How to afford next car //outstanding loan of £3400

[Applebottomjeans92]

I am wondering if anyone has advice/ideas of what to do.

Basically myself and DH have £9000 set aside for house works/decorating with bedrooms, living room and dining room left to do. We have to pay £1600 for a plasterer which is imminent. We still need a new bed, sofas, dining table set so am fairly confident we would need the full £7400.00. (£9000 - £1600)

Separate to this, we have a £3400 loan outstanding at my bank for a car which we no longer have - long story. There is 14 or 15 months left, £255 a month payment. Interest rate is around 6.6 %.

At the end of every month, after paying bills and having a little bit of spending money (£250 him, £200 me) we are squirreling away roughly £850 which each month we have been using towards the house, then we have Christmas. From end of December pay packets I/we need to decide where to allocate this money.

Sounds ok, but we are also trying for DC2, which is taking a few months but hence in 9 months/1 years time. This will then obviously make my earnings lower and also we'll be paying nursery costs again - so this £850 a month we have spare will certainly not be forever.

I'm at a loss of what to do. I would like to get an older care maybe spend £5/£6000 but DH would like to get fairly new, perhaps spend £16,000/£18,000 and potentially benefit from a dealers longer warranty (Kia?).

I've had a quick look at our banks and for some reason we are not able to get interest rates of 6.6 again - it's more like 11% which I suppose if we have to we have no choice but I am just wondering if I am missing something - would car finance deals be better interest rates? Dealer websites this morning are showing me 6%, but are they similar to banks where they advised a lower rate then actually you aren't eligible for that rate.

I am thinking from the end of December the £850 a month we have free we chuck at the loan to get it gone, then by around March time we are clear to then get ANOTHER loan/car finance of say £18,000 to get our new car and keep that one for a very long time. If we can get a car loan of around £300/£400 a month we may just be ok if we are lucky enough to conceive DC2.

I can’t agree more with the poster above. A main dealer will have a decent car with warranty - you can be wiser with this car purchase!

I would begin by stopping taking out loans every time you want to upgrade your car. Save for a car then buy a car within that means, from a reputable dealer.

And then I would do as this poster here suggests.

Taking out loans on top of loans is ridiculous. What happens if one or both of you lost your job or were unable to work?

You're in a great position OP and well done for having that amount saved.

This is what I would do..

For now keep the loan ticking away

Chip through your house to do list, however be smart, can you paint some rooms?

All furniture should be looked for second hand , look up quality brands, people can't give sofas away... you should be able to find a lovely bed frame and buy a new mattress. I had a good budget when renovating our current house but I always hunt for second hand. Remember you can recover sofa , chairs, headboards in the future

You absolutely should not be spending on a car on finance. See where you are in a few months and spend a few k on a Volkswagen or something reliable. What friends nay be selling their older cars you know have been looked after? My mum paid £500 for a friends 15 year Renault they'd had from new, still going 5 years later! Don't ask don't get..mention it to a few people

once house is done and you've picked up a cheap reliable car, see where you're at and pay off loan. It's on a low rate. Don't take further borrowing for anything else.

@caringcarer has ot absolutely spot on. Give yourselves a year, get rid of that loan before you take on more debt, and with the car, no you can’t afford the £16-£18k Kia (is it a sportage?) your dh has his eye on.

posted too soon! I echo what everyone has said about second hand furniture-I’m in my 50s and don’t <need> to but 2nd hand, but I do because if you keep your eye on gumtree etc you can pick up some cracking pieces

I would recommend this place for carpets. They do brilliant quality stuff but they are roll ends so cheap. Then get a local carpet fitter to fit it for you.

https://designer-carpet.co.uk/

Think about what you need and what you can afford, then choose what to buy.

Don't even consider what you want unless you can buy it without taking a loan.

You need to spend within your means, not rely on loans.

Buy furniture second hand, you can get great quality at a fraction of the new price. Auctions are good for this. Absolutely no need to buy new.

Agree with everyone saying about the second hand furniture. We have a beautiful oak dining set (sadly covered up with a pvc tablecloth and protector due to small DC, but one day it will be visible!) that we got on fb marketplace for about £500. I looked it up and it was over 2k new.

I’d pay off the loan to save the interest. Then save hard to get the basics of the home improvements done with a reasonable price tag. Possibly use 0% credit card if that’s an option.

I’d probably go middle ground on the car and buy a decent model but a few years old. But I don’t know that much about cars really. Throw everything at the car loan while you can before the nursery fees etc.

I'm in my early sixties and I've never had a loan other than my mortgage, we are debt free, with a largeish house with a good amount in the bank.

You need to stop having loans and save up for things you need/want ... you are living beyond your means and it's going to lead to real financial difficulties at some stage.

Limit your christmas spending to the absolute minimum. I mean no more than a few hundred pounds.

Buy furniture off marketplace, Gumtree etc .... save a fortune.

Buy a cheap car for now ... you can't afford £18,000.

ok ok house decorating/buying stuff has now been put on back burner.

and to explain thought process re more expensive car, it is definitely to buy it, pay it off and keep it for a long while. we were thinking that by going to a dealer such as KIA you get the much longer warranty which is beneficial.

At the moment I am thinking to pay off the £3400 using some of the house money, then if we got car finance of say £350/£400 a month, then it only max £150 more than what we pay now on the bank loan?

In an ideal world of course yes we wouldn't get a bank loan but I think I felt better before posting. Aside from our mortgage we have no other debt.

You can buy a used approved KIA from them that will have the remains of the 7 year warranty. You can get one for under £10k.

Used approved cars from main dealers have excellent warranties with them when they are up to about 6 yrs old.

Some small cars can be got from used approved schemes for around £6k. These will be reliable cars.

Too many people are fooled into thinking a car can only be reliable if they sign up for a brand new lease deal. The fear of facing repair bills and maintenance bills (which are often low hundreds rather than huge numbers) leads them to commit to a regular string of new cars with their high prices….they spend far more to avoid the fear of car repairs, Han the car repairs woukd ever cost.

If people could just keep £1-2k in the bank for these kind of bills, they would then have the freedom to choose cheaper options for the long term.

What size of car do you need? How many people/what kind of activity?
People on here might be able to suggest cars you haven’t considered before and you might be surprised how cheaply some can be had which are 3-5 yrs old (with good warranties)

My brother bought an amazing 1905 vicarage and furnished entirely from Facebook marketplace and antique/vintage shop finds and it looks amazingly stylish. So you don't have to buy everything new . . .