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  • FIRST POST
    • Jimmy9012
    • By Jimmy9012 24th Jun 19, 2:50 PM
    • 38Posts
    • 4Thanks
    Jimmy9012
    Loan affordability, can I afford it?
    • #1
    • 24th Jun 19, 2:50 PM
    Loan affordability, can I afford it? 24th Jun 19 at 2:50 PM
    Hi folks,

    So, we will be moving in to our very own home next month (first time buyers). So, all cash we had has gone to the deposit.

    My partner has health issues and she is starting to struggle with that each day. Due to this, and as the journey to her work is a little longer, she could really do with a comfortable car. The small car is not comfortable at all, very bumpy and not going to help her condition. Its not something we would get any finance support for through any motability type scheme, so would have to be self financed.

    As all the cash has gone to the deposit, and as she needs it now (when we move in a few weeks so it does not exacerbate her condition), I feel stuck as to what to do. We would want to upgrade to a car that is larger for future family (no children yet), that will last us a long time, and that is comfortable. Even decent used look to be about 22k. And, as I have no funds left to buy now, that looks like the only option is to do a large loan... do I have any other options? Maybe lease (but doesnt that cost more)?

    These are our finances once we move:
    Monthly Income Details[/b]
    Monthly income after tax................ 3616
    Partners monthly income after tax....... 718
    Benefits................................ 0
    Other income............................ 0
    Total monthly income.................... 4334


    Monthly Expense Details

    Mortgage................................ 1070
    Secured/HP loan repayments.............. 0
    Rent.................................... 0
    Management charge (leasehold property).. 35
    Council tax............................. 150
    Electricity............................. 41
    Gas..................................... 32
    Oil..................................... 0
    Water rates............................. 37
    Telephone (land line)................... 0
    Mobile phone............................ 0
    TV Licence.............................. 12.5
    Satellite/Cable TV...................... 82
    Internet Services....................... 9.99
    Groceries etc. ......................... 240
    Clothing................................ 50
    Petrol/diesel........................... 160
    Road tax................................ 0
    Car Insurance........................... 30
    Car maintenance (including MOT)......... 12.5
    Car parking............................. 0
    Other travel............................ 408
    Childcare/nursery....................... 0
    Other child related expenses............ 0
    Medical (prescriptions, dentist etc).... 0
    Pet insurance/vet bills................. 25
    Buildings insurance..................... 11.5
    Contents insurance...................... 11.5
    Life assurance ......................... 0
    Other insurance......................... 0
    Presents (birthday, christmas etc)...... 100
    Haircuts................................ 50
    Entertainment........................... 40
    Holiday................................. 0
    Emergency fund.......................... 50
    Total monthly expenses.................. 2657.99



    Assets

    Cash.................................... 0
    House value (Gross)..................... 0
    Shares and bonds........................ 0
    Car(s).................................. 0
    Other assets............................ 0
    Total Assets............................ 0



    Secured & HP Debts

    Description....................Debt......Monthly.. .APR
    Mortgage...................... 253500...(1070).....4.99
    Total secured & HP debts...... 253500....-.........-


    Unsecured Debts
    Description....................Debt......Monthly.. .APR
    Virgin Card....................3100......35........0
    Total unsecured debts..........3100......35........-



    Monthly Budget Summary

    Total monthly income.................... 4,334
    Expenses (including HP & secured debts). 2,657.99
    Available for debt repayments........... 1,676.01
    Monthly UNsecured debt repayments....... 35
    Amount left after debt repayments....... 1,641.01


    So, I think we could afford it, I am just not sure it feels sensible. We could get a far older car, but then due to age we get less use of it for the similar investment...

    I think 22k would be about 400 PCM for 5 years...

    What do you think we should do?
Page 1
    • Willing2Learn
    • By Willing2Learn 24th Jun 19, 2:54 PM
    • 3,546 Posts
    • 3,147 Thanks
    Willing2Learn
    • #2
    • 24th Jun 19, 2:54 PM
    • #2
    • 24th Jun 19, 2:54 PM
    When considering affordability, your SOA must be accurate. Do you really have 1,641.01 disposable monthly income left over? Or is your SOA aspirational?

    If you really do have that amount of cash available every month, then I would respectfully recommend you save up for the car, as you will have the lumpsum in no time and will be able to save money on the interest you will pay. You could have the money saved up for the car in just over 13 months...

