Maximising chances of getting credit???

pk83

Hi,

I am planning to apply for an £11,000 car loan next month. I have around £12,000 credit available on 3 credit cards (I have paid off all outstanding debt on the cards). Should I close these credit card accounts before applying for the loan to increase my chances of being accepted?

I also owe around £1,500 on my existing car loan. I will be selling my existing car to a family member for £3,500. Would I be better clearing/settling this loan before applying for another one?

Thanks for any advice,

Paul

[Deleted User]

might depend on what your income is?

pk83

I can easily afford the repayments (salary is £31k) - I've just heard that too much available credit is not good?

brians_daughter

A lender will usually look to lend you around 50% of your salary. so if you earn 31k you can say £15.5k is what financial institutions are willing to 'allow you to go up to'

These 'rules' may be diff if you are looking at a car finance package, but yes too much available credit can be bad. The lender sees you have access to £12,000 - and there is nothing stopping you racking up £12k of debt on these cards once you have the car loan, therefore maybe they would think twice before lending to you as you could end up with a £11k car loan and £12k of cc debt - not saying you would do that, but just pointing out how they may view it

If you are looking at getting the loan next month closing one/some of the cc account/snow would give time for the CRA's to update the systems to show the account is closed!

BTW what you looking at buying?

Tixy

I'd suggest don't close all 3 cards. Perhaps close 1 and drop the credit limit to the other 2 to around a thousand each or so.

It can take up to 5-6weeks for these changes to appear on your credit report so might be worth waiting a little longer if you can, or at least checking to see whether they have been updated just before you apply.

paulmcerlean

You shouldnt need to close them if you are taking a car finance deal as opposed to a loan. The main car finance companies will not ask for your salary details when taking into account your suitability for a deal.

pk83

Thanks for the replies folks, I will be looking at a loan rather than a finance deal as the car I am intending to purchase will be around 4/5 years old and possibly from a private seller. Brian's daughter, it is a Mitsubishi Evo VIII FQ320 MR. Not a very sensible vehicle but you only live once...

bouncydog1

Why do you want to spend £11k on a 4-5 year old car - by the time you have paid it off it won't be worth hardly anything - add to that maintenance, high insurance costs etc - seems a bit of a waste of money!

pk83

bouncyd!!! wrote: »

Why do you want to spend £11k on a 4-5 year old car - by the time you have paid it off it won't be worth hardly anything - add to that maintenance, high insurance costs etc - seems a bit of a waste of money!

The car cost £30,999 new. On a track it will compete with performance cars at 3 or 4 times the (original) price - I think it's a bargain. This is a hobby for me, I'm not buying it as an investment.

~Brock~

paulmcerlean wrote: »

You shouldnt need to close them if you are taking a car finance deal as opposed to a loan. The main car finance companies will not ask for your salary details when taking into account your suitability for a deal.

It wont be long before they are forced ask for, and assess, this information to in order to comply with the OFT responsible lending guidelines and the Consumer Credit Directive.