[MEGA]

Hi All.

I have a quandry I'd like to share with you.

I bought my E92 335d as an 11 month old car with a 29k ticket price.

Just 16k on the clock, and no fooling every option bar DAB is ticked. Front and rear PDC, elec fold mirrors, seat heating, prof nav, 313m alloys, the media pack so bluetooth and came with HiFi. Auto fold heated mirrors, rain sensing wipers, auto headlights adaptive.. etc etc.

But I am paying on HP. The intention was to own the car outright with no GFV so that when the HP is done and dusted I have a 12-14k asset that I can sell, keep, or whatever.

Here's the kicker though. 26.3k (after deposit) over 5 years at 7.1% APR is £523 per month.

I've paid off 20 payments now, excuse the rough maths (as I've calculated interest yearly not monthly, whilst my repayments will be based on monthly calculations) - but this leaves me as per the below.

End of year 1 28k outstanding, 6276 paid, 21.9k outstanding

End of year 2 23.4k outstanding, 6276 paid, 17124 outstanding

Whereas if I get out now, approx 19k outstanding.


The car is worth about 19k trade - more like 21.5k private sale. Point of all this being I am at break even point: But every month I keep it from now on am in more profit, as the depreciation curve is less than what I am repaying even after interest.




But.

I've recently lost some benefits at work, and the net result is I am about 350 a month worse off net.

I am also trying to save the deposit for a property.

I am looking at my overall motoring costs properly, and they are astronomical..


Finance. 523 per month
Servicing and tyres, 100 a month
Warranty. 50 a month
Fuel. 350 a month
Insurance. 120 a month

Total.. 1143 a month. Let's just be done with it and call it 1200 to be negative, as there can always be other costs too.


I am thinking, seriously thinking - about downsizing. But I'd have no deposit for the next car unless I can extract it from this one. I cannot dip in to my savings.

Reason being, I have about 2k net disposable once bills are paid, of which 800 or so remains after paying for the car. I am saving this up.

Let's assume fuel and insurance stay the same - because even if I go for bangernomics I'd need 6 cylinders and at least 250 brake.... , but that I save 300 quid on the finance by going for an older car. This could get me into my house 2 or 3 months quicker

What's tough is that all the savings I would make is still less than the money I just lost. So maybe I stuff all that off and just change jobs.

If I had 6k in the car NOW, I'd be more inclined to toss it. But I don't. So I'd need to finance the bangernomics. Maybe I at least wait until I've got 6-7k of equity in the car and then use that to buy a car outright? Then it's a 523 saving, now a 200-300 saving. So in effect if I spend the money now (whilst I definitely can - IE before I've actually signed the mortgage), I'll also be much better off in the medium term? That's how I'm justifying not moving on.

Hmmmmmmmmmmmmmmm

What's the opinions of those in similar positions or that have been there before?

Long post, sorry all. Just wrangling with what is the right thing to do.

Rgds
Dave

[creepy coupe]

What about your deposit Dave. You need to divide that by the term of ownership.

[phil200tdi]

The least you could do is to refinance at a lower APR?

Sainsburys offer upto £15k for 4.9%.

Put the rest of the balance on a 0% 20+ month balance transfer card.


BUT

You mention being more in profit the longer you keep the car. This is man maths! Getting a much cheaper car with cheaper running costs and lower depreciation will reap immediate ande significant savings.


The bigger question is how much cash you'll have once you have a mortgage? If you spend 50% of your net income now on this car or any other - what proportion will it be once you pay the mortgage and bills... worth considering now rather than later.

[nicktyler]

That is a hefty outgoing for the car. When you have a mortgage will it be more than your current rent? Worth considering that too. I would think seriously about what your priority is. Owning a house or owning this car. If it is the first then sack the car off and buy a shitter to get you around for a few months untill you buy the house.

