Car loan affect future borrowings

nokia42

From experience, how can a car loan (PCP, high amount borrowed but small monthly payments as its PCP) affect future borrowings? Can it affect mortgage applications?

forgotmyname

Makes sense, if your paying back a car loan then you have less to put towards your mortgage.

Ben8282

Had to google PCP to find out what it was. Don't think much of the idea; it's like an interest only mortgage on your car. Hope at the end of it you will have saved up enough to make the final lump sum payment or you will find yourself without a car.

David_White

It can have quite a big impact on the amount you'll be allowed to borrow on a mortgage.

Try using an online mortgage affordability calculator and run it with and without a monthly finance payment to see the kind of difference it is likely to make.

Brooker_Dave

Ben8282 wrote: »

Had to google PCP to find out what it was. Don't think much of the idea; it's like an interest only mortgage on your car. Hope at the end of it you will have saved up enough to make the final lump sum payment or you will find yourself without a car.

59% of all UK private car "sales" and 80% of Mercedes are to people basically hiring them for 3 years.

Problem is the car is never yours, and if the supply of cheap money runs out the car industry is toast.

Looks like we didn't learn the lessons of the last debt crisis.

nokia42

Thank you for your replies, very helpful.