Save for deposit or pay upfront for car?

mariza_dim

Hello,

I'd love yo hear people's thoughts as very new to this.

We're thinking of buying a used car at c£9.5k. Would you recommend getting a loan of £8k (4 years at 2.8% APR) or would it be better to pay upfront? If we did pay upfront, the money would come out of our savings for a deposit on a mortgage which we'll be hopefully be taking out very soon, hence why I've posted in this thread. Would £9-10k make much difference on how much we can borrow for buying a house?

Thanks

Mariza

[Deleted User]

I would do both - save for the deposit and pay cash upfront for the car.

mariza_dim

Thank you for your reply. As we'll be applying for a mortgage essentially the same month as buying the car, we wouldn't be able to make up the c£10k the car would cost. Do you think that would affect how much we could borrow for a mortgage etc?

[Deleted User]

It will impact affordability. A good broker should be able to tell you the different ways lenders will account for it.

A more salient point is that you don't want to be applying for credit in the run up to applying for a mortgage.

I would look at cheaper car options for cash is the deposit is tight.

AliceBanned

I know people who sold their cars before applying for a mortgage. I would absolutely not buy the car if I were in your situation. I would sort the mortgage and then get a much cheaper car but it depends how much you need a car. It is worth the sacrifice of a much cheaper car in my opinion, in the short term until your mortgage is sorted and your finances are more comfortable.