Worth considering that the house you want might be rising in value as we speak and make extending that wait a false economy. On the other hand the house price might be falling more than the car and wating a few extra months might pay for it. To me it just comes down to a personal priority or a gamble against the value of house/car in x-months time

[parapaul]

A second vote here for re-financing, if it's an option. Downsizing really never saves as much as you'd expect it to, especially if you've got a benchmark of 6 cylinders and 250bhp

[dobbo99]

phils suggestion is good, and M&S do a car buying loan that lets you offset a future value of the car, so lowers the monthly payments. I don't know what the rates are etc.
you'd still have a loan but you pay off more, in a quicker period, giving you equity in a smaller period of time?? worth a look.

Another option; say you settle the finance by selling the car, and use any profit and a small amount of savings to buy something as a runabout, you could be looking at then saving an extra £700-800 a month, or more if you were really disciplined, which then means your chucking more in the house fund and topping it back up and adding to it much quicker than you anticipated.

I guess it depends how much of a banger you want to drive about in, but sounds like the house purchase is more important than the car at the moment, otherwise you wouldn't be asking the question.

[MEGA]

HMMM. Refinancing 15k over 5 years is just 280 a month. If I put the rest on a 0% card (the 4k), then this would allow me to save an additional 240 a month for the following year, after which I've got the options to flip to another BT card (I've done this in the past) or start paying it off.

This is an interesting proposition that I'd not considered.

Any mortgate experts know what the ramifications to an unsecured loan against my name in the same year as an application though? I'll not be getting the mortgage till Feb/Mar so will be over 6 months if I do this soon, so no big scary warnings to any mortgage co's I believe? But I don't want to do anything to jeopardise the application.

ps my credit rating at the moment is 999.

Let me know your thoughts fellas.

[MEGA]

Originally Posted by nicktyler

That is a hefty outgoing for the car. When you have a mortgage will it be more than your current rent? Worth considering that too. I would think seriously about what your priority is. Owning a house or owning this car. If it is the first then sack the car off and buy a shitter to get you around for a few months untill you buy the house.

Worth considering that the house you want might be rising in value as we speak and make extending that wait a false economy. On the other hand the house price might be falling more than the car and wating a few extra months might pay for it. To me it just comes down to a personal priority or a gamble against the value of house/car in x-months time

My rent PLUS what I'm saving toward a deposit is less than my mortgage and bills are projected to be, so - I'm fine to keep the car. I am however equally aware of all of the costs associated with being a first time buyer ... hmmmmm, and such.



When I mentioned net salary, that was AFTER all bills. In effect what I meant was "net pocket money", or "money I am saving for a deposit" plus "money I am spending on the car". Now, if I take from one pool of course I give to the other, hence the whole quandry.

House is the top priority, but it's very hard to actually put my foot down. I require a level of luxury and refinement from my cars, and simply won't be worth living with if I step too low down the chain.

[Kerr]

Have you got a settlement figure from the finance company?

Any HP deal I've seen always stacks the interest in early payments. It isn't divided equally between the 60 payments, unless something has changed in recent times?

Having googled it, i don't think it has..

Also the problem with trying to get £6-7K equity you are going to pay interest on the loan plus covering depreciation.

It will also be a long time away and when more F30s come to the used market, our cars will only depreciate faster.

You running costs seem exceptionally high to me.

I thought you only did low miles?.

£350 of fuel is 55 gallons of fuel per month. At 35MPG that is 1929 miles per month or over 23k per year.

I'm £220 per month doing 12k at 28mpg..

My servicing has cost an average of £270 per 15k miles. Which on average 12k means £184 per year or £22 per month.

Rear tyres £400 per pair every 15k, again £25 per month.

Obviously your insurance will come down with age as that figure is high.

[chris_s1]

I think your estimates of running costs are way off. I do about 25k a year in my 335d and I don't spend anything like that amount. In 18 months of ownership I've spent £480 on tyres and £287 on servicing. By your reconing I would have spent £1800!

And warranty? what for? your car is not 3 years old is it?

[MEGA]

Yes, it just turned 3 (last month).

I do 10k per set of rears

I get 17mpg average in my london commute..

My costs are thus fair.

I know what I owe within 1k or so, as I have an illustration from a few months ago.

