Repay a 5 year loan after one year and take another loan to lower monthly repayments

Lawz

Hi,

I'm currently considering changing car as extending the warranty might be costly.

The alternative is to repay my 5 year loan after just a year, and sign up for another one (5 years too) but on the remaining balance. This would lower the monthly repayment and allow me to pay the extended warranty.

I'm assuming this is a crazy ideas nobody seems to do that. I understand that if I carry on extending the loan, it will take considerably longer to repay the debt, but then I would always expect to pay something for my car (this one or another)

Any thoughts?

jonesMUFCforever

Do you have the funds to repay the first loan?
What kind of warranty costs so much??

Lawz

I think the warranty will be between £30 and £50 monthly. It's the BMW warranty, it's very comprehensive and badly needed as the repairs can be very expensive.
Yes, I do have the money to repay the loan.

Alderbank

It's very common round here for people to replace their car loan with a cheaper loan if they find they can borrow more cheaply. It's a standard money-saving technique. Remember to factor in that you might have to pay two months interest to close the existing loan. Even better, but not available to you now, is to take the finance in order to get the extended warranty then cancel and replace with a cheaper loan during the cooling off period.

The crazy part of your plan though might be rushing to buy a costly warranty. My Honda Jazz has never given me a moment's trouble and I have never given a thought to costly warranties

jonesMUFCforever

OP you are crazy then - just buy a cheaper car; there are other makes that do not break down with normal use for years with proper servicing.
Lower your sights to something you can afford to run.

Lawz

Thanks for your answers.
It's a performance car, very unreliable. Nobody I know would consider owning one without a manufacturer's warranty. Repairs are also extra costly (they use special parts, they have to change all parts in pairs, etc)
I'm not happy with paying more than 250 / month, so if I manage to incorporate the cost of the warranty in this by signing up a new loan, then it's fine.
Initially a 60 months loan, 48 remain, then I would sign up for another 60 months on the outstanding balance. The rate would not be that different.
All this is to make sure I keep my cash in case of an emergency (and rates are so low!)

lovinituk

Let me guess, it's M badged!

Lawz

Ha ha! You guessed right.
Full warranty isn't cheap, but frankly inevitable with those.

lovinituk

Dark Matter again or too obvious?!

27cool

It flies against all common sense to own such a vehicle. I can only think that some people have more money than common sense.

Lawz

Haha! It's a luxury, I admit. My excuse is that I don't spend a penny at the pub