Buying a car but trying to save for a house

[Koete]

Hello!

Does anyone have any advice on the most economical way to buy a car whilst also trying to save for a house / look good on a mortgage application?
We have been wondering whether it's best to buy a car outright, thereby eating into our deposit - but the purchase wouldn't show up as regular outgoings in a mortgage application... OR buy a car on finance, therefore keeping deposit funds relatively intact, but could impact aforementioned mortgage viability.
Would love to hear how others do it. And fwiw, we really need a car. There are ULEZ requirements where we live and trying to get a big toddler into his car seat via a 2-door car, is back-crunching.

Thank you..

After supporting DD with her first house purchase recently and how bloody hard it is even with no debts no loans and an excellent credit rating, I would avoid the loans. That said if you have a great credit rating and a good income and not much other outgoings then it may be ok.

but finance, credit card, child care, all affect affordability.

Look to buy outright, but don’t set your sights high....certainly not a new car.

I’d think you can get a decent car for £5k. Do some research into what is solid and reliable and serves your purposes and don’t go for flashy or swanky brands. Consider a Kia or a Skoda and perhaps look at 5 years old. You can get something with a good service history and without rally high mileage. Don’t be tempted by swanky features or colours or anything bigger than you really need. You must do some careful research first and then you’ll see how much you can get for not too much money. See what a main dealer which will give you a years warranty can give you. The cars around 3 years old with very low mileage are probably beyond what you should pay, but if you go a couple of years older, Dealers still sell those and they can be good buys.

This way you won’t eat into your deposit too much but will avoid the debt and monthly payments.

The best way is not to buy a new car.

If you're prepared to do the legwork, you can find plenty of cars with demostrator miles (

I’d also consider if you REALLY a need to replace your car now.
Could you wait another 2 years? You might not love the current one and it might not be the most convenient, but can you just manage and remember that by doing so, the date you can get the mortgage you want is closer.

Often, the best way to save money is quite simply not to spend any and make do with what you already have. It’s not always possible and there always comes a time when you do need a new car, but does it need to be now?

I buy older cars, that have been well maintained, and continue to look after them myself. But I know a bit about cars and engines and I know what I’m looking for (and what to run a mile from).

The upside, though, is no monthly finance payment — and all of our cars are ULEZ-compliant, even the one that’s 13 years old.

Why does toddler have to go in the back? We managed by buying a £3k Kia 6 years old so had been under warranty and services by Kia and still had one year left, 50k miles, it's not flashy, has dents etc but made a huge difference to our affordability and in all honesty if £3k ruins your deposit to that extent then buying a house fullstop might be questionable to this stage. We intended to use car until settled in house, 18 months on and we realise we just don't need to

How much deposit do you have in terms of amount and percentage of purchase?

What ULEZ requirements are you up against in terms of age limit?

PPs talk about nearly new cars but even a £5k car is going to make a serious dent in a deposit of £10/20k or so.

I'd go for a small 5 door a few years old because that's likely to be your cheapest option. No idea what limits ULEZ puts on it because there's different levels and PPs talk about 13 YO cars being compliant but then others seem to think it has to be virtually brand new, so a huge variation in prices between a few hundred pounds and £10k+.

Apply the MoneySavingExpert mantra first ‘do I really need it’ - is it just you fancy a new car and it would be a bit easier, but actually the existing car could last another 2 years? If so, stick with it. If it needs a bit of work, it might be worth spending up to £1k to keep it in the road for another year to avoid the expense of a new car at this time.

As a PP said, a decent 6 year older Kia which still has the last year of extended warranty to go, can be had for well under £5k. I think a reasonable car can often be had for not much more than £3k.

It’s about learning to spend as little as you need to. Lower your expectations of what you require. A large car probably isn’t needed, a very new or fancy car isn’t needed. An older, smaller and pretty dull one is what you want.....and perhaps you have it already and therefore don’t need to go out and buy one right now. If you do, it’s got to be cheap.

Is it the London ULEZ? We bought a 2004 fiesta 5 door that was a part-ex from a garage. 60k miles on the clock, it was £1650. This was 4 years ago while we were saving for our house deposit and it’s still going strong! We’re trading up when I go back from maternity leave but we basically accepted we’d have a reliable banger for a few years. Works fine for us with a DD (9 months), pram etc. Paid for it on credit card and just made sure credit card was cleared before we put in the mortgage application.

Oh the point being that it’s ULEZ compliant in London!

Barbara ULEZ is a binary thing -- a car is either compliant or it isn't, it's not like the different levels of (say) road tax. And if it isn't compliant, there's a single charge which is the same for all cars (and motorbikes).

Basically, any petrol made after 2006 and any diesel made after 2015 will be ULEZ-compliant, which means no fee. There are a few outliers to this, depending on how forward-thinking manufacturers were on emissions at the time; I have a 2014 diesel, for example, which is ULEZ-compliant. Sounds like Dolly's Fiesta is similar.

Apart from some electric and hybrid cars, even ULEZ-compliant cars still have to pay the congestion charge, which is a separate thing. And hybrids will have to pay it from this October. (As will electric cars from 2025.)