Taking Out A Loan (Help Wanted)

bill_whu

Hi guys,
I have recently started a new job and it means I have managed to get a semi-decent income for the first time in my life. :beer:

I have decided to treat myself to a new (well, used) car that I have wanted for years. Obviously, then comes the problem where I don't have the money in my pocket but with a decent income I could get the car soon with a loan.

Now, basically the car I want will cost me £12,000. I currently have a car worth lets say £6,000. Since I can't do without a car as I have to commute to work I would ideally need to buy the new car first, then sell the current car immediately after.

My question to you guys is what would be the best way of doing this? I would want a £12,000 loan over a 2-year period, however I will be paying £6,000 of within (hopefully) the first month or two.

I initially thought about getting a credit card with 0% balance transfers and taking the money out on that, paying back immediately and then paying the remainder back in chunks (this is my ideal situation) whilst also the convenience of having 0% interest to pay.

What is the best deal on the market available for me in this situation?

Thanks in advance for any help!

ABOO_2

Are you sure you'll be getting 6k for your present car mate in a private sale.
I have a couple of friends in car trade and cars under 2k are selling, cars even at £3000 aren't moving. Have you asked for a px price if car you want is at a garage?

bill_whu

The £6k is not a problem, as if the car was only to go for £5k for instance I can put the extra £1k in myself. The car is the last thing I need to be concerned about in my opinion, especially if I had a 2 year loan. It's not your everyday car, it's in good condition and I'm fairly confident I could shift it.

I'm more curious about what the best way is to borrow the money so that I can pay in lump sums rather than having to pay a set amount each month.

[Deleted User]

if your current car is worth 5-6k and in good nick then why on earth do you want to saddle yourself with 6k of debt?....its madness

Emmzi

the best way is to wait until you are through your probationary period and have some employment rights. Right now you can be let go on a week's notice and even if you got PPI you would not be covered.

Also banks prefer you to have at least 6 months with your present employer, and your own bank will likely give you a much better loan rate than the dealership.

bill_whu

woodbine wrote: »

if your current car is worth 5-6k and in good nick then why on earth do you want to saddle yourself with 6k of debt?....its madness

With the greatest of respect, different people aspire to have different things. Everyone's circumstances are different and that would be the same as me saying to you for example: If you wanted a bigger house but it would mean paying more on the mortgage, more on the electricity/water bills etc then it's a bad idea. But if you've got a bigger family than you used to have and more income then what's the problem?

Different people have different things to worry about, I'm an absolute car addict and certain things have gone certain ways in my lifetime that just makes me want to make the most of things now whilst I have the chance to.

Emmzi wrote: »

the best way is to wait until you are through your probationary period and have some employment rights. Right now you can be let go on a week's notice and even if you got PPI you would not be covered.

Also banks prefer you to have at least 6 months with your present employer, and your own bank will likely give you a much better loan rate than the dealership.

Thanks for the response. I don't have a probationary period, and I am safe in the job for the time being. Admittedly I don't know everything about employment rights but I am in a stable situation.

The second part is more interesting though, would this still be true even if I had moved straight from a previous job and been working for the last 4 years full time?

As for the loan they will offer, what are the chances of them allowing me to pay back as I pleased provided it's completed within the agreed period?

Thanks

bill_whu

I'm starting to wish I made a thread saying this:

I need to borrow £12,000, I can repay £6,000 shortly after taking out the loan, the rest will be paid back over the next 24 months (after first taking out the loan) I would prefer to not have to pay a set amount each month and be free to pay it off as I please within the contracted time limit.

There, nothing to do with cars! Better?

ukmartian

No job is safe ...i got made redundant after 7 years with a international company ...No one saw it coming just told one day redundancies were on the way ...i got left saddled with debts and loans i could so easily pay back whilst working now i am stuck ....its the wrong time to to borrow...I am not criticising your decision ...i know what it is like to treat oneself, but at my own cost i know what it is like to get caught out .....good luck with the new job though...

ps if you are planning to pay it back in 2 years ...why not save up it may be quicker and definitely cheaper as no interest to pay... then get your dream machine ....

bill_whu

ukmartian wrote: »

No job is safe ...i got made redundant after 7 years with a international company ...No one saw it coming just told one day redundancies were on the way ...i got left saddled with debts and loans i could so easily pay back whilst working now i am stuck ....its the wrong time to to borrow...I am not criticising your decision ...i know what it is like to treat oneself, but at my own cost i know what it is like to get caught out .....good luck with the new job though...

ps if you are planning to pay it back in 2 years ...why not save up it may be quicker and definitely cheaper as no interest to pay... then get your dream machine ....

The main reason I want to do it this way is because my current car is more likely to lose value quicker than the one I want, therefore the longer I leave it the bigger the saving margin becomes.

Thanks for the advice though, and sorry to hear about your job.

Emmzi

bill_whu wrote: »

Thanks for the response. I don't have a probationary period, and I am safe in the job for the time being. Admittedly I don't know everything about employment rights but I am in a stable situation.

The second part is more interesting though, would this still be true even if I had moved straight from a previous job and been working for the last 4 years full time?

As for the loan they will offer, what are the chances of them allowing me to pay back as I pleased provided it's completed within the agreed period?

Thanks

a) can be sacked for any non-protected criteria discrimination reason in the first year (changes to 2 years in april). "Sorry Bill, it's just not working out"

b) was 6 months when I was a bank manager for almost everyone. But try HP, as its secrued the criteria may be lower (interest rate higher though)

c) I think you want an overdraft, not a car loan then :-) But ask if they have a flexilble repayment option. That usually means you take the risk of a variable interest rate though, you don't get to have it both ways.

Until you can safely answer "what happens if I lose my job" without "I sell the car" it isn't worth the risk to me. Remember most PPI wouldn't kick in for 6 months also as it's a new job. So I'd be thinking of buying in May time, and I'd have put away the equivalent of the loan repayment and any increase in insurance each month a) to reassure myself of affordability b) to offset depreciation on current car and increase my down payment.

Firefox1975

Do you have any other credit lines? overdrawn? mortgage? how much do you earn?