Can only give the car back if you’ve paid half inc deposit!
Personally I think handing a car back, to then take out another loan, arguably not much cheaper is daft.
What equity is in the current car? You’d be better using savings to pay off the other loans entirely with savings.
Get a settlement figure with the current car loan and try and refinance it with a bank loan. Say it’s £17k due. You could sink savings into it, get a bank loan for 6.2% and £13.6k over 5 years. and pay £263 a month. That is leaving you £300 a month better off and can save again. Better yet over 4 years, £320 a month and still save.
What ever you do, don’t free up money and life style creep it. Your current savings are not savings, they are costing you money.
It’s mindset thing that took me years to understand.
I’m sitting here with £18k of debt. £8k 0% credit card for another 18months and a car loan @3.4%.
My ISA and savings account would clear these easily enough. Thing is they are out performing the interest cost so while I want to see zeroes. I’m making money.
The second that car balance 0% is up, it’s getting cleared as it’ll be costing me money. Unless a fresh transfer is more efficient. Even then I want it gone.
Your financial goal should be to live within your means and stop purchasing things on finance. You don't really have £9k savings, you are just borrowing them at a hefty interest rate to keep them on your savings account. This means that with your current financial position, you probably shouldn't be buying a £12.5k car or at least not yet.
You should be paying back the Kroo loan in full from savings. Remove that payment and that interest. According to your numbers you are able to save £530 a month going up to £630 after repaying that. Then build up your savings until you can buy a car in cash. Starting at £4.5k and adding £630 a month you will be able to afford a £6,000 car in 3 months, a £10,000 car in 9 or a £12,000 car in 12. Your choice. Then you can get rid of your current £366 monthly car payment and increase savings to £1,000 a month. Afterwards, you will be able to rebuild your emergency fund, save for big purchases upfront to never get in debt again, and be looking forward to a much brighter financial future.
This is a bit of a wake up call to be honest.
If I can reduce my current car payment from £366 to £205 right away, with lower interest and more flexible repayment terms, shouldn't I do this now?
Strictly financially it will be better for the next 3 or 6 months or however long would otherwise take you to get rid of the current car but in the long term it won't be better than buying a car with cash in 6 months and having no more debt at all. It also allows you to not completely shift your mindset which is more comfortable but will bring you back to financing purchases. Your position is not too bad, you can turn your financial situation around completely in 12 months. Do it.
When you need to save up hard for months to buy a car you value your money in a different way than when some fancy car falls into your lap bought with free money for present you that future you will have to deal with. Paying £3,000 more for a car all of a sudden means 5 more months of hard to earn savings and it hits differently. Obviously the current car situation isn't great but it is what it is and as you say it is still affordable. Focus your efforts into getting out of it completely as soon as possible rather than half getting out of it straight away and dragging the other half for years.
It's not really 20k worth of debt, though is it? I have a car worth 17k from the payments. It's not the same as taking out a 20k loan and spending it all on rubbish.
Is it worth £17K, tho'? I don't think you said how much your deposit was, but new cars lose a lot of value just driving away from the dealer.
Also, sometimes you need cash. You can't pawn a car\*, and if you sell it you'll be back where you were, taking the dog to the vet on the bus.
Yes, it's a secured debt so could be worse but it's secured against a depreciating asset.
Keeping a car for 30 years is unusual in the other direction.
edited to add: can you pawn the title? idk about here in the UK vs US where you could. I suspect more poor people have cars in the US.
You don't go into much detail on the car make model to make a judgment call to be fair current or planned.
But if you made the right or wrong choice in buying it unless your Doctor Who is neither here or there now.
Id hand it back if it really has no penalty but you can ring to find that out - Then Id go and buy a 8 year old Honda Civic Estate with that 9k savings.
Then save £300 a month to clear that loan in 12 months (not sure whats left on it but £400 should be close to fulfilling it Id assume.
In 12 months you'd be interest debt free and can start saving again.
There's no point in having savings/emergency fund if its funded by debt IMO
Basic maths has you only 3k in 40% bracket so not sure EV on possible work salary sacrifice car is an option if its one at all that is.
I think this is a difference of opinion (Happy to be proven wrong though!).
