Can't get a high enough mortgage due to car finance

6 Replies

Hey guys my name is chris , I was wondering if you had any ideas on what I could do I tried to get a mortgage through my bank and they'd only lend 34k because of my car finance , I could afford a mortgage aswell and really don't know what to do and have no one really to talk to as I live with my grandparents .

I was thinking of buying a flat and just paying it off then sell it once paid for but being 26 now it's going to be a while till that would be paid off , do you have any advice what to do as I seem to be stuck . Thanks guys and love the Bp YouTube channel!

tia

so the asset that loses value and costs you money is preventing you from buying an asset that makes money and increases in value....

ok here's some tough love. You have no business having a car payment, there is no possible way you can reconcile the financial burden. You are already receiving a subsidization for living expenses, that car is an anchor holding you back from financial improvement.

sell it, finance the negative equity with a personal loan or credit car and buy a cheap beater like you're supposed to have. Then buy a house and make some money. I usually advise to spend 3-5% of net worth (or less) on a vehicle.

you're only stuck because you got yourself there, and you can get yourself unstuck easily.  

Dump the car! Like you, I'm 26 as well. I got out of college, grabbed a job making 50k a year and proceeded to step right into the path that most take. By the time I was 25, I'd owned a 2014 sierra, 2016 Silverado, and finally a 2017 Sierra. All new, all financed or leased, all STUPID! I realized how bad my truck was holding me back, just like you are doing now. Against all my buddies  dumb opinions and recommendations I walked into that dealership with a truck that had 3k miles on it and a check for $5500 bucks to cover my negative equity and told them its all theirs. I walked out feeling like a king despite the smirks for the slick haired car salesman who felt he had just scored the win. Fully burdened cost of that truck was nearly 700 dollars a month. Don't fool yourself, the car payment has to go. That was about a year ago. With that freed up cash in my budget I've been able to pay off a bunch of debt and purchase 2 cash flowing duplexes since last April. If you want to play ball you've got to get serious, your friends or family may laugh now but if you play your cards right I can promise you will get the last laugh. Don't let a car payment make your life choices. SELL IT!

I think you need to look at your finances like a reality TV show. Lets say the point of this reality show is to increase your net worth so you don't starve when your are old. Lets say you have to prepare for when your body breaks down and can not work anymore. What would the people on their couch watching be saying? What would you be say at the end of the episode if you were watching three people go through these three scenarios. 1st person buys a cheap car. 2nd person buys your car and decides to take the loss and move to a cheap car paying the $4,000 difference. 3rd sticks it out with equivalent of your car. You asking the question was the first step in fixing the problem. It will suck to pull a loan to give away a car but you are trading it for a house.

I haven't been on Bp long but you guys are awesome and i appreciate your help alot  , so would you suggest buying a cheap car hoping it doesnt break down or go down the route of renting a car ? i'm currently paying £400 a month finance which i know is stupid now but at the time i was in love with it , and now i'm looking back seeing the mistake of not thinking long term . I could wait 2 years and the car would be paid off whilst saving more for a house deposit theres alot of options i just know either way i need a car to get to work.

Thanks for your advice ! 

@Christopher Smith you want to buy a cheap but reliable car. Look in the market around you and see what a reliable used car costs. Around here it would be 4-6000 dollars. Then go find one that’s ideally less than 10 years old and less than 100k miles or just over and buy it in cash. If you would have to rent a car, I’d just keep this one until it’s paid off.

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