The creator of the best-selling UK
car price guide, Parker’s Car Guides, has warned
car buyers not to increase
their mortgage for
car finance purposes. The company warn that with rising food,
fuel and
energy costs,
remortgages to purchase cars could leave consumers in financial
strife.
For those borrowers that
remortgage to afford a
new car, devaluation of the
vehicle alongside higher
loan
repayments could end up costing a lot. The Editor of
Parker’s Guides, Kieren Puffett, reportedly commented:
As
house prices continue to fall and repayment rates start to
rise, some car owners will find that it wasn’t such a good
idea to pay for a new car with the
equity of their home. In the most extreme cases,
home owners who financed their lifestyle – including new
cars – with this
money, could find themselves a serious repayment headache that
selling their existing car won’t solve – thanks to
depreciation. It’s an incredibly expensive and inefficient
way of
borrowing money .
He reportedly concluded: The trouble with
paying for a car by
re-mortgaging is that unlike your house, a car does not
appreciate in value over time. Many owners will find that they are
still paying for a car that was scrapped many years ago by the time
their
mortgage comes to an end.
