Buying a car and valuing other priorites

Haydenlm1

Hello everyone! I hope you can help me with my situation / dilemma

To just paint the picture of my situation -

Ive recently sold my old car which is a merc a200d 2016 with 75k miles on for around £11,500. In my honest opinion I believe it was just getting old and mileage is on the higher scale and if i kept it, I wouldn't of been able to get a decent amount for it when selling so I am happy with how much I have got for it.

I have been wanting the 2021 CLA model for around 24k which I really would love to buy, I really do love the car and really want it, however im always anxious about making big purchases like this. I could put the £11,500 into the car as a deposit and take around 12k loan at 6.2% which will only leave me with paying £230 ish a month (Which is less than what I have been paying before). I also drive a lot less nowadays due to homeworking so car mileage can stay as low as possible. This would obviosly be a HP , I keep the car at the end and can sell it in around 6 years time or so.

In the other hand though (which is what scratches my brain a bit) is that I am unsure if I should just cover part of my mortgage with this £11,500? Or maybe put the £11,500 into a fund and let the money grow for the next few years and then cover more of the mortgage when i remortgage in 4 years time? Then maybe use a loan to buy a cheaper car? But at the same time, I feel like i work hard enoguh to have the car I like and want..

I have around £95k left on my mortgage with about £450 a month mortgage payment, but the house I bought is also in the middle of being renovated . I am doing it up as I go and get paid.

I know ultimate this is my decision and what I want to do, but I am just confused.

Any thoughts or ideas would be greatly appreciated,

Thanks guys!

Northern_Wanderer

Assume that you will need to buy a car now? If you don't buy the 2021CLA, what will you be driving for the next 4 years?

You could buy a £11.5k car (although there is little available at that price) and put the £230 you would be paying for a 2021CLA car each month into your mortgage? I don't think cars will get cheaper, quite the contrary with the fines that car dealerships are going to be paying when electric vehicle targets are missed (wonderful net zero targets) and the lack of ICE vehicles available and the higher costs of EVs.

While piling the £11.5k into your mortgage will reduce your term/ interest, it won't give you same enjoyment as your nice car!

theoretica

If you put the 11.5k into buying a cheaper car you could move away from buying cars with debt, and use the monthly payments you would have been making towards saving for your next car and/or overpaying the mortgage. 

Bigwheels1111

I’m stuck in limbo at the moment.
I have enough money to buy a house outright and a new car.
But it’s stuck for 3 more years in fixed rate savings.
I have an 8y old 5008 with 26k on the clock.
I think I will wait for 3 years to buy a house, then maybe change my car.
If the house has or can have an EV charger fitted I might think about an EV.
If not it’s a hybrid. I could afford the car tomorrow, but will not buy until late next year at best.
Need to wait for euro 7 to come in.
As the government can’t wait to change ULEZ Brackets, well that’s just my opinion.

jimjames

Haydenlm1 said:

Hello everyone! I hope you can help me with my situation / dilemma

To just paint the picture of my situation -

Ive recently sold my old car which is a merc a200d 2016 with 75k miles on for around £11,500. In my honest opinion I believe it was just getting old and mileage is on the higher scale and if i kept it, I wouldn't of been able to get a decent amount for it when selling so I am happy with how much I have got for it

An 8 year old car with 75k miles isn't old or high miles so unless you were aware of a problem it should have kept going with normal maintenance for many years. You'll always get more money for selling a car sooner than later ( well normally, I sold one for more than I paid for it recently but that's uncommon)

It doesn't seem to make sense to take a loan instead of using the money you have when you are paying more for the loan than you get in interest.

InvesterJones

Haydenlm1 said:

But at the same time, I feel like i work hard enoguh to have the car I like and want..

That you need to get a loan (e.g. HP) to drive the car you want perhaps suggests otherwise. But if you are dead set on the car you can't afford outright then it's just a case of minimising the interest on all of your loans - i.e. take the most loan out of the lowest interest, unless there are some perks of doing otherwise that make financial or quality of life sense.