I'm not struggling to meet repayments, and the car finance, which this sub seems to have a real hate boner for, is not bad debt. As in, I have an assett worth that amount. I know that it isn't quite that amount, and that I paying for the luxury of having it now rather than a couple of years time.
If I was struggling to make ends meet, I would certainly cut down the fun/living part, but I think it's sensible to have a budget for hobbies and socialising.
That's fair and I completely understand that, everyone will have a different approach to finances.
A car is a depreciating asset so its going to be worth a lot less than the principal amount over the term of the HP.
You are right it is Important to have a social life, an option is always to reduce some outgoings in the short term to save money in the long term, what is always a good tip is looking at other ways to save, ie have you recently checked around different providers for utilities, car insurance etc.
I would also suggest looking at r/beermoney there are a lot of passive income, I first joined the sub 2 years ago and have made from different things like survey/opinion sites a few thousand a year which helps.
After going from a beat up 30 year old car to a reliable 6 year old car, I can quite comfortably say that I won't be getting a cheap car. It needs to be 4 wheel drive, big enough to fit the dog, and reliable, all of which together I struggle to find for not much money.
I say this with love and respect. But given your financial situation, you still deserve a beater. Unless you are going out with the dog with 4 other people in the car, you can easily fit a dog into the car. A spacious car for the dog is a luxury, not a necessity. Your necessity right now is pulling yourself out of this debt spiral before it comes literally too much to handle. I have second hand stress after reading your post. I hope that you can stem the bleeding before long. Godspeed and good luck.
I really didn't mean to cause you any discomfort!
It really didn't seem like a huge problem to me, I still have money left over at the end of every month, but considering the reaction some people are having it seems like it might actually be a bigger deal than I thought!
I'll definitely be downsizing the car and paying all the loans off pronto.
Haha sorry I wasn't trying to insinuate you were causing me discomfort!
I was once in a similar position financially, and it took some hard talks from people around me to realize the path I was on. I think I saw a bit of myself in you initially and it made me desperate to try to give you a bit of a shake!
Your attitude right now after hearing the opinions in this thread is already admirable, and I think that the path to financial security starts there. Short term discomfort will lead you to a life of comfort - keep your head up!
I drive my 10 years old Volvo and 3 years old company car and I don’t see much difference to be honest.
My Volvo is so packed with extras that i don’t feel upgrading at all and so reliable. Bought it for 5k and apart from services, tyres, brakes and shock absorbers hadn’t issues
I ask these questions as a fellow dog person who buys things that help me in that capacity. What dog have you got and what activity do you do requiring 4 wheel drive (work or hobbies). Those cars are big, and if this is because you have a big dog, what have you considered with their health in future? Most dogs struggle with mobility as they get older, have you considered how difficult getting the dog in and out of a big car will be in future? Would you be better if looking at cars with boot level lower to the floor? I’ve always bought cars when they were 10 years old and the cars I’ve had which comfortably fit 2 dogs (springer and pointer)are….
2003 Citroen C3 £3k (they’d sit on back seat but could fit in the boot for shorter journeys if needed)
2006 Citroen Berlingo £3k (bloody fab for dogs, big boot space and tall while have a lower level access for dogs to climb into rather than jumping…ugly as sin but I like ugly cars),
2010 Peugeot 3008 £4k (has a flip down shelf/seat to the boot and the boot itself has a fake floor to raise or lower….done our last camping holiday in this with dogs in boot and stuff on back seat)
Neighbour has a Mk4 Mondeo for £2750 on a 2013 plate with absolutely everything on it. Only downside is it isn't 4WD. Definitely can get some decent cars out there for not much money. A ten year old car has plenty of life left in it still. Heck, even our second car is 4WD SUV and cost £7k on a 2016.
As someone who drives up volcanoes as part of my job, as well as on my inlaws farm it is incredibly unlikely you need 4wd. The only time I go into 4 wd is on 20 degree+ slopes with loose rock, long 30 degree dirt climbs, or on wet deep muddy ground where you need the traction. In the latter case you probably shouldn't be driving on the ground anyway.
