Advice needed re: personal loan application to pay balance of car finance - HELP!!!

katehesk

Okay...In May this year I got a new car and the finance I took out was roughly 10k over 5 years.

Since then I have managed to accumulate almost 5k in savings (a very significant part of this came as a gift from my gran'ma).

The APR on the car finance agreement was rubbish...14.9%, and I want to take out a personal loan for roughly 5k over 2 or 3 years and use my 5k of savings to pay the remaining balance on the car finance, in order to save literally thousands in interest.

But, i'm worried i'll be rejected by a loan company.

I live at home with my parents and work full time in the private sector and at the moment i'm on a relatively low income but have no significant outgoings other than my car. I've had credit cards in the past and have never defaulted on any payments etc and recently got an experian credit report (not score) and as a result have closed all credit accounts that were open but unused. Other than my car I have no other debts apart from an overdraft which I occasionally dip into.

I want to apply for an Alliance & Leicester loan where the typical APR is 8.9% and wondered how likely I am to get that typical rate based on my current circumstances and also, If I am rejected how is this likely to effect my chances of getting a similar loan for the same reasons in say, six months time.

I also wondered whether I am better off applying in branch where I can explain that the loan is to pay off the debt of the car finance as opposed to applying online where it may seem I want to take out this loan in addition to the car debt if that makes any sense?

Please help, your advice is much appreciated

katehesk

Anyone? Please?

katehesk

Wondered can anyone help me with this please?

PNPSUKNET

it shouldnt matter where you apply, you will be asking for a debt consolodation loan. Its dependant on how much your income is to be honest

CLAPTON

how much is your income?

if you live at home with low outgoings why do you ever use your OD?

what sort of finance do you have on the car?.. personal loan, HP ?

katehesk

My income is just under 12k PA. The finance I have is HP.

I use my overdraft occasionally because it's free and any excess goes straight into savings.

CLAPTON

in these troubled financial times it's probably best not to use your OD at all as many banks are showing this on the credit files and regular use looks like you are in financial trouble.

given your current level of debt and your low income I doubt in anyone will give you a loan... although you may intend to pay the HP off, you aren't obliged to and they will see your total debt level as 10k (HP) plus 5k loan.
However an application or two won't affect your credit record.

What does your HP agreement say about early settlement?

Clive_Woody

katehesk wrote: »

My income is just under 12k PA. The finance I have is HP.

I use my overdraft occasionally because it's free and any excess goes straight into savings.

With a salary of less than £12k and an outstanding debt of £10k, I suspect the chances of you being offered additional money as a loan is unlikely.

Assuming you can make early re-payments on your car, my advice would be to pay off the £5k from your savings now and do everything you can to reduce the remaining debt with any extra left each month.

Maybe in 12 months time when the outstanding debt is less than £5k and maybe your salary has gone up you could consider applying for a loan, try your own bank first.

katehesk

I'm not sure about making overpayments, but I requested a settlement fee already and I don't incur a penalty for settling early, which is why I would rather get a loan for 5k over 2 or 3 years than over pay on the loan. It's annoying, because the loan would be to pay roughly 50% of the car finance and I know I can make the payments, having been paying a much higher monthly amount and not struggling to do so for the last six months, but I did fear that a potential lender would view any loan as an additional debt so i'm in a fix really.