looking at £7500 loan over 5 years.. I've done a very rough sums and that total cost is around £9,300 (at 10% this will be higher). In 5 years time, the car will be well over 5 years old.. Looking at parkers, the trade in price for a 5 year old Aygo (middle of the range) is £3,385. Your's as you're not buying new, would be less.. So that is going to cost you just to have the car, I would say over £6k over those 5 years. That is £1,200 per year, before you add in the cost of things going wrong - or even just wear and tear items.

Your Rover, you say in terms of cost to buy £1200 and fixing costs £2000. Total = £3200 over 3 years.. That's just over £1000 per year, including the fixing it costs..

Both the above don't take account of insurance, tax, fuel, MOT..

I'm not saying don't go for it.. however looking at the figures, your old car doesn't appear to be costing you more than a new one. Given your current income, maybe it would be worth looking at a slightly cheaper car, maybe in the 4k range. Get a good one and it'll give you years of service..

AlwaysPondering

Beast wrote: »

No problems - I don't mean to put a negative spin on what is clearly something you've thought out and are excited about but (if the 1988 in your name is your date of birth), I'm a bit older but not much and have pretty much played out the situation you're in at your age. Looking back would I borrow money again whilst on a low salary to buy a car I want but don't really need? Not a chance.

I too don't mean to be abit negative, but again if the 1988 is your year of birth, I'm about 10 years old than you. Many of my friends have been in the similar situation and got themselves into all sorts of problems when they were your age, and only now getting themselves out of it..

Kirsty1988

AlwaysPondering wrote: »

I would be rather concerned at getting such a loan for a car, even a newish car. It does sound like you have been unlucky with the 2 cars you have had so far. In contrast my wife bought her car for £4k around 8 years ago, and apart from servicing, and the normal wear and tear (tyres, brakes, exhaust etc), it's going strong and is getting 68+mpg.

The road tax issue is interesting, because although you quote the low £35 per year, my wife's car costs £205 a year - strange I know. However although you are saving on the road tax with such a new car, the biggest cost to you is likely to be deprecationon such a new car.

Just thinking out allowed here.. You are looking at £7500 loan over 5 years.. I've done a very rough sums and that total cost is around £9,300 (at 10% this will be higher). In 5 years time, the car will be well over 5 years old.. Looking at parkers, the trade in price for a 5 year old Aygo (middle of the range) is £3,385. Your's as you're not buying new, would be less.. So that is going to cost you just to have the car, I would say over £6k over those 5 years. That is £1,200 per year, before you add in the cost of things going wrong - or even just wear and tear items.

Your Rover, you say in terms of cost to buy £1200 and fixing costs £2000. Total = £3200 over 3 years.. That's just over £1000 per year, including the fixing it costs..

Both the above don't take account of insurance, tax, fuel, MOT..

I'm not saying don't go for it.. however looking at the figures, your old car doesn't appear to be costing you more than a new one. Given your current income, maybe it would be worth looking at a slightly cheaper car, maybe in the 4k range. Get a good one and it'll give you years of service..

First off, The whole £7500 isnt for a car, I want to pay off my Credit Card of £1700 and the car cost around £4500. I know this only comes to £6200 but by getting over the £7500 it significantly reduces the interest rates and the left over money will be put straight back into payments. The car i want isnt brand new, its second hand, an the £35 a year road tax isnt because its 'brand new' its because it has low carbon emissions as its only a 1litre engine therefore saving me money on petrol which at the moment with my 1.4 is around 50 to 70 a month. The reason for getting a newish car is that my current car has a Head Gasket problem which i already got repaired when i first got the car costing me over £250 and now its gone past the stage of being able to just repair that problem. A blown head gasket = whole new engine, which i just cant afford and to be perfectly honest my car is only worth about £500 now so deffiantely not worth it!

drbesty

Just remember that five years is along time, what happens in a year or two when you want to get a place of your own? The loan is nearly all of your annual salary, also if your outgoings are quite low how have you got such a large outstanding balance on your credit card?

Kirsty1988

I first got the credit card when i got my job four years ago. I was 18 and naive and used it for random purchases. I pay £150 off it at least every month, but then when iv had unforeseen emergencies iv had to use, such as when the car breaks down etc.
Then in december when my boyfriend had his motorbike accident we were only getting a joint wage of about £800. So i had to cut back. Then when he went back to work instead of throwing all the money at the credit card, i paid off all the store cards and catalogues which had higher interest rates. Now there gone were more focused on paying the credit card off.
But then the car has messed up. And now we need a new one.
We were paying £250 off the card in the last 3 months and worked out we'd have it all paid off within 18months. I have £800 in savings which i was also going to pay off the credit card but now with needing a new car, im confused about whats best to do.
Iv looked at getting it on finance using the 800 as a deposit but it works out even more expensive.

Fiddlestick

Kirsty1988 wrote: »

I first got the credit card when i got my job four years ago. I was 18 and naive and used it for random purchases. I pay £150 off it at least every month, but then when iv had unforeseen emergencies iv had to use, such as when the car breaks down etc.
Then in december when my boyfriend had his motorbike accident we were only getting a joint wage of about £800. So i had to cut back. Then when he went back to work instead of throwing all the money at the credit card, i paid off all the store cards and catalogues which had higher interest rates. Now there gone were more focused on paying the credit card off.

I'm normally one of the doom-mongers but it sounds like you have a good attitude to handling credit and paying off responsibly, which is a good thing.

I hope you get the right product and the car that's right for you

Jon_B_2

Quick word on the Aygo. The Citroen C1 and Peugeot 107 are exactly the same car built by Toyota and are considerably cheaper. You can pick up a 3-4 year old C1 second hand with less than 40,000 on the clock for less than £4000.