But I am waiting for a settlement figure, and if I'm way out it will change things

[chris_s1]

OK fair enough. In my experience the cost to change rarely justifies the future saving unless you are going for something very different.
There is also the risk that what ever you buy won't satisfy or provide the saving you hoped for and you'll end up changing back and be doubly worse off...

[gangzoom]

Not sure about the costs of changing cars etc, but the current housing market is a buyers dream and if I was in the market for a house I would scape and save as hard as possible to get a big deposit.

Mortgage rates will never be this low ever again, and it makes a massive difference to your monthly repayments..eg.

Payments on a £200K mortgage over 25 years at 2% = £850/m (£50K interest over the term of the mortgage)
Payments on a £200k mortgage over 25 years at 4% = £1000/m (£116K interest over the term of the mortgage)

But your need a large deposit for the best rates, so save hard...

...no help at all regarding your car though.

[Giff]

Keep car and buy bicycle?

[Drrncour]

Remember that what ever debt you have is removed from the total value of the mortgage amount you are offered. So lets say your offered 200k mortgage, they will 95% of the time remove all loans from this amount. So if you owe 20k on the car, that's only 180k for the mortgage (less if you have other loans).

They also means test you on outgoings also, and there is a limit % to what they offer compared to what is paid out each month.

[blues n twos]

What about a nice E46 M3? Pick one up for say £10k. If you sell yours for £21k then £2k deposit and £8k over 5 years at 6.5% ish

You have more than halved your outlay on car costs, 6 cylinders and 330bhp!

Just another one to throw in the pot

Jon

[Brian mc21]

Holy fuck. Are you telling me your car costs you nearly 1200 quid a month all in. I earn another 200 a month on top of that. Shit I should have paid more attention at school. Sorry I can be of no help.

[djgandy]

£600/pm running costs seems excessive for a 335d :| 14400/year and you wont even own the car for a few years?!

What is your mileage? I assume 1000 miles per month based on your fuel cost/mpg?
How are you going through rear tyres so quickly if you spend all your time stuck in london traffic? Surely fronts don't need changing every 10k either?

Did I miss a part where you have a huge savings pot because unless I did I'd just keep the car tbh. If you say you will struggle for a deposit to buy another car, I think you'll struggle more to get £30/40k for a mortgage.

[MEGA]

Not a huge savings pot but a growing one which we're using toward a mortgage not the car.

We are currently saving about 1500/month toward deposit.

If I have to dip into savings to get out of the car it defeats the objects. That money is for deposit, not car.

Not sure what you mean by "a 335d". The cost of the car will be dependant on how old it is, what the options are, and all the rest. People do buy nearly new cars. I wanted this one. I don't regret it. Just wondering if I should shift my priorities is all. I spent £30k more or less on a car. Just because you "can" get a beaten up 2006 335d in today's money for about 10-12k doesn't mean I would have ever considered that. That's why I bought a 2011 one

Dave

[MEGA]

My other big issue is insurance. A group 18/19 car in a London postcode at my age, and with an accident on my history - is not a great thing. But nothing I can do about that bar buy a 1 litre shitter - and I think I'd kill myself if I had to do 3 hours a day in such a thing...

[MEGA]

Originally Posted by blues n twos

What about a nice E46 M3? Pick one up for say £10k. If you sell yours for £21k then £2k deposit and £8k over 5 years at 6.5% ish

You have more than halved your outlay on car costs, 6 cylinders and 330bhp!

Just another one to throw in the pot

Jon

Yeah - an E46 M3 or 3.0i Z4 are the top two cars on the list should I choose to change.

But I'd rather refinance. Still waiting on a settlement figure at the mo to see feasibility

[MEGA]

Originally Posted by Drrncour

Remember that what ever debt you have is removed from the total value of the mortgage amount you are offered. So lets say your offered 200k mortgage, they will 95% of the time remove all loans from this amount. So if you owe 20k on the car, that's only 180k for the mortgage (less if you have other loans).

They also means test you on outgoings also, and there is a limit % to what they offer compared to what is paid out each month.

Aware - Not an issue. Joint income is 80k, and we want a 250k property.