should i pay off my car finance?

[movingonup2015]

I bought a new car back in December 2013 on a 0% finance deal. I pay £137 a month and the deal ends in January.

I then have the option of part ex against another new car or paying off the balloon payment which will be around £4,800.

I have 11k in savings at the moment but I am desperate to move house. I am saving as much as I can so I can save up at least 20k as a deposit to move to a detached house. I will never move to another semi as long as I live because I've had nothing but nightmare after nightmare with neighbours in every semi I've ever lived in.

The detached houses around my way start at 200k, my mortgage is due for renewal in December and the balance will be 138k. My house I bought for 165k and I doubt very much (even after improvements that I've made) that it will be valued at anything more than that because of the state of the house next door and the people that live there, so the equity will only be 27k. I can't borrow more than 160k so for a 200k house I will need 40k in savings which means after selling & buying fees I'm going to need to save at least another 20k on top of what I have now.

If I pay off the balloon payment on the car that leaves me with around 6k which pushes my next house further away from sight. However, if I refinance then I look less desirable when looking to borrow more for my next house.

I can't save more than around 200 per month (because every month so far something has needed fixing in the house - not because i'm stretching myself financially) for example, this month I need a new window, next month will be paying for the cost of redecorating after old window ruined all the plaster below the window and the hallway below due to a huge water leak from the old window, month after that railings need to go up outside the front of my house to stop the people that go buy drugs next door from sitting on my front wall and ripping all my plants out of my borders, month after that my fence out the back needs replacing as it blew down in the recent winds, month after that my patio needs relaying as it all has all collapsed and all the joints have disappeared into the abyss, month after that the entire lawn needs either digging out and starting again or respraying as It no longer has any grass its just a bed of moss(you can see where I'm going here!)

So my options are:

1. pay off the balloon payment with my savings
2. refinance and will probably be paying more per month than I am now
3. part ex against a new car because if im going to be paying monthly for a car I mayaswell get a new one? but all the deals around (at the moment) are around 160 a month for lower spec than what I have now.

just to add I need a reliable car because my commute is quite far away and I've had so many tellings off in the past for not turning up/turning up late because my car has broken down/refused to start so the last 3 years with a good reliable car has been bliss!

sooo WWYD in my situation? What's the most sensible thing to do?

I then have the option of part ex against another new car or paying off the balloon payment which will be around £4,800.

This is what the model relies on - that at the end of one deal you are 'trapped' into getting the next deal. Try to break free. I appreciate that you need a reliable car but that doesn't necessarily mean brand-new every few years.
Pay the balloon, keep your existing car and be £137 (or more) pcm better off.

PS: are you sure that detached is the answer to your problems? Isn't the answer naicer neighbourhood ?

Thanks senua. Unfortunately this was a nice neighbourhood - infact one of the nicest neighbourhoods in my town which is why I saved and saved until I could afford a house in this particular part of town.

However, it is literally just this one house (that with my luck happens to be attached to me) that has brought down the whole tone of the place. It was privately owned, the lady died and her son inherited it who unfortunately is a drug dealer and doesn't do anything other than sit around the house all day being loud and obnoxious and then in the nice weather sits out the front waiting for all his buyers to come round and then they all do drugs out the front together and to pass time pull all my plants out whilst they sit there...

how/why this is still continuing after numerous reporting is another story but what I do know is I need to get out asap....

If you aren't paying the car finance your borrowing potential will be higher. Subject to affordability you could get a 90% mortgage so wouldn't technically need any savings. Have you calculated how much you could borrow if you repay the balloon payment? You may be able to move much sooner than you are expecting.

Obviously that works the opposite way too, and if you part ex and the new finance is more expensive then you would be able to borrow less on a mortgage.

What will the value of the car be in January?

My thoughts if worth less than 4.8k hand it back. And buy a cheap runabout.

If worth more than 4.8k pay it off. Sell it and buy a cheap runabout.

I live in a semi with lovely neighbours and haven't had any issues in 14 years.

Will it be easy to sell your house though? The picture you paint wouldn't make me want to buy it. Agree with the others who say pay off the car.