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Should I increase my loan?

edited 30 November -1 at 1:00AM in Loans
5 replies 888 views
JamiekingJamieking Forumite
1 posts
edited 30 November -1 at 1:00AM in Loans
Hi everyone.
Some guidenece would be much appreciated.
I currently have a loan at 310 per month
Car finance at 240per month
Along with many other car related costs such as high tax monthly and fuel.

I have always made my payments meaning my credit score is good meaning my Apr at the bank is at a good rate at the moment.
I have the option to increase my loan and extend its duration back over the original 5 years {currently 18months left on existing loan}. My payments would increase to 390 per month but I could clear the car and replace it for something with Lower tax and much less fuel costs..
After looking at this in as much detail as possible and I could save around 280 per month.have no car finance but I will have a larger loan over 5 years. I can't seem to see any issues as I would be saving alot more money monthly.

Please help :)

Replies

  • zx81zx81 Forumite
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    It sounds as if you'll be choosing to pay a lot more interest, even if you were accepted.

    Better to maintain your payments, even if you can get a lower rate.

    Remember you need to meet the lender's criteria, not the CRA's.
  • DCFC79DCFC79 Forumite
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    Remember your score is immaterial.
  • DrEskimoDrEskimo Forumite
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    What is the car finance, PCP or HP? How long has that got?

    Monthly cost alone is not indicative of how expensive something is. Term, APR, amount finance relative to the price, deferred payments, etc. all factor in as well. Whilst it may seem like you are saving money, you could be in a position where you have no payments much sooner.
  • foxy-stoatfoxy-stoat Forumite
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    If only you knew what the VED and fuel costs where going to be before you bought the car you could of been a lot better off....oh wait, you could of.

    Yeah borrow more if you want, you the one that has to pay it back.....you COULD sell the current car and buy a cheaper car and not have to borrow anything further, just pay back what you owe and be happy.
  • SystemSystem
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    Jamieking wrote: »
    After looking at this in as much detail as possible and I could save around 280 per month.have no car finance but I will have a larger loan over 5 years. I can't seem to see any issues as I would be saving alot more money monthly.
    You're right, monthly you'll save more money. However the term you'll now be repaying it over is much longer than what is left so you'll most likely pay more out in total in the long run.

    What you need to do is this:

    1) Stop focussing on the monthly payments only. People set fire to £1000s of hard earned money doing that and thinking as you're doing.
    2) Work out how much it will cost you to continue your current loan and car deal until they end.
    3) Calculate how much it will cost you in total to repay this 5 year loan you're looking at.
    4) If 3 is less than 2 then go ahead.
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