Buy my car with savings or a loan?

DannyRul3z

Hi all,

I'm looking for a bit of advice here. I'll try to set the scene:

Me and my girlfriend are saving for our first home and we have just about enough for a deposit but are happy to continue saving for the next few months whilst we wait for the right house to come up. Our credit scores are fine and she has more savings than I have.

I have a car on PCP and in May the time will come to take the next step. I'm currently planning on buying the car for the price of a little over £5k. This is a good price for the car and the condition it is in and I need the car for work - other alternatives aren't feasible so I will be buying the car regardless. How should I finance this as I don't quite have the full amount (although I could borrow from my girlfriend).

If I was able to get a further finance agreement from the dealer would that be any different to getting a loan in a mortgage providers eyes?

From speaking to friends some have said to get a loan for the full amount. Others have even said to get a loan for more than the amount, and use the rest of the money for the house. Would this have any impact on our ability to get a mortgage in the first place? I've also heard other people say to split it and get a loan for half of the amount.

For arguments sake let's say the decision to buy the car has already been made and we would be moving in say August - what would be my best option?

Thanks

[Deleted User]

Any additional borrowing will impact your mortgage application. The type of loan won't matter.

I'd recommend simply buying something cheaper for cash. It will make you richer and will increase the chances of you getting a mortgage.

However, if you do go down the loan route, certainly don't borrow more to put towards the house, as few mortgage lenders will accept a borrowed deposit.

pjcox2005

What about a 0% credit card, a lot currently have over 2 yrs interest free.

Put normal spending on it, and use savings/cash saved from spending now on card to buy the car. Debt will impact borrowing but may have less impact particularly if you use for fees, house expenses (I.e after mortagage credit checks) so may help with cash flow.