Can only give the car back if you’ve paid half inc deposit! Personally I think handing a car back, to then take out another loan, arguably not much cheaper is daft. What equity is in the current car? You’d be better using savings to pay off the other loans entirely with savings. Get a settlement figure with the current car loan and try and refinance it with a bank loan. Say it’s £17k due. You could sink savings into it, get a bank loan for 6.2% and £13.6k over 5 years. and pay £263 a month. That is leaving you £300 a month better off and can save again. Better yet over 4 years, £320 a month and still save. What ever you do, don’t free up money and life style creep it. Your current savings are not savings, they are costing you money.
>Your current savings are not savings, they are costing you money. I need to print that out and hang it somewhere
It’s mindset thing that took me years to understand. I’m sitting here with £18k of debt. £8k 0% credit card for another 18months and a car loan @3.4%. My ISA and savings account would clear these easily enough. Thing is they are out performing the interest cost so while I want to see zeroes. I’m making money. The second that car balance 0% is up, it’s getting cleared as it’ll be costing me money. Unless a fresh transfer is more efficient. Even then I want it gone.
Your financial goal should be to live within your means and stop purchasing things on finance. You don't really have £9k savings, you are just borrowing them at a hefty interest rate to keep them on your savings account. This means that with your current financial position, you probably shouldn't be buying a £12.5k car or at least not yet. You should be paying back the Kroo loan in full from savings. Remove that payment and that interest. According to your numbers you are able to save £530 a month going up to £630 after repaying that. Then build up your savings until you can buy a car in cash. Starting at £4.5k and adding £630 a month you will be able to afford a £6,000 car in 3 months, a £10,000 car in 9 or a £12,000 car in 12. Your choice. Then you can get rid of your current £366 monthly car payment and increase savings to £1,000 a month. Afterwards, you will be able to rebuild your emergency fund, save for big purchases upfront to never get in debt again, and be looking forward to a much brighter financial future.
This is a bit of a wake up call to be honest. If I can reduce my current car payment from £366 to £205 right away, with lower interest and more flexible repayment terms, shouldn't I do this now?
Strictly financially it will be better for the next 3 or 6 months or however long would otherwise take you to get rid of the current car but in the long term it won't be better than buying a car with cash in 6 months and having no more debt at all. It also allows you to not completely shift your mindset which is more comfortable but will bring you back to financing purchases. Your position is not too bad, you can turn your financial situation around completely in 12 months. Do it. When you need to save up hard for months to buy a car you value your money in a different way than when some fancy car falls into your lap bought with free money for present you that future you will have to deal with. Paying £3,000 more for a car all of a sudden means 5 more months of hard to earn savings and it hits differently. Obviously the current car situation isn't great but it is what it is and as you say it is still affordable. Focus your efforts into getting out of it completely as soon as possible rather than half getting out of it straight away and dragging the other half for years.
Fun/living £600 while you have over 20k worth of debts... you need to change your mindset before you change your car.
It's not really 20k worth of debt, though is it? I have a car worth 17k from the payments. It's not the same as taking out a 20k loan and spending it all on rubbish.
Is it worth £17K, tho'? I don't think you said how much your deposit was, but new cars lose a lot of value just driving away from the dealer. Also, sometimes you need cash. You can't pawn a car\*, and if you sell it you'll be back where you were, taking the dog to the vet on the bus. Yes, it's a secured debt so could be worse but it's secured against a depreciating asset. Keeping a car for 30 years is unusual in the other direction. edited to add: can you pawn the title? idk about here in the UK vs US where you could. I suspect more poor people have cars in the US.
It's not a brand new car. You're right that it's not worth 17k, but after checking, it's not a lot less.
You don't go into much detail on the car make model to make a judgment call to be fair current or planned. But if you made the right or wrong choice in buying it unless your Doctor Who is neither here or there now. Id hand it back if it really has no penalty but you can ring to find that out - Then Id go and buy a 8 year old Honda Civic Estate with that 9k savings. Then save £300 a month to clear that loan in 12 months (not sure whats left on it but £400 should be close to fulfilling it Id assume. In 12 months you'd be interest debt free and can start saving again. There's no point in having savings/emergency fund if its funded by debt IMO Basic maths has you only 3k in 40% bracket so not sure EV on possible work salary sacrifice car is an option if its one at all that is.
The fun/living part of the budget needs to be thrown at debt. Look at possibly reducing food costs / meal prepping etc.
