Undecided about loan

djwolf

Hi all. I'm new to the forum.

My situation:
I currently have a car loan with £2200 remaining (20 payments left). I now need to change the car as it's getting on a bit and I could do with something newer with lower mileage for reliablility. Aside from this loan I owe £1500 on a credit card which has 0% interest until Feb 2008.
I should get about £1500ish from selling my car so this can be paid on the loan. I will then need to spend about £3500 on a decent car.

I just want some advice on what to do. I guess I could either leave my credit card balance as it is and just go for a fresh loan for £4200 over say 3 years, or I could go for a bigger loan of £5700 over 4 years, this would enable me to pay off my credit card. I just want things to be as less complicated as possible but it would be nice to avoid paying unnecessary interest aswell.

Any suggestions?

Thanks.

CLAPTON

how much are you paying per month on the loan and how much are you paying on the credit card
and how much can you afford to pay?

djwolf

I'm currently paying £130 a month on the loan and I choose to pay between £50-£100 a month on the credit, depending on other outgoings. The min. payment is about £10.

I can comfortably afford about £220 on an average month. I just don't want to rush in for a big loan that I later regret.

CLAPTON

unless the car is really breaking down regularly, i would frankly be inclined to keep the car and concentrate on paying the CC back before the 0% runs out (well i would actually save the money in the best savings account i could find and use the saved money to repay the card when required.)

once the CC is cleared you could start to save the money and hopefully avoid taking out a new loan and so avoid paying all that interest.

djwolf

Thanks for the advice. The car is running okay, just uses a bit of oil and has a slight water leak. I suppose it's cheaper to get repairs done than to pay out more for another car. I'm going to try and pay the credit card off within 12 months then I'll look at getting a new loan after.