Loan question

mushtafa

mushtafa

mushtafa

Soldato
Joined
17 May 2013
Posts
2,943
Location
West Sussex, UK
Looking at a loan for a new car.

£6k 5yrs 7.9% Total repayable £7,236
£8k 5yrs 3.9% Total repayable £8,803.20

Anything stopping me taking the £8k, using the £6k and keeping the additional £2k to pay it back?

That'll save me £432.80
 
Nope but those rates seem high regardless. Bad credit?

Edit: 6k for a car - 5 years feels very long. Will it even last that long?
 
I only require an extra £6k after the sale of my car.

The lower interest rate isn't available at £6k.

This is from NatWest. It seems on average with the other banks. I'm sure lower interest would be available on a higher amount.

I used 5 years as an example because I felt the interest was low enough to enjoy the lower monthly payment rather than doing it 3 years
 
The only thing I can think of as a possible issue is that if the loan is given very specifically and solely for the purpose of buying a car then by a very strict interpretation you might be considered to not be complying with those terms if you borrowed £8K specifically and solely to buy a car and used £2K of it for something else. Maybe. Potentially.
 
platinum87 said:
How do you expect a car to not last 5 years?

How do you expect those are the interest rates for "bad credit" ?
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He was thinking the car is only £6k and thus cheap second hand and thus likely not last 5yrs.

anyway the OP is using finance to top up his sale of his own car so the total sale value is probably much higher.
 
Fusion said:
Even if the car was £6k, plenty of cars that price will last 5 years. It’s not £600.
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You are right but I am coming from the motors section where someone is currently looking at a 12 year old range rover for similar money, lol
 
Thanks all. On another note, why the bank ask what the money is for? Do they judge your acceptance on it? The rates stay the same for whichever I select
 
mushtafa said:
Thanks all. On another note, why the bank ask what the money is for? Do they judge your acceptance on it? The rates stay the same for whichever I select
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They ask to make sure it's not going on gambling debt or to prop up a failing business etc. It's part of the risk assessment.
 
Take the higher loan/ lower rate.
Buy 6k car and pay the extra 2k back within a month, if asked you food a cheaper car you liked.
This way you get the lower rate and lower loan, aka lower monthly payments.

I did this many years ago at the advice of the manager offering the loan.
 
I didn't realise that was possible to pay more than the monthly repayment.

How does that affect the load? Do you pay the original monthly payment, and finish the loan before the 5 years. Or do they adjust the monthly payment for the term?
 
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