First Time Buyers With Car Conundrum

Kimiokee

Dear All

This is my first ever MSE post so please be gentle with me! I'm sorry if this has been posted before but I did a search and have scrolled through various posts and can't find what I'm relating my experience to. So here we go...

My fianc! and I are currently looking to buy our first home. We're fortunate to now be in a position to buy a property circa £275k with a full deposit and we've just started viewing some potential properties.

My dilemma however is this. Between Christmas and New Year someone went into the back of my car. I have found out yesterday that they have now written this off. My car was on finance and I have gap insurance so I'm currently going through the motions of getting that sorted and I shouldn't be out of pocket thanks to the gap. I am now stuck on what to do for a replacement.

My daily commute is 2 hours via B roads and the odd country lane. My now Cat B car was a Mazda CX-3, a bit bigger and higher than my old Fiesta so I felt a bit safer considering most of the traffic I meet down the lanes are tractors and Land Rovers who have the 'might is right' mentality. Despite it being a nice car, I loathed the repayments of just over £300 a month which jumped up because of the 21k miles a year I do. Now I'm effectively released from my contract with no penalties, I'm torn between a cheaper PCP in a smaller car or buying a £3.5k car I've seen that's been around the block a few times.

Pros for PCP
• Newish car - covered by warranty
• Less miles and use - nothing should go wrong to begin with
• More (luxury) gadgets - heated windscreen, LED headlights, Sat-Nav

Cons:
• High monthly payments due to 21k per year mileage
• Tied into 3/4 year contract - life situations could change and I'm left unable to pay

Pros for older car:
• Buy outright - no prolonged payment with interest
• Can put as many miles on it as I like
• Can run it into the ground or sell the asset if I decide to change car at any point - no contractual ties

Cons:
• Could break down at any point and not covered by warranty

My thoughts were to go for a slightly older car that I can own outright however my fianc! would rather see me in a 'safer' car 'that won't break'.

However, we are still trying to buy a house at the same time...If I buy outright at £3.5k I don't want to take that out of our deposit as it may mean we miss out on a house during the time it will take it to re-save that amount. Instead, I thought I would put it on my 0% credit card. Effectively at £3.5k compared to my £300 a month it would take me 10 months to break even and then the car is mine to do with as I please for better or worse.

Alternatively I sign into another 3/4 year contract at 'X' a month on a car that I also have to pay interest on top of and not own at the end unless I put down an extra chunk to pay off the remaining balance.

We are going to see our bank regarding a mortgage in principle the weekend after next - we already have pre-approval based on our finances but with the sudden change of situation my very long-winded explanation to get to my question is this:

Which will the bank look more favourably on in terms of granting our mortgage application? My having £3.5k on a 0% card or a longer fixed term repayment of 'X' for a car and how much (if anything) will it affect our application? Has anyone been in a similar situation or are there any mortgage advisors out there who might be able to lend some advice?

I very much appreciate anyone taking the time to read through this and any answers/advice you can provide.

aneary

I wouldn't put the whole lot on a credit card they will reduce the amount you can borrow by 3.5k however also having the finance will reduce your affordability.

Can you buy a really cheap car and run that into the ground until you have your house. You can get breakdown cover which will give you some security if you were to break down. My car is old (16 years) but is super realiable and I don't worry about it breaking down.

Slithery

No need to spend £3.5k on a second-hand car, you can spend half that much and still get a reliable motor.

What do you mean by 'full deposit'?

ProDave

I am a firm believer in what some call "bangernomics"

My previous car A Subaru Forrester, I bought as a 4 year old for £3500 and it did me for 9 years but was gettign quite tatty, though it still had nearly a full MOT when I sold it.

I recently did the same, this time spending £3K for another Forester. If I can get 9 years from this one as well, I will be well happy.

Choose a make you like and know to be reliable. In my case Subaru. I have been driving cheap old Subaru's for 25 years now and never had one break down. They should be good for 200K miles or more.

Kimiokee

Thank you for your replies.

Sorry by 'full deposit' I meant the standard 10% so we wouldn't be using a government scheme to help us.

I have since spoke to a friend of a friend who is a mortgage advisor and they said:

'lenders take a max of 5% of the balance on a credit card as the monthly cost, so £3,000 at 5% = £150pcm'

Ultimately then it would seem that it would depend how much I put on the card for a car as to whether the repayment would work out more or less than a pcp over the repayment time.

Thank you for your advice and suggestions.

Kimiokee

csgohan4

nothing wrong with an old banger, had 2 cars costing about 1500 pounds and ran well for years, old vauxhall's and rover's. Money saving too

Davesnave

Driving a cheaper car needn't be a lottery, especially if you choose a well maintained example from some of the more reliable models around. Like Dave, I've done bangernomics for many years.

It's because I drive filthy lanes all the time that I prefer a less shiny example of car, Mine comes from the top ten in this list, but I'd think anything in the top thirty or thereabouts would be OK

http://www.reliabilityindex.com/

My latest cost only £600, but I knew it was due new tyres and a few other things, so I budgeted for £1500 just in case. No older car is going to be perfect, but nor should it leave you stranded any more often than a newer model if its cared-for. The only time I've had to call out the breakdown service within memory was when I was an unfortunate passenger in someone else's car!

csgohan4

I thought honda and toyota had the lowest MOT failures

Davesnave

csgohan4 wrote: »

I thought honda and toyota had the lowest MOT failures

Perhaps theirs are lowest among the fails, but they may cost more to repair when they do go wrong etc. I wouldn't say no to a Corolla Verso, for example.

I'm not saying one should use just one reliability indicator on its own, or buy a very cheap car like mine (caught on the hop like the OP with plenty else to fund and do just now!) but a bit of research pays dividends. It's also vital to have a good garage to call upon.

Another place I like to look is:
https://www.honestjohn.co.uk/carbycar/

Amanda_Cm

Cheaper car. Don't get it on finance. You may have problems to get a mortgage with lots of credit cards, finances, store cards etc.
The less rates you need to pay, the better.

dimbo61

You have been driving a Mazda so why not look at a Mazda 3
like this one
https://www.autotrader.co.uk/classified/advert/201801022381377?onesearchad=Used&onesearchad=Nearly%20New&onesearchad=New&price-from=2000&price-to=3500&make=MAZDA&advertising-location=at_cars&maximum-mileage=40000&sort=sponsored&quantity-of-doors=5&postcode=cw57gq&radius=1500&page=1

Or maybe a Mazda MX5 ?