loan advice

danny99_2

Hi everyone,

Hoping someone may be able to reassure me!

Basically I am needing a new car, and a pretty decent one in the region of £4500 as I currently have an old banger that costs more than it's worth to keep on the road.

I'm in my late 20s, still live at home with my parents, and have the following debt-

Personal loan balance £3300 (was £10000 excl interest taken over 4 years, 1 year left on payments, taken to consolodate loan/overdraft/and credit card)

Credit Card balance £900 (on a £1500 limit card)

No overdraft

£1500 in savings.

I'm trying not to touch my savings as I'm just starting to try to sort my life out and get a deposit on a house saved.

I'm hoping to borrow in the region of £8000 over 4 years to pay off the £3300 loan, and allow myself to buy the new car. If I take a 3 mth payment holiday I can pretty much pay off my CC in the 3 months with the money I have been paying on my existing loan, then get rid of it.

My concern is with the credit crunch and me still living at home will my bank lend me this money at a decent rate?

I have no arrears or missed payments on my CC, loan, or mobile phone. All other bills are paid by DD.
I don't want PPI as my job is secure, i'm reasonably healthy, and it will cost around £40 per month :eek: but I do want to take out either my banks or a 3rd party income protection.

Thanks!

lawrie28

Firstly, What rate is our existing lona rate? By settling this loan you will have to pay (I would imagine) an early settlement charge. This will mean you are then paying interest on interest, no a cheap thing to do.

Secondly, your origional loan rate, I would imagine, is much lower than the rates around today. so again you will pay more on your origional borrowing.

You should not have an issue getting HP on a car-this can be a better option, as is secured on the car, not on you, also gives you benefits of consumer credit act on purchases, chance to hand back car after you have paid off a certain amount of balance etc. You will have to put in a deposit, typically 10%, but think about it, if you put in the whole £1500 you have saved, then you will have less to pay out per month on the new loan. and can then save all your monthly payments from your other loan when that finishes next year. With the property market like it is, your better waiting a while before you buy anyway.

You say you have an old banger, costing you more than it is worth. Fair enough, no one likes running around in a hunk a junk, but think about it, the extra insurance, plus depreciation on a newer car, will this help you long term?? OK you have to impress the gender of your choice, but long term is it best.

Also, unless you have a 0% card, pay off the ccard with your savings, it will be cheaper in the long run.

Streeet

Given the status of the credit market, I guess the only way you will really know is to apply. You dont have to accept the loan if it doesn't suit.

Yes I know this will leave a footprint on your credit file, but it doesn't sound like you'll be applying for a mortgage in the next 6 months. (and given the market who's in a rush anyway?)

In addition this may also present you with a cheaper way of getting a mortgage in the future..
See Martins advice on getting a cheaper 100% loan.. ultimatley you could get a loan for your car.. in a year sell your car (when you've got it out of you system ) and use the excess towards your deposit.


"Your savings are better off paying your credit cards" - "do you really want to suffer depreciation of a lump of metal" both correct and good considerations however..

After planning, scheming, cutting back and going without for years to get out of debt I realised when I got there life wouldn't suddenly become one big party. Sure I have alot less worries but you still have to budget, plan and have patience.
Ultimatley I feel I missed some of my twenties as a result and there was no need.. budget and plan.. it might take a year longer but you'll have fun in the mean time.

danny99_2

Thank you both for your replies, they give me some other options.

I'm not after impressing the ladies (it'll take more than a new set of wheels haha!), just want and need a car that I can travel in in confidence. Basically it has been towed twice and has cost at least it's value in repairs over the last 12 mths (no exageration). Some more stuff is starting to go wrong now that will cost in the region of £400 to sort which needs to be done in the next month or so. Then it's got it's MOT in July with the CV joints starting to knock so that's at least one or maybe both drive shafts at £100 each (can't replace just the joint) at least, with whatever else may get picked up in addition. So that's again it's value spent in repairs with plenty of scope for something else to break!!

Good point about paying off the CC with some of my savings. If I do take a loan and do take up a holiday period then I can always put that into savings (i'll do the maths and see what the holiday period would cost in accrued interest to see if it's worthwhile).

I know this isn't a time for first time buyer but I've spent the last five years thinking that rather than changing my position and I want to have savings for a deposit there when the market does change. I'm not keen on running two loans side by side for a year as this won't allow me to pay them back, live, and save a decent amount each month.

Again, thanks for your replies, I'll give it a lot of thought. Apologies for my long rambling reply (maybe I'm trying to justify it all to myself haha).

danny99_2

Thanks also Streeet, your reply came in whilst I was rambling on!!

It really isn't about just wanting a new car (it wouldn't be new anyway, just new to me and newer than my existing machine!!), or getting something out of my system (I'm not on my midlife crisis yet and after buying a convertable) it's about not wanting to throw another grand at something that is worth less than that and has the potential to cost more than that. I'm after a motor that's reliable and affordable to run, that I'll keep for the duration of any loan I take out.

Streeet

Cars.. the bain of my life!!
The best car I ever had was a £400 astra diesel I bought at auction.. It did 70000 trouble free miles without one problem!

In comparison I had a 4 year old focus... the money I spent on that damn thing it should have won a grand prix!

Best of luck mate.. hope it all works out for you

danny99_2

Cheers Streeet. Yeah some of my mates have had cracking cars that have lasted years and cost next to nothing. Mine was wasn't cheap (when i got it six years ago) and was great til all the wear and tear items wore and tore at once!