A report in The Times highlights car finance deals are preventing people from taking out a mortgage.
Aaron Strutt, the product director at Trinity Financial, told The Times: “We have had a few cases where lenders have said, ‘You need to pay off one of these loans,’ especially if the client has a couple of cars on finance. We have people with £500 to £700 a month in repayments on a car, and they have two of them.”
Mr Strutt says that a family with a sole earner on £60,000, two children and £1,000 credit card debt could expect to be offered a mortgage of £300,000. However, if the couple had a car loan costing £420 a month, the amount they could borrow would fall by almost £40,000.*Figures generated from Accord Mortgages affordability calculator.
Approximately 90% of cars registered in 2017 were purchased with a reported £34 billion of finance.