Car loan when already in HP loan

malcolmhire

Hi,

Basically I've had an HP agreement with Welcome Car finance for the past 2 years. I got a car from them as I had just finished uni with not the best credit record. Anyways I'm wanting to get a new car now as I want something a bit better than what I have.

So I am wanting to terminate the HP agreement as I've paid back half the amount of the agreement without missing a payment, so there shouldn't be a problem there.

Where I have a problem is that I would like to make sure I can get the loan I need for the car I want without getting rid of the car from Welcome first as I need a car for work.

I need a £13,000 loan for the car I'm wanting will this have a negative effect from the bank I am wanting to get the loan from?

Will arranging a meeting with the bank and explaining what I propose to do help in obtaining the loan I need instead of just applying for one?

I've checked my credit file and I currently have £10,000 in debt but £6,000 of that is the car the rest is credit and store cards that are all under control. These cards have had 5 late payments in the last year one day late in the most cases.

So with will applying for a loan before I terminate the HP effect my chances?

Thanks, Malcolm

drbesty

You won't get a loan for £13k, you already owe £10k and you have late payments on your credit file, buy something you can afford

lawrie28

how much is current car wrth, and how much do you owe?

A vt on your credit file is not great.

In a slightly more polite way to the above post, you already have a car that works. You obviously are not swimming in cash, hence the cards etc. Pay off the curent car loan, save a chunk of moeny for a decent deposit, and just run with the current wheels. I know that its not really what you want, but I do think you will struggle to get another HP deal agreed. And look at it this way, you will be saving money, paying back what you owe, improving your credit file, and puttng yourself in a better position long term.

malcolmhire

I have been reliably informed that a VT does not effect your credit file, the file is just updated with loan settled (just look like I've paid the remaining amount off) this is part of the credit act. It only effects getting credit from the same company again which was Welcome.

The car is roughly worth £3000 with £6000 left to pay so seems a no brainer to get rid now

Although I do have £10,000 debt £6000 of that is the car. £4000 doesn't sound much as I'm easily paying off £400pm of this debt off.

I currently earn £26,000 per year and can easily afford paying off debts and a new car. My bank has quoted me for a loan already and said I should be fine as they obviously know how much I have in the bank and how much I get paid. Obviously this is without a search of my credit file,
but I imagine they have details of your credit file.

All I was really asking is wether I have a better chance if I spoke to my bank and explained that I am looking to VT on the car when I purchase my new car. I just can't be without a car.

Superbiatch

When I was in your position, I got the finance set up on the new car first before settling the VT but credit was a lot easier to come by then.

But a VT didn't seem to affect my credit rating too much as I went on to get further credit and a mortgage 2 years later if thats any help.

malcolmhire

Superbiatch wrote: »

When I was in your position, I got the finance set up on the new car first before settling the VT but credit was a lot easier to come by then.

But a VT didn't seem to affect my credit rating too much as I went on to get further credit and a mortgage 2 years later if thats any help.

Thats great, I too will be looking to get a mortgage in a couple of years. VT shouldn't effect your credit at all as it is not listed on file I've been told by a friend that works in the HP industry, I just didn't want to discuss any personal details with him that's why ive asked all you lovely people.

smitchy73

I don't think VT marks on your credit file at all, as you've already stated it just shows as settled.

Your bank knows your savings and finances better than most so will be best to lend you, but shop around unless you're already getting a decent rate. Most banks now are doing a big affordability study around you when you apply as lending is now based more on affordability as they are now being a bit more responsible when lending to make sure you're not overloading yourself.

Just work out your figures and go for the best deal for buying the car, because if you get your loan, don't forget you'll be a cash buyer so you should be able to discuss/haggle for top discounts, check out the latest whatcar website/magazine for deals that are running currently.

malcolmhire

smitchy73 wrote: »

I don't think VT marks on your credit file at all, as you've already stated it just shows as settled.

Your bank knows your savings and finances better than most so will be best to lend you, but shop around unless you're already getting a decent rate. Most banks now are doing a big affordability study around you when you apply as lending is now based more on affordability as they are now being a bit more responsible when lending to make sure you're not overloading yourself.

Just work out your figures and go for the best deal for buying the car, because if you get your loan, don't forget you'll be a cash buyer so you should be able to discuss/haggle for top discounts, check out the latest whatcar website/magazine for deals that are running currently.

I'm looking to buy the car privately so I'll be doing some haggling for sure. I've been offered 15% from my bank over 4 years, isn't th best but like you say I have more chance with my bank than with anyone else and I might get declined with anyone else which would have an unessasery search on my credit file.

Just checked my experian credit score today(I know this is not my actual credit score) and I have 889 which seems good to me.

YorkshireBoy

malcolmhire wrote: »

I have been reliably informed that a VT does not effect your credit file, the file is just updated with loan settled (just look like I've paid the remaining amount off) this is part of the credit act.

You may have been "reliably informed" it does not affect it, but bearing in mind it could be reported would you want to risk it?...

http://www.experian.co.uk/downloads/consumer/creditfileexplained.pdf
(see the table on page 10).

ILW

Is it really likely that a bank are going to give a loan which brings total debt up to roughly a years take home pay?

Experian_company_representative

A VT is registered on your credit report, but just as an information flag that explains why the credit was repaid ahead of schedule. These flags don't affect credit scores.

James Jones