Should I take out car loan or up mortgage?

crusty_toenail

Hi all,:cool:

Need to borrow 10k to finance car!

Current mortgage deal coming to an end - 28K for 180k house value.

Should I take a separate car loan (5.5% over 60 months = £190 per month)

or,

add 10k onto existing mortgage - making it 38k over 5 years (fixed, no fee post office deal - 3.35%) maybe even decrease term of mortgage to make payment the same as would be with separate car loan, that way paying off the extra 10k over the 5 year term?

What would be my best options to pay off less interest in the 5 year period? I know my current mortgage is £140 per month (28k)and car loan would be £190, so £330 total.

Thanks in advance,

Crusty x

Takeaway_Addict

1) why do you need a 10k and not a 3/4k car?
2) Personally I wouldn't add it to the mortgage for the main reason that if times come hard for you its another 10k u need to find to keeop your house whereas if its a loan you can reduce payments with no risk of losing your house (presuming you carry on paying your £140 a month)

crusty_toenail

Anyone else? I'm just wondering what makes sense from a financial point of view? Stick on mortgage and over pay (decrease term/ lump sums added) or separate loan deal?

Obviously I don't need a 10k car, I have my eye on a 20k car (but have 10k saved already) to put towards it x

Curr946

personal preference really.

There is two ways to look at this,

1) do what ever is going to be cheaper in the long run and paid off quickly
2) what option will provide you with the most breathing space per month should your income drop unexpectedly.

5 years is a long time and anything could happen. I wouldn't want a car loan bulked into my mortgage. However, in your case this dose seem to work out cheapest.

forgotmyname

Buy a cheaper car until the Mortgage has been paid in full then use the monthly money to buy something you want.

CLAPTON

on a like for like basis and all other things being equal, get a loan with the lower interest rate.

HappyMJ

crusty_toenail wrote: »

Hi all,:cool:

Need to borrow 10k to finance car!

Current mortgage deal coming to an end - 28K for 180k house value.

Should I take a separate car loan (5.5% over 60 months = £190 per month)

or,

add 10k onto existing mortgage - making it 38k over 5 years (fixed, no fee post office deal - 3.35%) maybe even decrease term of mortgage to make payment the same as would be with separate car loan, that way paying off the extra 10k over the 5 year term?

What would be my best options to pay off less interest in the 5 year period? I know my current mortgage is £140 per month (28k)and car loan would be £190, so £330 total.

Thanks in advance,

Crusty x

Get a cheaper car. Spending £20,000 on a car that has a lifespan of what...7 years. Madness.

sharpy2010

HappyMJ wrote: »

Get a cheaper car. Spending £20,000 on a car that has a lifespan of what...7 years. Madness.

He doesn't want advice on what car to get, he wants advice on the cheapest way to get the car he does want.

Is that really so difficult?

jonesMUFCforever

If he puts the £10k on mortgage won't he be paying that for term of the mortgage that is left?
This is why Banks make money!
The loan rate he has been quoted (if offered of course) would be the one I would take as in 5 years it is repaid.

CLAPTON

sharpy2010 wrote: »

He doesn't want advice on what car to get, he wants advice on the cheapest way to get the car he does want.

Is that really so difficult?

Yes it is that diffcult.

In life, so often it is the correct question that is difficult and not the answer.

bouncydog1

Are you able to overpay on the mortgage? If so then I would put it on there but I would try to negotiate the lowest possible price for the vehicle perhaps by looking at an ex demonstrator and paying cash will get best discount.

I would also set up a standing order for £200 per month so that you would be paying extra over and above the amount required at the mortgage interest rate. This would mean that it would be paid off in less than 5 years.