Apply for loan and finance at the same time?

peddles

I've set my eyes on a motorbike. I was going to get it on finance and put down a 5k deposit, but I've only just got a mortgage a month ago, so most of my savings have now gone!
I was thinking of getting a loan (14k total over 18-24 months - 5k for the bike deposit and 9k something else personal and irrelevant to the issue)

I've done the numbers and this makes financial sense to me...even if it may sound strange.

Last I knew - my credit was good (had no problems setting the mortgage up!)
Is all this a bad idea? I know I can easily pay everything off as needed, but not sure if I will get approved for the loan, and then the bike finance straight after. Will it do major damage to my credit score?

Thanks.

[Deleted User]

It depends on your circumstances. Your credit score is useless, but lenders will look at your income and credit history.

Try an eligibility checker to gauge your chances. Remember that multiple applications and rapidly increasing debt will increase your risk profile. The recent mortgage in particular will have a major impact, both with the debt and the change of address/ER.

Whether it's a smart thing to do boils down to what else you may want to do with your money.

TadleyBaggie

Once you get the first loan, your affordability for the motorbike finance will take a hit and you may not be approved. Why not just take out a loan large enough to pay for the motorbike outright?

peddles

Thanks both.
Yeah I did wonder about just getting the bigger loan, but the loan interest is higher than the finance interest...but maybe it's not worth risking getting rejected and have a loan for nothing...

DrEskimo

Just wait a year..save up the monthly cost of the loan, plus anything else and then just buy the bike (now cheaper as 1 yr old used version) and have no issues with increasing your exposure to financial risk, and save money by not paying some finance company interest....

I doubt there is any pressing need to have it right now, other than you are just wide eyed and excited...!

peddles

DrEskimo wrote: »

Just wait a year..save up the monthly cost of the loan, plus anything else and then just buy the bike (now cheaper as 1 yr old used version) and have no issues with increasing your exposure to financial risk, and save money by not paying some finance company interest....

I doubt there is any pressing need to have it right now, other than you are just wide eyed and excited...!

Of course, that would be great...but I actually do kind of need it in a hurry! New house needs faster commuter machine!
...maybe a little wide eyed and excited too.... :rotfl:

DrEskimo

peddles wrote: »

Of course, that would be great...but I actually do kind of need it in a hurry! New house needs faster commuter machine!
...maybe a little wide eyed and excited too.... :rotfl:

If I was being blunt...the fact you are even having to borrow the deposit for the additional finance for the bike is an indicator that you are not in a strong position to afford this!

What is the extra £9k for? Presumably things to help furnish the new property that you now have a mortgage for...?

Honestly, there is no need to get into debt over such material things. My advice is to be sensible, save for a year and see how you get on. Life has a habit of throwing a spanner in the works, and its better to be in a position where you have saved money and can use that towards any issues, rather than worrying about debts...

If everything goes swimmingly, then in a years time you can look at purchasing the bike in a much stronger position financially (borrowing less, or not at all, with a nice firm emergency fund in place for the unknowns).

It is far more rewarding to purchase these things with out worrying about the financial risks attached to them. That;s my 2ps worth anyway...good luck with whatever you decide to do

BoGoF

You say the loan rate is greater than the finance.....what are the rates. You do realise you may not get the advertised rate.

peddles

DrEskimo wrote: »

Honestly, there is no need to get into debt over such material things. My advice is to be sensible, save for a year and see how you get on. Life has a habit of throwing a spanner in the works, and its better to be in a position where you have saved money and can use that towards any issues, rather than worrying about debts...

Damn you and your rationality!!

In all honesty though, I really can afford the repayments, and more. But like I said, just not right now after dumping all my savings on the house. But maybe a little patience and restraint will do me good...thanks.

peddles

TadleyBaggie wrote: »

Once you get the first loan, your affordability for the motorbike finance will take a hit and you may not be approved.

How long do you think is a safe gap to wait between getting the loan and then trying for the finance then?

DrEskimo

peddles wrote: »

Damn you and your rationality!!

In all honesty though, I really can afford the repayments, and more. But like I said, just not right now after dumping all my savings on the house. But maybe a little patience and restraint will do me good...thanks.

Ha...trust me I'm my own worse enemy...I blame my OH though. She has no desire for material things and happens to make very good money. The amount she saves is quite staggering...

I have spent the last couple of years really getting my finances in order. Settling all my debts (except mortgage and student loan), getting a strict budget, saving a large proportion of my income each month in high interest savings accounts, using low risk multi-asset investment funds for long term financial goals, and understanding my pension. I've used this site and it's been a real eye opener!

I now get far greater reward from saving than I do spending, and then when I do have things I want to buy (recently used some of my savings to buy a used EV) I can buy it knowing it's done and paid for and can maintain my levels of savings and budgets with no repercussions. Should the worse happen (no one plans to go bankrupt...!) I am well set up with dealing with it.

Highly recommend the savings and investing board. Lots of fantastic advice