Advice please

bnc_2

I have just over 2 years left on my mortgage. I am on standard variable rate (cheap at the moment). I am purchasing a car for 20k. What would be the best way to borrow that amount ? Add it on the mortgage but not extend the term, add it on the mortgage and extend the term by say another year (mortgages going up ?) or just get a loan for 3 or 4 years. Obviously after my mortgage has finished in 2 years I will be able to afford to much bigger monthly repayments if I took on a loan but can you overpay to get rid of the loan quicker ? Also if there such a thing as a loan, say over 4 years, that starts with lower repayments (say for 2 years) and higher repayments for the last 2 years. Any other ideas ? Thanks.

[Deleted User]

I would question the sense in buying a 20k car

Malky

woodbine wrote: »

I would question the sense in buying a 20k car

I would question the sense in your answer as your answer has nothing to do with the question

CLAPTON

best to pay as low an APR as possible

you can always make overpayments on loans if you wish

best not to spend 20k on a car

[Deleted User]

Malky wrote: »

I would question the sense in your answer as your answer has nothing to do with the question

sorry but it does,paying 20k for a car is madness,all the rest of the question becomes irrelevant once you realise that !

zxspeccy

£20K is a lot for a car, especially as a lot of that disappears when you drive out the showroom (I am assuming a new car here).

Having said that adding this to your mortgage is a sensible way to keep the APR down, however as this new lending is secured then “your home is at risk if you do not keep up the repayments” (as they say). Also a mortgage is specific loan for a house purchase, so your bank may not lend the money for a car purchase anyway, but you could just say it was for “home improvements/extension”.;)

My policy is if you haven’t got the money to buy the car then you should be saying to yourself “Can I afford this car? Do I actually need this car?”. Expensive/new cars are a luxury and as a luxury are usually for the likes of those rich enough to afford them.

As for your question around a loan that starts with lower payment which increase over time then I am not sure that any of the major lenders do this. Keep the payments down to a level you can comfortably afford to repay and then make overpayments as an when you can afford them. Also a loan will have the advantage of a fixed interest rate for the entire term, so no shocks should anything happen to the base rate.

One final point, you mention you are on a Standard Variable Rate, and if this is the case then this could increase at any time which could have a big impact on the repayments. So do make allowances for this as well.

debtcutter

A £20K car to someone on a £20K annual salary probably wouldn't make sense, but nobody has asked a single question about this person's salary, credit history etc.

Assuming (due to having a mortgage) that the credit history of the OP is good, at what point does it become OK to spend £20K on a car, in your eyes?

Is it ridiculous for someone to spend 1/5 of their annual salary on a car? I'd suggest not.

"Everyone should live within their means" - agreed

"nobody should ever borrow money to buy a £20K car, no matter what they earn, owe/don't owe" definitely not agreed.

If you have £20K in savings, great, if you don't and driving a nice car is your luxury that you want to spend money on, then go for it, be make sure you're prepared for a severe change in circumstances and get the best rate possible.

debtcutter

zxspeccy wrote: »

One final point, you mention you are on a Standard Variable Rate, and if this is the case then this could increase at any time which could have a big impact on the repayments. So do make allowances for this as well.

Sound advice

Malky

woodbine wrote: »

sorry but it does,paying 20k for a car is madness,all the rest of the question becomes irrelevant once you realise that !

What the OP wants to spend 20K on is irrelevent. Catch 22 situation here. Whilst borrowing 20K is not moneysaving, borrowing 20K at the lowest possible rate is.
Who are you to question what the OP spends their money on?
As a previous poster said earlier, no one knows the OP's salary or credit history so how can you pass judgement (not exactly MSE courtesy) on such little information?

CLAPTON

debtcutter wrote: »

A £20K car to someone on a £20K annual salary probably wouldn't make sense, but nobody has asked a single question about this person's salary, credit history etc.

Assuming (due to having a mortgage) that the credit history of the OP is good, at what point does it become OK to spend £20K on a car, in your eyes?

Is it ridiculous for someone to spend 1/5 of their annual salary on a car? I'd suggest not.

"Everyone should live within their means" - agreed

"nobody should ever borrow money to buy a £20K car, no matter what they earn, owe/don't owe" definitely not agreed.

If you have £20K in savings, great, if you don't and driving a nice car is your luxury that you want to spend money on, then go for it, be make sure you're prepared for a severe change in circumstances and get the best rate possible.

the point that is becomes ok to spend 20k on a car is when you can afford it i.e. when you have 20k saved up in the bank and not when you have to borrow money to buy a rapidly depreciating assett

[Deleted User]

Malky wrote: »

What the OP wants to spend 20K on is irrelevent. Catch 22 situation here. Whilst borrowing 20K is not moneysaving, borrowing 20K at the lowest possible rate is.
Who are you to question what the OP spends their money on?
As a previous poster said earlier, no one knows the OP's salary or credit history so how can you pass judgement (not exactly MSE courtesy) on such little information?

!!!!!! who made you boss?
i was expressing an opinion,something i`m perfectly at liberty to do when people are asking for advice,even more so when the information is limited