Car Loan

carolann312

My car has just failed it's MOT for the 3rd year on the trot so I am thinking it is time I eventually get a newer car (not brand new).  I am going to wait until perhaps next summer but my dilemma is this.
In October next year my fixed rate mortgage comes to an end.  If I get a car loan in the summer will this affect what deals I can get with my mortgage?  I think it will but someone has told me that it shouldn't make a difference.  Surely the bank will look at my salary and outgoings to check on affordability? Thanks

CliveOfIndia

carolann312 said:

Surely the bank will look at my salary and outgoings to check on affordability? Thanks

Absolutely, any lender will will look at your existing debt and factor that into their affordability calculations.  Ideally it would be better to sort the mortgage out first and then look at getting a loan afterwards.

There is one caveat - if you re-mortgage with the same lender then they won't always perform another hard search.  Sometimes they will, sometimes they won't - though it's not easy to find out which will be the case in any given scenario.

As a slight aside - it's worth looking at the cost of repairs for your car.  Yes, there does come a time when a car becomes uneconomical to repair.  But very often it's well worth keeping the old car going - better the devil you know, and all that.  If you buy a newer used car, there's always the chance that you're just buying someone else's problems.  That's a very broad generalisation, of course, and depends to a large extent on the general state of the existing car - as well as the age and condition of the replacement car you're considering.  But it's worth taking a bit of time to sit down and look at it objectively.

carolann312

I have paid for the repairs for now as I need my car to get to work but it is quite old and I seem to be throwing money at it every year. I did ideally want to sort out a new mortgage deal before a car but the end of my fixed deal and next year's MOT are due around the same time. You never know it might pass next year !!

molerat

How much is it costing to get through the MOT ?  

Often the depreciation on a newer car is more than the cost of repairing an older car so it may make more financial sense holding onto the old car if it is otherwise reliable and the repairs are more maintenance items rather than major structural failures.

CliveOfIndia

molerat said:

How much is it costing to get through the MOT ?  

Often the depreciation on a newer car is more than the cost of repairing an older car so it may make more financial sense holding onto the old car if it is otherwise reliable and the repairs are more maintenance items rather than major structural failures.

This is it in a nutshell.  I'm one of those who has always bought older cars - take my time, hunt for a good deal, try and buy a car that's reasonably sound.  Just a few months ago, my elderly Honda needed £800 to get through the MOT - first big bill I've ever had.  But basically it's a solid car, and great to drive.  It owes me nothing (bought for cash when it was already 7 years old) and it's given me years of faultless service.  Having had the necessary repairs done, I fully expect to keep it for a good few years yet.

So, £800 for (hopefully) many more years of motoring, aside from consumables.  As you rightly say, the depreciation on a new(er) car would dwarf that figure.

carolann312 said:

 I did ideally want to sort out a new mortgage deal before a car but the end of my fixed deal and next year's MOT are due around the same time. You never know it might pass next year !!

Think about it logically - a mortgage is without doubt the biggest commitment most "ordinary" folk have.  So it makes financial sense to go all-out to secure the best deal you can on that.  A car - well, that's just "stuff", a tool.  It doesn't matter if next-door have got a Range Rover, do you really care? Unless the car is genuinely at the end of its life,  nurse it on for a few more years and give yourself a smug smile when you think how much you've saved compared to "The Jones's" next door.

carolann312

I paid £300 for repairs on the MOT fail but today my windscreen wipers have stopped working!! Seems to be one thing after another. I really don't care which car next door have got. I just want one that doesn't keep needing repairs. Doesn't matter if it's old (like me)!!