    Edit: Just to add, that if you do have 1,641.01 surplus every month, then how come you have no cash assets? There should be something saved up...
    Last edited by Willing2Learn; 24-06-2019 at 3:00 PM.
    I work within the voluntary sector, supporting vulnerable people to rebuild their lives.

    I love my job

    • stripeyfox
    • By stripeyfox 24th Jun 19, 2:57 PM
    • 397 Posts
    • 413 Thanks
    stripeyfox
    • #3
    • 24th Jun 19, 2:57 PM
    • #3
    • 24th Jun 19, 2:57 PM
    you don't need to spend anywhere near that amount to get a decent car.
    • D_M_E
    • By D_M_E 24th Jun 19, 2:59 PM
    • 2,594 Posts
    • 72,197 Thanks
    D_M_E
    • #4
    • 24th Jun 19, 2:59 PM
    • #4
    • 24th Jun 19, 2:59 PM
    Do you really need to pay 82 monthly for sat/cable - can you go freesat or freeview instead?

    Car - how much spare at 0% left on the card - could this be used to get a cheap car while you save for something better - once got a Granada for 500 which lasted 5 years.

    Also you need to save something for an emergency fund - what would you have to pay with if something, even minor, goes wrong?
    • BakingC
    • By BakingC 24th Jun 19, 3:06 PM
    • 92 Posts
    • 142 Thanks
    BakingC
    • #5
    • 24th Jun 19, 3:06 PM
    • #5
    • 24th Jun 19, 3:06 PM
    How much deposit did you put down? Is your SOA based on new mortgage? Was rent previously higher as 4.99% seems high for a mortgage rate if your take home as a couple is over 4K so doesn't seem like you had a large deposit relative to your take home.

    Would it be worth considering your partner taking some work closer to home? If their income is only circa 800 a month then they have a car 400 + Petrol, tax, insurance they are only contributing a few hundred a month to the household. Obviously personal choice but just think spending 22k on a car might not be worth it if working closer could help with their health and they could earn just as much / save lots on travelling.

    But echoing other comments every month you delay buying the car you are 1.6K closer to it as you may struggle finding such a large loan even if affordability is fine straight after getting a mortgage so by the time you find a reasonable interest rate you may have 6-7K spent which should buy a reasonably comfortable used car to last for a few years while you save up for a nicer more comfortable one.
    • foxy-stoat
    • By foxy-stoat 24th Jun 19, 3:10 PM
    • 4,624 Posts
    • 2,739 Thanks
    foxy-stoat
    • #6
    • 24th Jun 19, 3:10 PM
    • #6
    • 24th Jun 19, 3:10 PM
    What car have you got at the moment that you need to replace it for a 22,000 car?

    As you have just bought or about to have your first mortgage I would limit your debt as much as possible.

    You can buy cheaper cars that are comfortable.
    • Lover of Lycra
    • By Lover of Lycra 24th Jun 19, 3:30 PM
    • 241 Posts
    • 871 Thanks
    Lover of Lycra
    • #7
    • 24th Jun 19, 3:30 PM
    • #7
    • 24th Jun 19, 3:30 PM
    So, I think we could afford it, I am just not sure it feels sensible. We could get a far older car, but then due to age we get less use of it for the similar investment...

    I think 22k would be about 400 PCM for 5 years...

    What do you think we should do?
    Originally posted by Jimmy9012
    Did you factor in depreciation when reaching that conclusion?

    If this is you buying your first home I wouldn't immediately go committing myself to a loan at 400 pcm for 5 years. Is your partner's condition likely to get to the point where she can no longer continue to work or will require long periods of time off work?

    I would also hold off applying for any new credit until you've completed the purchase of your home or the mortgage lender might withdraw its mortgage offer.
    • Jimmy9012
    • By Jimmy9012 24th Jun 19, 3:43 PM
    • 38 Posts
    • 4 Thanks
    Jimmy9012
    • #8
    • 24th Jun 19, 3:43 PM
    • #8
    • 24th Jun 19, 3:43 PM
    When considering affordability, your SOA must be accurate. Do you really have 1,641.01 disposable monthly income left over? Or is your SOA aspirational?

    If you really do have that amount of cash available every month, then I would respectfully recommend you save up for the car, as you will have the lumpsum in no time and will be able to save money on the interest you will pay. You could have the money saved up for the car in just over 13 months...

