New Loan - Am I being sensible?

Darklinglion

Gaz83 wrote: »

Well, at least now you're being honest.

Are you prepared to cut down on socialising, nights out, gadgets, clothes and the like for the sake of a second-hand car?

There's certainly room for some trimming to be done.

Lets have another look at the figures in more detail....

Car I'm looking at £13,495. (They'll be room to haggle down.)

My car is worth about £1000 part ex.

I've probably £500 I can put towards without delving into savings etc which means I need to find/borrow £12,000.

According to my banks website they're offering loans within this amount at 3.99%. Can't see any reason why I wouldn't get this rate as I've an excellent credit rating. That equates to £270 a month over four years.

I'm already managing a loan of £120 a month so as far as my spare cash in concerned I'll need to put another £150 aside for this? Doesn't sound quite so desperate as first thought.

meer53

You're not guaranteed to get a loan at 3.99%, those rates are representative and only a percentage of people will get them. Your credit rating means nothing to your bank, they use their own scoring criteria.

Your idea sounds like madness to me, if i were your OH, i'd be trying to stop you buying such an old car. You need to factor in possible repair costs, mot etc.

I have a 2 year old car which costs me £120 per month. All i've spent on it in the last 2 years is £100 for 2 new tyres. No tax and the lowest insurance group. It gets me to work and back, just the same as your car will get you to work.

lee111s

I think a lot of people on this forum are just about saving money and they think it's the be all and end all, which is fine, but some of us like to spend money on things that others might not get the same enjoyment from.

Whilst I like saving money where I can, I also live to enjoy myself. Similar to the OP, I got a £11500 loan a few months ago to buy a Lotus Elise as a second car. Many people will think I'm mad paying that money for a 13 year old car that I'll only do about 4-5k a year on however, I absolutely love driving and will get many many years enjoyment from owning the car and probably not lose a penny when I come to sell it, prices have been steady for the past 4-5 years.

I overpay my mortgage, save on bills and shopping as much as I can. As mentioned above, I do this so that I can still have a life and do things I enjoy.

A friend of mine is 32 and has just paid off his mortgage, has a house worth £175k which is fab and to be commended. However, he's done nothing but pay off his mortgage since he was 21. No holidays, seldom nights out, little run around cars etc. That's not the life for me. You could die tomorrow, you've gotta do a little bit of both, save on some things to enjoy others.

With that said, OP I say go for it. I'm a true petrol head and some people just won't get it. They see cars as a functional tool, not something to enjoy. Not saying that's bad, just everyone is different

Dr._Shoe

You sound like a sensible and responsible young man to me (I'm guessing). The fact that you're asking for advice is a step in the right direction. It would be even better if you were going to take some of it!

It sounds to me that you can afford it and it is a nice car. If I'm right, you're young but by paying extra mortgage you are effectively putting money away for the future. I say that you're only young once and if you can't have the things you like now then you're never going to have them.

BUT, who knows where you'll be in a couple of years. You could lose your job, kids could come along or you could find yourself having to help fund care for a parent, anything. The advice I'd give my daughter is this, "if you're prepared to give up this nice thing you're considering buying at a time when you can no longer afford it, then go for it. If you're not, then you shouldn't even be thinking of it."

What I'm saying is you've got everything nicely under control at the moment but it's shocking how quickly you can spiral out of control.

Pixie5740

lee111s wrote: »

I think a lot of people on this forum are just about saving money and they think it's the be all and end all, which is fine, but some of us like to spend money on things that others might not get the same enjoyment from.

Whilst I like saving money where I can, I also live to enjoy myself. Similar to the OP, I got a £11500 loan a few months ago to buy a Lotus Elise as a second car. Many people will think I'm mad paying that money for a 13 year old car that I'll only do about 4-5k a year on however, I absolutely love driving and will get many many years enjoyment from owning the car and probably not lose a penny when I come to sell it, prices have been steady for the past 4-5 years.

Prices have been steady for the last 4 or 5 years? Have prices gone up because you're paying interest on that £11,500 so you will lose money.

The OP asked if he/she was being sensible borrowing over half their annual income to spend on a depreciating asset. No that is not sensible but the OP has already decided that he's (or she's) going to spend £13,000 this car with 100,000 miles on the clock anyway so the whole thread is moot anyway.

lee111s

Pixie5740 wrote: »

Prices have been steady for the last 4 or 5 years? Have prices gone up because you're paying interest on that £11,500 so you will lose money.

The OP asked if he/she was being sensible borrowing over half their annual income to spend on a depreciating asset. No that is not sensible but the OP has already decided that he's (or she's) going to spend £13,000 this car with 100,000 miles on the clock anyway so the whole thread is a moot anyway.

Most model of lotus have indeed remained stable, a few have actually gone up in price. I don't need to justify that though, but feel free to do some research.

I'm also overpaying on my mortgage so I'm saving interest there.

I don't class it as lost money, as I would have thoroughly enjoyed using it. Every time you go to the pub for a few pints or out for a nice meal, do you class that as losing money? I doubt it, as you're doing something you enjoy doing with your hard earned. The loan will be paid off in 18 months, by which time would have cost me around £400 in interest. Money very well spent in my eyes. I work hard and spend my spare cash on things I enjoy doing. Life balance and all that.

As I said, everyone is different and people who aren't motiviated by cara will always think they're a waste of money buying anything but the most basic spec car that will do the same job as any other

Pixie5740

If I have a meal out I don't buy it on credit. When I buy a car, and I like nice cars, I pay cash for it. Well actually I take the finance to get a bigger discount and then repay the loan straight away.

The thread isn't about your enjoyment of your Lotus it's about whether or not someone, who doesn't have a handle on their finances, should borrow such a high loan:income ratio to buy a car. The OP has already decided their going to do it though.

meer53

The OP seems to have a "guesstimate" approach to finance from what they've said about their income/expenditure. I'm 100% behind someone buying something they love, IF they are sure they can afford it. The OP doesn't seem to know whether they can afford it. So my reply is based on common sense and my experience in dealing with people just like the OP when things go belly up.

R_P_W

To answer your question.....you are not being sensible at all! Quite the opposite in fact.

Mistral001

This is perhaps a question for a car forum, as it really all depends on how much the car will depreciate over the next, say four or five years. Some sporty or exec. type cars can depreciate very quickly once they get beyond about 8-10 years old. Their high spec. usually means a lot more to go wrong when they reach a certain age and the second hand price can quickly drop to less than say a Fiesta of the same age.