Multiple loans

Leaverstar14

I'm considering opting out of my work's company car scheme and using an alternative allowance to buy a car, using a personal loan of £25k. My credit record is extremely good and I have no debt other than a mortgage and a few hundred quid on a credit card that I pay off monthly. I was offered a tesco loan of £25k a year ago at 2.9% (which I didn't end up taking at the time) so I'd expect to be offered a similar deal now. However we're also planning to begin some home improvements in the new year and had planned to borrow around £20k to do this. I'm concerned that having a relatively new loan might cause problems obtaining a second one. Also, Interest rates seem to rise sharply from £25k so I don't really want to take a single larger loan. Any insight on how to best approach this would be very much appreciated!

DCFC79

Leaverstar14 wrote: »

I'm considering opting out of my work's company car scheme and using an alternative allowance to buy a car, using a personal loan of £25k. My credit record is extremely good and I have no debt other than a mortgage and a few hundred quid on a credit card that I pay off monthly. I was offered a tesco loan of £25k a year ago at 2.9% (which I didn't end up taking at the time) so I'd expect to be offered a similar deal now. However we're also planning to begin some home improvements in the new year and had planned to borrow around £20k to do this. I'm concerned that having a relatively new loan might cause problems obtaining a second one. Also, Interest rates seem to rise sharply from £25k so I don't really want to take a single larger loan. Any insight on how to best approach this would be very much appreciated!

Whats more important ?

No need to spend such an amount on a car but your choice of the day.

Theres no guarantee you will get a loan at 2.9%.

Could you do some of the works using savings or postpone the improvements for a perod of time ?

Curls2208

Sounds like you're planning to live beyond your means to be honest. You don't need to have the car and the house refurbish at the same time surely? Get yourself an old car and make your house nice is what I'd do.

Leaverstar14

Thanks for the replies, it's great to see that people care enough to post their thoughts and offer sound advice. I think I could probably have phrased the question better. In this case it's not a question of affordability or sanity, the repayments aren't a problem and equity will be gained in a privately owned car that's paid for by my employer. It's just a technical question of the best and most economical way to borrow £50k.

YorkshireBoy

What was the £25K loan application for last year?

What are the stipulations, if any, on the car (spec, age, type, etc) you must run if opting out of the company car scheme?

What's your mortgage rate? And can you add to it at that rate?

How much savings do you have? Is some going towards the car or the home improvements or both to supplement the finance?

Why have your requirements increased by £5K (from £45K to £50K) over the last 12 hours?

With an additional £45-50K of debt (unsecured from your intentions stated) what will you do if you lose your job?

Do you understand the difference between 'need' and 'want'?

Leaverstar14

- private purchase of a car, but opted for a company car in the end.
- the stipulations on company car aren't really relevant. I could definitely spend less, but the car I would buy is £25k.
- 2.25%. Remortgaging is an option.
- £8k savings, which we'd intended to contribute to home improvements.
- £25k was a typo, it should have been £20k.
- I'll find another job. I'm on 6months' notice.
- Yes I'm fully aware that this is a result of want and not need, but don't really see that as any better qualifying criteria.

I appreciate you might take a different approach, but do you have any insight as to whether borrowing £25k now will hinder my ability to borrow £20k in a few months time?

Thanks

[Deleted User]

It will impact your risk and affordability.

Whether it would make further borrowing impossible will depend on your income, circumstances and history.

Curls2208

I have recently tried to do both actually, so I will answer your question for me personally.

My credit history is fairly good, but I had a 20 K loan from sainsburys bank at 2.9 %, I'm not going to go into it but it's purpose was not for spending but more for experimenting with my finance, peer to peer lending and stocks and shares, as I'm currently financially secure until i get a mortgage. Anywayyys.....

I got this in Sainsburys loan in June.Then, about 2 or 3 weeks ago I tried to apply for both a ZOPA and a Post office 20K loan at 2.8 or 2.9%.
My reasoning? I had some great cashback on top cashback, and I could use this new loan to pay the remainder of my sainsburys loan off (already down to 11K with 3 months wages) and then continue what I was doing with my investments for a bit longer with a bit more money.

I couldn't get approved for either at these rates, Zopa offered me a rediculous rate, Tesco too, post office refused me outright.

So that's my situation, but every single person is different!

Although I must say my peer to peer lending at 5%ish is looking like a nice return on that loan right now! Shame it's not FTSE protected.

Leaverstar14

Thanks Curls2208, really helpful to understand someone else's experience of a similar situation! Good luck with the P2P lending!

Robisere

A house owned is an appreciating asset. A car owned is a depreciating asset, with the exception of certain Classics. Which have to be kept free from depreciation of course. A new 25K car will be worth a lot less after 12 months.

Leaverstar14

Fully agree Robisere. The car wouldn't be new, it would be 12m old. I'd expect it to depreciate at £3k/yr. The car allowance from my employer will cover all the running costs and repayments and my monthly standard of living will be the same as it is now. After 4yrs I should have a car worth £13k and the loan would be repaid. Financially it makes a lot of sense, there are just some technicalities around the burden of the debt.