£6000 Loan

Dan15l

Hello MSE Forums,

I am new to the forum and this is my first post, take it easy on me.:rotfl:

The vehicle I am currently using is constantly breaking down due to being an older vehicle (2003 - 206 Peugout) and is costing me a lot of money in repairs, recently it stopped working and I am now unable to travel to work which is a good 30miles from where I live.

I am currently trying to purchase a new vehicle for £5500 'without' finance and without having to pay monthly installments for 'Car Insurance' and try to pay off as an annual lump sum (£500), which will save me around £300.
I also plan to pay it all back within an 8 Month period.

The total amount I am trying to loan is £6000: after being on the MSE website for the last few days I have come to the conclusion that my 3 options are:

Personal Loan

• Tesco Bank 3.5% rep APR

Balance Transfer Credit Card

• Tesco Bank 3.9% rep APR

0% Credit Card

• MBNA 0% up to 27 months

As this is one of my first loans I am unsure on which option is best and the key differences between all three, would it please be possible to have some advice on what you would suggest in this situation and if there is something that I have missed?

I am able to pay back £1000 a month.

I have some other savings however I am trying to keep them set aside to potentially purchase a property in the future.

Thank you all very much for your help.

Kind Regards,
Danie K

[Deleted User]

The main issue is which, if any, you would be accepted for.

Try an eligibility checker first.

Not all dealers accept credit cards, so you need to check that first before deciding on a loan or card. The balance transfer card is no good for you as you don't have a balance to transfer.

But if you can repay in 8 months, then use your savings and rebuild them over 6 months at £1000 a month, thus saving the interest.

Dan15l

I have checked for both 'Credit Card' and 'Personal Loan' and I am fortunately eligible for both options, I have an excellent credit score according to the MSE credit checker and eligibility calculators.

I am unsure on whether to use my savings as it is currently in a 'Help To Buy ISA' and I am getting interest on the total per month and I can only add a maximum £200 a month to get the 3% interest.

Thanks.

foxy-stoat

If you can afford to pay £1000 a month then just take out any loan you can and overpay in the first 6 months and clear it.

Or use your savings and rebuild them in 6 months so you dont need to apply for a loan.

Dan15l

Oh right, that was my other concern, I did not want to get into a 12-month loan if I can pay it back in less time and wanted to check to see if there were any other short term loans, but it seems that the minimum is a 12-month loan having checked the MSE options, however If I am able to overpay the installments then that sounds like the best option.

With the savings, as mentioned to @zx81:
I am unsure on whether to use my savings as it is currently in a 'Help To Buy ISA' and I am getting interest on the total per month and I can only add a maximum £200 a month to get the 3% interest.

Thanks.

Andyjflet

Personal Loan

I work in finance for a dealer, there may be an issue with Credit Card payment for that amount of money.

Personally I would get a personal loan and overpay to clear as you have suggested. I take it the other £500 is for insurance ?

They may give you a token amount for your old car, make sure you ask to insist this is included in a PX deal. Even £100 is better than nothing.

Dont forget youll get an unused months of tax back on the Peugeot too, you will also have to tax the new car you have your eye on.

foxy-stoat

danielkainth wrote: »

Oh right, that was my other concern, I did not want to get into a 12-month loan if I can pay it back in less time and wanted to check to see if there were any other short term loans, but it seems that the minimum is a 12-month loan having checked the MSE options, however If I am able to overpay the installments then that sounds like the best option..

No reason not to take out a 12 month loan, if you take out a short term loan (less than 12 months) it might have a negative effect on your ability to get a mortgage in the near future.

Dan15l

Thanks for your advice @Andyjflet, yes the additional £500 if for insurance and I will definitely look to PX the old vehicle and get my reimbursement from un-used tax months.

And thank you @foxy-stoat for your advice, I didn't know that short term loans could potentially affect my opportunity to take out a mortgage in the future, I shall definitely look more into the standard 12-month contracts.

foxy-stoat

Well payday loans do - doubt you could get a £6000 loan from a payday company.

Dan15l

Thanks for the advice guys, in the end I used my other savings rather than a loan or credit card, just going to build it back up slowly and make more saving accounts.

DCFC79

Whats wrong with the car ?