Buying a house soon, but need a new car now. Buy with cash or take out a car loan?

Hi,

I have saving in a CU.

I am looking to apply for a mortgage in about 6 months.

My question is, I want to buy a car so should I withdraw cash from CU and just pay for car upfront or should I take out a loan for car.

It doesn't make sense to pay interest when I already have the money but I also don't want such a large chunk coming out of my savings...

What's the best option for me?

Also, I have moved to an area with very limited public transport options...

If you have a car loan it will reduce the amount you can borrow on a mortgage. If you have the money it makes sense to pay up front. Will you still have enough for a deposit?

Nutso said:

Will you still have enough for a deposit?

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This is the key issue. Don't spend your deposit on a car.

If you do decide to borrow for the car, make sure you don't borrow from the Credit Union. As they won't let you withdraw your savings while you have a loan outstanding.

1) Your absolute focus is to buy a house so have all your resources ready for that.
2) So buy as cheap a car as possible so you can keep as much cash as possible or have as low a loan as possible.
3) After you have bought the house and know where you stand financially, you can trade up the car to meet your actual requirements.

You might decide with your level of car usage, you need a brand new SUV with alloy wheels. And that is fine. But for the moment get a basic reliable cheap second hand car.

Brendan

gerprem08 said:

in about 6 months

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Most banks look for 6 months statements. So as above, buy a cheap car now, then start the 6 month clock and apply then when that withdrawal won't show (unless of course the bank your savings are in is one of the banks you're applying to)

Wanting too buy a car is always nice but do you actually need a car + all the bills that go with it ? Would a bicycle or ebike be an option until you get your home.

You have to have at least 10% (if first time buyer) or 20% deposit of the purchase price available in cash.
So you need to budget for how much can you spend on the car while still having the legal %.
Remember you will also need extra cash for stamp duty, solicitors fees, moving expenses.

Pinoy adventure said:

Wanting too buy a car is always nice but do you actually need a car + all the bills that go with it ? Would a bicycle or ebike be an option until you get your home.

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Or even a taxi! Car insurance +car tax+ depreciation = a lot of taxi journeys.

gerprem08 said:

What's the best option for me?

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Your specific circumstances are important.
You didn't mention that you already had your 10% deposit saved last August which should factor into any proper advice.

As others have said, think long and hard about the options, before buying a car.

If you only need a car part time for example, and other modes of transport are not an option, then would a service like GoCar, or some form of relatively flexible car lease / car hire, be an option? With tourism from abroad down significantly, a car hire company might do a very competitive rate for a fixed period, or regular rental deal etc.