Car loan madness

gb12345

Pinkus wrote: »

1. Apologies -- didn't know what information was needed
2. 1 loan that accounts for about a 7th of monthly income.
3. Surplus each month, after all usual outgoings is c.£500-£600 at the moment, c.£900 once the existing loan is paid.

Any other credit? Credit cards etc - The lender will consider your total credit, which will be the current loan, the new loan and any credit cards etc.

CLAPTON

Pinkus wrote: »

The £6k is going toward paying-off existing Barclay's lending next month; that's been £300.00 a month for the past 8 years so it needs to go.

makes no sense to do that and then get a new loan

what APR are you paying on the existing loan?

Gordon_Hose

You can't get a car loan, and you won't buy one with your savings.

You're stuck then.

tomvandam

purchase hire or lease a car if you have £600 spare every month

Pinkus

wildingb wrote: »

You are paying 300/month for 8 years. You have 7000 left, from an original loan of 25,000.
You have paid around 28000 already. You interest rate must have been around 6% on the PSL, maybe less?

And you want to borrow money to get a car at 10% interest rate.

My advice is no, no and no.
Buy a cheaper car for around 4000 with cash. Get a good deal from a private seller.
Use your earning to replace your saving, should take 6 months =3600.
Then pay off the PSL loan.
PSL = 7000-6x300=5200.
2000 old savings+3600 new savings=5600

Save another 10 months at 600/month = 6000,
sell your 4000 car privately for around 3500.
Now buy a better car for 9500.

In 16 months you have 9000 car and no debt.

Don't be in a hurry to get into debt.

Fantastic advice.

I wanted to change my motor as the fuel efficiency is terrible (10 year old Mondeo) and costs £250+ a month to do 1,000 miles a month and car-tax is £240.00 a year. I figured I could get petrol costs down £50.00 a month and car tax down £10.00 a month, meaning the savings would outweigh the loan costs over 24 months with an -- albeit depreciating asset -- at the end of it.

However, as you correctly point out, getting more debt isn't an ideal solution so I'm going to be debt free as of next month, save-up for 10 months at £700 per month and buy a car outright and be debt-free until the Mrs and I get a mortgage in the future. Many thanks for adding clarity to my thoughts -- I've been in debt with this PSL so long (lived like a pauper at times when a junior employee) that paying it off has become a bit of an obsession.

With regard to my credit history:

Earn £35k a year gross (net £2k a month) Never had a credit card, never had a store card, had a previous car loan with Santander paid in full 2 years' ago (no defaults), lived in overdraft when first qualified but cleared that 3 years' ago -- never defaulted, no other credit apart from car insurance and rolling monthly 'phone contract.

Thanks for all the help, everyone. Anyone know how people afford weddings?

All the best.

BugsyBrowne

Good old Experian they've scored the OP 999 giving him an excellent score yet he's got no history whatsoever of managing a credit card.

Keep up the good work Experian.

Tiddlywinks

Pinkus wrote: »

....Never had a credit card, never had a store card, had a previous car loan with Santander paid in full 2 years' ago (no defaults), lived in overdraft when first qualified but cleared that 3 years' ago -- never defaulted, no other credit apart from car insurance and rolling monthly 'phone contract.

You need to build your credit file if you are looking to get a mortgage in the near future... a credit card would help IF you use it each month and then repay it.... if you choose one with cashback then you get money back on your shopping etc. Just use it for all the things you would normally use cash for... weekly shop, petrol etc.

Pinkus wrote: »

Anyone know how people afford weddings?

Simple - just remember that the object of the exercise is that you end up married on the day - that's it... anything extra is just padding... you can get married for £200, £2,000 or £20,000 depending on the choices you make... and they are choices not necessities.

Good luck.

Pinkus

Thanks for all the help, everyone -- you're an extremely well informed and helpful bunch, for which I'm mightily grateful.

:T

pheonixrising21

Maybe you could look at paying off the PSL with your savings and getting a brand new car on something like a PCP scheme.

How important is a Mondeo-sized car to you? Could you go for something smaller? You can get something like a (brand new) Toyota Yaris diesel, possibly on 0%APR. It would get you around 65-70 mpg and be (at most) £30 per year road tax. 1000 miles a month at that mpg will cost around £100 a month in fuel.

There are alot of other cars of similar size (the new Clio diesel even claims to be able to to 88mpg on the combined cycle - and comes with 4 yrs free servicing as standard!), which you could get on PCP for around the £200-250 per month mark. As motor finance is secured its easier to get than personal loans too, and many have lower APR' than you can get for a personal loan too.

IMO, these deals on PCP for new cars are better value than buying a slightly older car outright, due to the fact that you get full manufacturers warranty, breakdown cover and often servicing too.

Pinkus

pheonixrising21 wrote: »

Maybe you could look at paying off the PSL with your savings and getting a brand new car on something like a PCP scheme.

How important is a Mondeo-sized car to you? Could you go for something smaller? You can get something like a (brand new) Toyota Yaris diesel, possibly on 0%APR. It would get you around 65-70 mpg and be (at most) £30 per year road tax. 1000 miles a month at that mpg will cost around £100 a month in fuel.

There are alot of other cars of similar size (the new Clio diesel even claims to be able to to 88mpg on the combined cycle - and comes with 4 yrs free servicing as standard!), which you could get on PCP for around the £200-250 per month mark. As motor finance is secured its easier to get than personal loans too, and many have lower APR' than you can get for a personal loan too.

IMO, these deals on PCP for new cars are better value than buying a slightly older car outright, due to the fact that you get full manufacturers warranty, breakdown cover and often servicing too.

Admittedly, I've no idea how PCP works but I'll have a look.

The thing that puts me off buying a new car is the depreciation over the first 3 years.

Mondeo sized isn't essential, but I'm 6'2" and after a long day of work I'd like to get into a comfortable car as motorway driving is extremely dull -- I don't think it should be uncomfortable in addition. My Mrs has a 5 year old Yaris and after I've driven on long journeys I feel half dead.

I'll look into the PCP, although the infectious resistance to debt this forum provides has rather swayed me to saving up. Also, I've realised that I only *really* use my car for commuting, with the occasional lengthy trip to my homelands. If i lost my job, I wouldn't need the car. As such, do I really want to be bound into a repayment agreement for a car I don't need without the cash to pay (if I lost my job)?