    Edit: Just to add, that if you do have 1,641.01 surplus every month, then how come you have no cash assets? There should be something saved up...
    Originally posted by Willing2Learn
    Yes, this is the correct number - not aspiration. Ideally I would like to do as you say and save to buy the car in 13 months, but the extra 20 minutes each way in the car would very negatively affect her health - so we are looking to get a car that would be better for 1) comfort, and 2) future family.

    What about monthly lease for a year whilst saving?
    • Jimmy9012
    • By Jimmy9012 24th Jun 19, 3:48 PM
    • 38 Posts
    • 4 Thanks
    Jimmy9012
    • #9
    • 24th Jun 19, 3:48 PM
    • #9
    • 24th Jun 19, 3:48 PM
    Do you really need to pay 82 monthly for sat/cable - can you go freesat or freeview instead?

    Car - how much spare at 0% left on the card - could this be used to get a cheap car while you save for something better - once got a Granada for 500 which lasted 5 years.

    Also you need to save something for an emergency fund - what would you have to pay with if something, even minor, goes wrong?
    Originally posted by D_M_E
    About 900 left available on the card before being at limit. We have a car already, its just not helping her going from 20 minutes each way to work, to 40 minutes each way. The seating kills her back and that hurts her mobility which would deteriorate over time.

    No emergency fund at the moment. But, as soon as the house move is done that will build up. All cash is currently going to the move/deposit.

    The expense for cable is high, but that also includes our 2 x mobile phone bill which is 2 x 12 PCM with Virgin Mobile. I bundle it as the TV/Mobile provider.
    • Jimmy9012
    • By Jimmy9012 24th Jun 19, 3:51 PM
    • 38 Posts
    • 4 Thanks
    Jimmy9012
    How much deposit did you put down? Is your SOA based on new mortgage? Was rent previously higher as 4.99% seems high for a mortgage rate if your take home as a couple is over 4K so doesn't seem like you had a large deposit relative to your take home.

    Would it be worth considering your partner taking some work closer to home? If their income is only circa 800 a month then they have a car 400 + Petrol, tax, insurance they are only contributing a few hundred a month to the household. Obviously personal choice but just think spending 22k on a car might not be worth it if working closer could help with their health and they could earn just as much / save lots on travelling.

    But echoing other comments every month you delay buying the car you are 1.6K closer to it as you may struggle finding such a large loan even if affordability is fine straight after getting a mortgage so by the time you find a reasonable interest rate you may have 6-7K spent which should buy a reasonably comfortable used car to last for a few years while you save up for a nicer more comfortable one.
    Originally posted by BakingC

    The SOA is based on the new mortgage. We have 95 LTV. We did not have any plans to move/own until very recently (January in fact), so saved fairly hard since then for the 5% deposit. We should move mid July, and this SOA is based on what those costs are set to be.

    What you said is food for thought though, appreciated.
    • Jimmy9012
    • By Jimmy9012 24th Jun 19, 3:53 PM
    • 38 Posts
    • 4 Thanks
    Jimmy9012
    Did you factor in depreciation when reaching that conclusion?

    If this is you buying your first home I wouldn't immediately go committing myself to a loan at 400 pcm for 5 years. Is your partner's condition likely to get to the point where she can no longer continue to work or will require long periods of time off work?

    I would also hold off applying for any new credit until you've completed the purchase of your home or the mortgage lender might withdraw its mortgage offer.
    Originally posted by Lover of Lycra
    Yes, will hold off on applying for credit until at least then. Her condition can deteriorate quite rapidly, and yes - its possible that eventually she will be unable to work. Thats one of the reasons why helping her comfort to and from work will help her stay out and about and keep her able to work...
    • Ebe Scrooge
    • By Ebe Scrooge 24th Jun 19, 3:56 PM
    • 4,317 Posts
    • 3,800 Thanks
    Ebe Scrooge
    you don't need to spend anywhere near that amount to get a decent car.
    Originally posted by stripeyfox
    I have to agree with this. Sure, if you have the cash to spare then I'm not going to preach about what you should spend it on. But if you're looking at getting a loan, then 22k is an awful lot of money for a car. You could get a very good used car, with warranty from a "respectable" dealer, for a third of that amount. Even a third of that amount is more than I've personally ever spent on a car. Like I say, it's your choice, but it does seem to be a lot to be aiming for.
    I may not know much about art, but I know what I like.
    • Jimmy9012
    • By Jimmy9012 24th Jun 19, 3:58 PM
    • 38 Posts
    • 4 Thanks
    Jimmy9012
    What car have you got at the moment that you need to replace it for a 22,000 car?

