2 Loans or 1 Loan?

J666

Hi I'd really appreciate some advice please?

I'm starting a new job shortly, and will be given a car allowance. So that coupled with a reduced tax bill from not having a company car then I'm thinking of getting a loan to fund a nearly new car.

The cars I'm looking at are between 25-30k.

I know personal loans only go up to 25k, so should I or can I get 2 loans of 12.5k each?

Or get two loans of 15k each?

Smaller loans seem to have better APR.

Although I fear that if I try to do this and get accepted for one loan then I'll be rejected for the second loan and only have half the money....

Your advice and ideas will be greatly appreciated.

redcard

So you're getting a very substantial pay increase?

J666

A bit of a pay rise, but the key according to my calculations are:

£400 a month (after tax) for the car allowance
plus
an extra £400 in my pay (by not being taxed on a company car.

So as long as I can do it all (car, insurance, maintenance, private mileage) for £800 then I'm probably better off...

30k (6 months old car) over 5 years is about £580 a month
25k (18 months old car) over 4 years is about the same

But both cheaper to split into two, hence my query...

forgotmyname

Your paying £4800 a year in tax on your company car?

Wont you be taxed on the allowance? I thought you were.

How long since you have had your own car insurance and no claims? You may have to start with zero no claims.

What about the interest on your £25 - £30k loan?

J666

P11d value of car plus fuel is about 12k, which is roughly 400 a month.

You are taxed on the allowance which takes it to 400 a month.

Interest on loans is about 3-3.5k in total.

I have 16 years no claims (insurance is about £45 a month).

thebritishbloke

You'll be much better off just trying to get finance on the car directly through the dealer (presuming it's a brand new car).

Just remember you're taking on a lot of risk by relying on the car allowance. If you lose your job, that's a pretty hefty bill you're going to have to keep paying.

jonesMUFCforever

One important correction from post 1 - LARGER loans get the best APR not the smallest ones.

J666

thebritishbloke wrote: »

You'll be much better off just trying to get finance on the car directly through the dealer (presuming it's a brand new car).

Just remember you're taking on a lot of risk by relying on the car allowance. If you lose your job, that's a pretty hefty bill you're going to have to keep paying.

Dealership finance is 12% apr, pcp is 4.99% but there's a big ballon payment after the 4 year term which really turns me off this option.

If I lose my job I'll sell the car so I don't think it's a big risk...

J666

jonesMUFCforever wrote: »

One important correction from post 1 - LARGER loans get the best APR not the smallest ones.

Not according to this website in the loans section or on any of the compare websites...

Plus if it's over 25k then it will need to be secured against my house which is complicated and too big a risk for me to consider.

PeacefulWaters

A few sweeping statements in this thread. To put the generalisations in context;

1. Unsecured loans are on the market for sums in excess of £25k.

2. Some lenders charge a higher APR for larger loans.

Not all lenders are the same.

Pixie5740

Have you tried some of the personal loan soft searches to see if it's likely that you'd be accepted for £25k to £30k of unsecured debt?

I think as a general rule of thumb banks will lend unsecured debt up to around 50% of your income. It depends on other factors such as your credit history, other debts and financial commitments though.

Due to the depreciation of cars I wouldn't take finance out on a car for more than 3 years.

As thebritishbloke says it is a bit of a risk if you lose your job as it'd very unlikely you'll sell the car for the same amount as the outstanding balance of the loan but that's down to your appetite for risk really.

Getting finance through the dealership might be the better option of financing the car. The finance packages are really what the dealerships make their money on so you might be able to negotiate a better price on the vehicle.