Loan or HP for a car ?

robadub

Hello

My partner and I are looking to purchase a new car

We have a deposit of around £4000 (£2000 interest free c/c & £2000 from a car we are about to sell)

We are looking to spend around £11500 on a car

I was just wondering if the best way to make up the missing £7500 would be to take a loan out or a HP agreement or are they essentialy the same, appologies but not much experience in having either a loan or a HP ??

We both have good credit ratings, and a mortgage, my partner is working and i am unemployed at the moment, not sure if any of those would make a difference ?

Thanks in advance

KingElvis

You may have a good credit rating but with no job you have no income and so will not be able to obtain a loan.....

None of my buisness BUT....a new car when you have no job? madness.

CLAPTON

you owe 2k on CC and want to borrow 7.5k more making 9.5k of debt
presumbaly you have budgeted to pay the CC off before the 0% runs out and to start repaying the loan at the same time

in general personal loans have lower APRs than HP but that depends upon your credit rating and income
HP is generally more expensive but easier to get as you stand to lose the car if you don't make repayment; HP also allows you to VT after half the finance is made and walk away from the car

you haven't said what your financial circumstance are but 9,500 is a lot of debt

CHR15

CLAPTON wrote: »

presumbaly you have budgeted to pay the CC off before the 0% runs out and to start repaying the loan at the same time

Don't underestimate this part.
How long is the 0% period? On 12 Months you will need to push £166 into this to clear it by the end of the term, this is on top of the loan repayments you will be making.
Don't assume now that it will be a simple process of obtaining another 0% deal before the end and transferring the debt over, many people have fallen over by assuming this.

It is a LOT of money to pay for a car without any kind of savings, it is all being funded by borrowing.

You don't give any insight into Salary or other debts but for the average Joe, this does not aound like a good idea. You will be repaying this car for a VERY long time, well beyond the point at which you want another car.

Don't overstetch yourself for a new toy, it isn't new for very long.

robadub

the cc is 0% until 2013, partner earns around 20k and i am just in the process of becoming a self employed courier, so not going into this completely blind with no job prospect (if i did not have the promise of a job we would not contemplate it) should of said that in the first post sorry

YorkshireBoy

I assume from your posts that, aside from your house, you have no other assets other than the current car?...ie no savings.

I think you'd be pretty foolish to saddle yourselves with almost half your total gross annual income (between you!) in unsecured debt for a motor car.

I also don't see any mainstream lender giving you a decent rate on such a loan in your current circumstances.

Just my opinion though, but when I paid £11.5K for my last car (£7.5K of it on 0% for 3 years) I did it on a joint income of £60K+ (and with a very small mortgage). Between you, you earn a third of this at the moment.

YorkshireBoy

robadub wrote: »

the cc is 0% until 2013

Which card?

CLAPTON

robadub wrote: »

the cc is 0% until 2013, partner earns around 20k and i am just in the process of becoming a self employed courier, so not going into this completely blind with no job prospect (if i did not have the promise of a job we would not contemplate it) should of said that in the first post sorry

with an income of only 20k (plus a promise of a job ) having debts of 9.5k is completely foolish

robadub

YorkshireBoy wrote: »

Which card?

mbna credit card

YorkshireBoy

robadub wrote: »

mbna credit card

So that's going to cost you 4% to get at the cash for a start.

What's the limit on the card? Because that'll be an indication of your partner's credit-worthiness and therefore give some indication of the likely loan rate.

robadub

YorkshireBoy wrote: »

So that's going to cost you 4% to get at the cash for a start.

What's the limit on the card? Because that'll be an indication of your partner's credit-worthiness and therefore give some indication of the likely loan rate.

i think the limit on the card is £3500