    As you have just bought or about to have your first mortgage I would limit your debt as much as possible.

    You can buy cheaper cars that are comfortable.
    Originally posted by foxy-stoat
    Currently Peugeot 107. The seats are not great, especially for longer drives (even 40 minutes), and the ride leaves a lot to be desired. You can feel every bump.

    We are considering something like a slightly old (2018) Kia Sportage, or Hyundai Tucson. That would give room for a family and many comforts that will keep her mobile. For example, for her motorway drive they both have cruise control. They both are automatic, so she does not have to worry about using her left foot at all (yes, easy for us - but over time it will exacerbate her issues)... the lumbar support and seats also feel very comfortable compared to the Peugeot.

    Its not like we are looking at Volvo XC60's or anything. The Kia and Hyundai are mid level SUVs with many comforts that would help her. Older models do not have the same kit list, and seem a little pointless to move to...
    • chelseablue
    • By chelseablue 24th Jun 19, 4:13 PM
    • 2,804 Posts
    • 3,232 Thanks
    chelseablue
    2018 isn't slightly old, that's nearly new

    In April we bought a 2018 Hyundai I30, its a great car very comfy with a Sat Nav and all that jazz

    We pay 200 a month 0% finance

    Honestly you really don't need to spend 22 grand to get a nice car
    • YorkshireBoy
    • By YorkshireBoy 24th Jun 19, 4:19 PM
    • 30,745 Posts
    • 18,758 Thanks
    YorkshireBoy
    You're talking about committing to the equivalent of over half her take home pay in car repayments. And to get her to a job she might not even have in 5 years time when you stop paying for it...either through ill health or pregnancy.

    And all this after buying a house in a location which doubled her commute.

    My suggestion would be to buy some cushions and/or have a break on the commute. However, I think you've already made your mind up haven't you.
    Last edited by YorkshireBoy; 24-06-2019 at 4:22 PM.
    • DrEskimo
    • By DrEskimo 24th Jun 19, 4:38 PM
    • 582 Posts
    • 434 Thanks
    DrEskimo
    100% financing a nearly new 22k Kia is a dreadful idea.....you'll have done well if it's even worth half that in a few years time.

    If it's a large comfortable car you are after, then I would recommend a Lexus RX450h. A 2011 model with moderate mileage will set you back about 15k.

    My dad has had one for nearly 6yrs and it's never had an issue and is one of the most comfortable cars I've been in.
    • Kentish Dave
    • By Kentish Dave 24th Jun 19, 5:32 PM
    • 414 Posts
    • 644 Thanks
    Kentish Dave
    Once in a while I have a crisis of conscience about how much money I have sitting in cars and look at what nice machinery I could get for far, far less money.

    This week I found a pretty good condition 100,000 mile Mercedes, about ten years old, for just under 2,000. That’s a car that will waft, rather than crash or bang, and it probably has another 100,000 miles in it.

    22,000 gets you a good Audi RS6, or a Phaeton, Range Rover, leggy Bentley or any number of very special bits of cherished material.

    If you do spend this much, please don’t buy a diesel Golf or a Fiat 500L.
    • General Applause
    • By General Applause 24th Jun 19, 6:04 PM
    • 92 Posts
    • 171 Thanks
    General Applause
    I am sure you can get the seat modified, or even custom made for her condition for considerably less than 22 grand
    • buythedip
    • By buythedip 24th Jun 19, 6:06 PM
    • 58 Posts
    • 80 Thanks
    buythedip
    Her being at risk of being unable to work is even more reason not to get this car, not vice versa

    Edit: particularly given that she doesn't earn that much
    • strongboes
    • By strongboes 24th Jun 19, 6:11 PM
    • 101 Posts
    • 73 Thanks
    strongboes
    If you want pure comfort then get an old merc, diesel auto. Practically unlimited choice from 200 quid up. I've had 2 mercs in my time, a cls320 auto which was not too shabby, and a c180 estate, which I bought with 220k on the clock, it ran perfectly for 2 years before I swapped it.

    I'm sure the Kia is nice but 22k on a Kia isn't something i'd do. My E60 M5 was only 18k for comparison which was over 80 new, so your best off buying something over 5 years old so you don't take the depreciation hit.
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