Why do I feel so worried about getting a loan?

josh93

Hi all,

So i'm in a bit of a mindset predicament. My car is ageing and is coming up with a whole bunch of issues, it's time to get rid of it and purchase a new (used) one. I do have the cash in the bank to not purchase with a loan, but that would wipe out the majority of my hard earned mortgage deposit savings, so the idea of paying monthly without having to bother with PCP contracts is an ideal scenario. Tesco loans have given me their best rate, £8k @ 2.9% APR - £143 a month with around £500 in interest to pay over 5 years. But I just feel so hesitant to do it, and I think I may need some reassurance.

I have a good amount in the bank in actual savings, a stable job, and no other borrowings apart from the £100 left on my credit card and my credit score is immaculate. But something keeps holding me back from signing the damn agreement.

I'm worried that it will lower my mortgage lending amount, which only stands at £108,000 in the first place on my current salary - has anyone had any lowering in mortgage offer amounts due to taking out a loan?

Sorry this is more of a brain dump, but this is my first loan so it would be great to get either some reassurance or advice really, especially people who have had one prior to getting a mortgage!

Any help would be awesome, thanks!

DrEskimo

The loan will impact on your mortgage. It will affect the affordability aspect.

Fix the car and wait till you have purchased a house. Better still, get the house, continue to save, then buy a car with your new savings!

DCFC79

Despite being immaculate, your credit score is only seen by you only.

Lenders see your history.

[Deleted User]

You're right not to do it.

Your immaculate credit score will be of little comfort when you can't get a mortgage

Nebulous2

5 years is a very long time to pay a second hand car. It could be gone to the scrapheap while you are still paying for it. £8k is a lot to drop on a car if you don't have it. You can get a serviceable car for a quarter of that.

I'd say you are right to be hesitant.

enthusiasticsaver

Any borrowing will impact on a mortgage application and decrease the amount they will lend you.

If you use your savings to buy the car you will obviously no longer have the deposit for a house.

You need to decide what is more important but if you take out a car loan you will find that £108k will be reduced. I personally would wait until you have got your house or resign yourself to waiting for a few years if you cannot delay purchasing a car.

enthusiasticsaver

Also I would never take out a 5 year loan for a car. 3 years ideally, 4 at a pinch or you risk still paying for it when it needs exchanging.

Jami74

Buy a cheaper car!

If you can afford £143 a month, that's £1716 over 12 months. Buy a car with a years MOT for about £1500, maybe you'll spend a couple of hundred pounds over the year on replacement tyres, bulbs, plugs etc.

If it costs less than £1716 the second year to keep it running then you've made a saving which you can put towards your mortgage or saving for the next car.

sourcrates

I`ve just bought a 2007 fiesta 1.4 zetec, in ice blue 90,000, but in absolutly imaculate condition, the cost was £895, and I beleive the bargain of the year, I know a bit about cars, but actually bought this off the internet, from a dealer, who delivered it to me as well, at cost price, without seeing it first.

I don`t usually buy cars without seeing them, but took a punt on this one, so it just goes to show, older cars should not be written off, there are plenty of good quallity cars out there for very little money.

Eight grand is a bit chunk of your mortgage deposit gone, even if you borrow it, you lose money in interest and further depreciation, buy something cheap would be my advice.

BobQ

If your savings for a home will wipe out your saved deposit it sounds like an expensive car you have in mind or you have not saved very miuch towards a loan? Some figures might help (ie when you plan to buy and how much deposit you need and currently have?)

Are you setting your ambitions for a car unnecessarily high? Do you even need a car or just what one?