Car Finance question
Discussion
Guys,
Bit of a quandry and wondering if you could help me out.
My current car was bought using a deposit and a personal loan. Perhaps not an ideal way to do it. I pay £297 a month and the loan finishes in May 2012.
I had to move back home due to my Firm relocating me and also for personal reasons. However, I am currently in the process of saving for a house deposit, I anticipate this to last another year/year and a half. Due to being at home I have a 20 mile commute each way and that is starting to be quite expensive in my current car.
I was thinking about p/x-ing my car for a newer, more fuel efficient car and so making some significant savings that way (more money for the house fund) but to do get anything decent seems to require another loan.
So my question, after this long winded intro, is do I:
A) Take on a further loan and change the car? This saves cash in fuel, insurance, tax and maintance costs (as well as giving me a car worth more for the future).
The "deal" set up by the garage means that some of the p/x value would be a deposit and the rest would be in a cheque form which would cover the extra loan payments for 18 months.
After that time I would have 8 months of paying both loans unless I wipe out the remainder of the first loan at that overlap point.
B) Keep my current car and accept that I will either have to buy a £500 banger car and run that to counter the fuel costs (though that option entails paying more tax, insurance etc in the future) or take a season ticket loan and use the train/bike system to get to work.
C) P/X current car in for something of similar, lesser value.
I realise that options B or C would seem to be the best choices but I just wondered if anyone had anything to add.
Many thanks for your help guys.
Bit of a quandry and wondering if you could help me out.
My current car was bought using a deposit and a personal loan. Perhaps not an ideal way to do it. I pay £297 a month and the loan finishes in May 2012.
I had to move back home due to my Firm relocating me and also for personal reasons. However, I am currently in the process of saving for a house deposit, I anticipate this to last another year/year and a half. Due to being at home I have a 20 mile commute each way and that is starting to be quite expensive in my current car.
I was thinking about p/x-ing my car for a newer, more fuel efficient car and so making some significant savings that way (more money for the house fund) but to do get anything decent seems to require another loan.
So my question, after this long winded intro, is do I:
A) Take on a further loan and change the car? This saves cash in fuel, insurance, tax and maintance costs (as well as giving me a car worth more for the future).
The "deal" set up by the garage means that some of the p/x value would be a deposit and the rest would be in a cheque form which would cover the extra loan payments for 18 months.
After that time I would have 8 months of paying both loans unless I wipe out the remainder of the first loan at that overlap point.
B) Keep my current car and accept that I will either have to buy a £500 banger car and run that to counter the fuel costs (though that option entails paying more tax, insurance etc in the future) or take a season ticket loan and use the train/bike system to get to work.
C) P/X current car in for something of similar, lesser value.
I realise that options B or C would seem to be the best choices but I just wondered if anyone had anything to add.
Many thanks for your help guys.
Edited by Iceman82 on Thursday 25th March 09:28
You missed the option of selling current car, paying off the loan and starting again from scratch i.e. buying what you can afford?
THere are plenty of reliable, economical £500-100 bangers out there if you need to save money!
Id definitely think about that. I hate having car loans outstanding when you haven't got the car any more. Its completely contrary to your need to save.
THere are plenty of reliable, economical £500-100 bangers out there if you need to save money!
Id definitely think about that. I hate having car loans outstanding when you haven't got the car any more. Its completely contrary to your need to save.
Edited by blindswelledrat on Thursday 25th March 09:34
Needs more numbers really.
Basically if you have a personal loan, the car is yours, not the bank's. If that's the case you can sell the car privately for as much as possible.
If that clears the loan, then anything else is what you have as a deposit or, better still, for bangernomics.
If not then pay all but £500-£1,000 of the sale price against the loan, buy a fuel-efficient banger, and then pay down the remainder of the loan as quickly as possible. Don't even think about saving until the loan has gone - you'll pay more interest on the loan than you can ever hope to get from the saving, unless you have some seriously risky investments in play that I wouldn't call "saving" as such.
Basically if you have a personal loan, the car is yours, not the bank's. If that's the case you can sell the car privately for as much as possible.
If that clears the loan, then anything else is what you have as a deposit or, better still, for bangernomics.
If not then pay all but £500-£1,000 of the sale price against the loan, buy a fuel-efficient banger, and then pay down the remainder of the loan as quickly as possible. Don't even think about saving until the loan has gone - you'll pay more interest on the loan than you can ever hope to get from the saving, unless you have some seriously risky investments in play that I wouldn't call "saving" as such.
Thanks for the advice guys.
It's bangernomics/cycling for me. A year and a half of that and saving for the house and I will be able to have a foot on the property ladder (hopefully!).
Once that's done, then I may look at a nice car again but perhaps starting small with the PH default choice!
Thanks again guys.
It's bangernomics/cycling for me. A year and a half of that and saving for the house and I will be able to have a foot on the property ladder (hopefully!).
Once that's done, then I may look at a nice car again but perhaps starting small with the PH default choice!
Thanks again guys.
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