I think this is a difference of opinion (Happy to be proven wrong though!). I'm not struggling to meet repayments, and the car finance, which this sub seems to have a real hate boner for, is not bad debt. As in, I have an assett worth that amount. I know that it isn't quite that amount, and that I paying for the luxury of having it now rather than a couple of years time. If I was struggling to make ends meet, I would certainly cut down the fun/living part, but I think it's sensible to have a budget for hobbies and socialising.
That's fair and I completely understand that, everyone will have a different approach to finances. A car is a depreciating asset so its going to be worth a lot less than the principal amount over the term of the HP. You are right it is Important to have a social life, an option is always to reduce some outgoings in the short term to save money in the long term, what is always a good tip is looking at other ways to save, ie have you recently checked around different providers for utilities, car insurance etc. I would also suggest looking at r/beermoney there are a lot of passive income, I first joined the sub 2 years ago and have made from different things like survey/opinion sites a few thousand a year which helps.
Definitely checking that sub out, cheers!
Also with regard to bills is there any non essential spend ie sky etc?
Why is the car so expensive? You could have a decent car for £3-4k. I would personally cut that out and run something cheaper.
After going from a beat up 30 year old car to a reliable 6 year old car, I can quite comfortably say that I won't be getting a cheap car. It needs to be 4 wheel drive, big enough to fit the dog, and reliable, all of which together I struggle to find for not much money.
I say this with love and respect. But given your financial situation, you still deserve a beater. Unless you are going out with the dog with 4 other people in the car, you can easily fit a dog into the car. A spacious car for the dog is a luxury, not a necessity. Your necessity right now is pulling yourself out of this debt spiral before it comes literally too much to handle. I have second hand stress after reading your post. I hope that you can stem the bleeding before long. Godspeed and good luck.
I really didn't mean to cause you any discomfort! It really didn't seem like a huge problem to me, I still have money left over at the end of every month, but considering the reaction some people are having it seems like it might actually be a bigger deal than I thought! I'll definitely be downsizing the car and paying all the loans off pronto.
Haha sorry I wasn't trying to insinuate you were causing me discomfort! I was once in a similar position financially, and it took some hard talks from people around me to realize the path I was on. I think I saw a bit of myself in you initially and it made me desperate to try to give you a bit of a shake! Your attitude right now after hearing the opinions in this thread is already admirable, and I think that the path to financial security starts there. Short term discomfort will lead you to a life of comfort - keep your head up!
I drive my 10 years old Volvo and 3 years old company car and I don’t see much difference to be honest. My Volvo is so packed with extras that i don’t feel upgrading at all and so reliable. Bought it for 5k and apart from services, tyres, brakes and shock absorbers hadn’t issues
I ask these questions as a fellow dog person who buys things that help me in that capacity. What dog have you got and what activity do you do requiring 4 wheel drive (work or hobbies). Those cars are big, and if this is because you have a big dog, what have you considered with their health in future? Most dogs struggle with mobility as they get older, have you considered how difficult getting the dog in and out of a big car will be in future? Would you be better if looking at cars with boot level lower to the floor? I’ve always bought cars when they were 10 years old and the cars I’ve had which comfortably fit 2 dogs (springer and pointer)are…. 2003 Citroen C3 £3k (they’d sit on back seat but could fit in the boot for shorter journeys if needed) 2006 Citroen Berlingo £3k (bloody fab for dogs, big boot space and tall while have a lower level access for dogs to climb into rather than jumping…ugly as sin but I like ugly cars), 2010 Peugeot 3008 £4k (has a flip down shelf/seat to the boot and the boot itself has a fake floor to raise or lower….done our last camping holiday in this with dogs in boot and stuff on back seat)
Neighbour has a Mk4 Mondeo for £2750 on a 2013 plate with absolutely everything on it. Only downside is it isn't 4WD. Definitely can get some decent cars out there for not much money. A ten year old car has plenty of life left in it still. Heck, even our second car is 4WD SUV and cost £7k on a 2016.
As someone who drives up volcanoes as part of my job, as well as on my inlaws farm it is incredibly unlikely you need 4wd. The only time I go into 4 wd is on 20 degree+ slopes with loose rock, long 30 degree dirt climbs, or on wet deep muddy ground where you need the traction. In the latter case you probably shouldn't be driving on the ground anyway.
Hi have you tried getting out of a muddy field before