Should I Loan or Save?

Cz420uk

Long time lurker first (second actually!) time poster!

Im living with my parents rent free at the minute. Currently have £1100 in Credit Card Debt (0% until December 2007) and £3300 outstanding on my loan with Northern Rock 9.9% with 38/mths left to pay

I have my own personal SOA and bring home £947.00 and have £506.00 worth of 'bills' to pay which includes socialising and everything you could think of down to the last little detail.

I am very fortunate and maybe a little ashamed to get away with paying very little for living at home so I know I shouldnt be in as much debt as this.

As you can see I have approx. £440 spare each month so over the next 3 months I will be battering that credit card down till its paid off. This wont be a problem as I am quite disciplined!

The point is... I have my driving licence and had a car before but lost it under what ever circumstances. I was planning on extending my Northern Rock loan over 10 years :eek: (once my credit card debt is cleared) and get an extra £4500 on it so I can get a car which im starting to miss. This would bump my loan (debt!) upto around £7000 - £7500 when it went ahead.

Do you think this is wise (I could do with a car for work) or would you save this spare £440 each month and over pay the current loan and then save for a car afterwards and become debt free!?!

I would normally rush straight into getting the loan but I have found myself addicted to this particular board and it has made me think for the future.

Also, if I get a loan and 2 years down the line I want to move out then im going to have this hanging over me when applying for a mortgage etc.

Advise more than welcome!!

lynzpower

Personally, Id save for the car. Every single car you will own ( with the exception of a vintage jag eg) will be depreciating. therefore it makes little sense to be paying more for it over the longer term

chevalier

Why do you need to spend this much on a car? You could get a decent motor (and get it checked by the RAC or similar) for £1000 no worries, as long as you don't mind that it isn't new, and doesn't necessarily have the latest bells and whistles. Remember when you drive a new car off the forecourt, you lose £1000! So maybe not such a good proposition.

I personally would get debt free as soon as possible. You have over £400 to pay off your debt each month. But I am sure you could cut your £500 or so 'bills' you have. Ie be more creative with socialising, to cut there, maybe not buy any more clothes till the new year sales?! Or whatever your vice is!

best of luck
chev

novagirl

I agree, you really don't need such an expensive car. Who cares if it isn't a new car?! As long as it gets you from home to work and hopefully back again, then a little cheapy runabout will be fine