financing - how can I do it?!

spaced_2

Hi All

I have been drooling over a car that I want to get but I have a bit of a dilema.

I want to finance £10k of the total price, and pay the remaining £10k in cash.

The problem is that I am a director of a small company, but for the last 4 years have only paid myself £400 per month, preferring instead to re-invest the money in the business.

I have one credit card in my name which I only use for company expenses and it is paid in full every month.

I have no mortgage and no other debts, but last year I phoned up my credit card company to ask for my credit limit to be raised to £5k (from £1600) but my application was declined. Then out of the blue a few months later I received a letter saying that my credit limit has been automatically raised to £5k! I have no idea why!

Coming back to the car - because of this experience I don't want to turn up to the dealership agree to purchase the car and then have my application declined at the last minute and suffer the embarrasment that comes with it.

I am worried because I was declined with the credit card - they always ask how much do you earn etc etc, and I never know what to say because I do have the option of paying myself annual dividends and therefore show a nice income - it's just that I have never needed to! Is this even an issue when it comes to financing a car?

Can I just make up a figure when I fill in the application to show a reasonable income? Do they check or want some proof of income such as payslips?

I'm visiting the dealership on Friday, so I know I've left it kind of late to be asking this question but the possibility of being declined didn't actually occur to me until last night (doh!).

Anyway, any help/suggestions/tips will be much appreciated!!!

Many thanks,
Spaced

[Deleted User]

Wouldn't normally recommend this but you could get online access to your credit report and check your history; think there are free trials available.

jonesMUFCforever

director - small company - is the company making money ie does your balance sheet showing a growing capital account year on year?

If so approach your business manager who may be able to arrange a business loan for you.Register the car in your business name to get tax relief on the interest.

spaced_2

Thank you for your replies.

Yes the business does show growing capital - but my accountant says that the tax I would pay on a company car would outweigh the tax relief on the interest.

I'll see if I can get an online credit report before tomorrow - doesn't it leave a trail (or something) if you check the credit report?

divadee

spaced wrote: »

I'll see if I can get an online credit report before tomorrow - doesn't it leave a trail (or something) if you check the credit report?

with experian and equifax you can view the reports instantly online and with the free trials around it wont cost you anything either.


no it doesnt leave a trail on your report all it would show is that you applied and they confrimed your details thats all, but ony the credit check company see that no other companies at all.

spaced_2

well, I went and checked my credit report on experian/creditexpert.com and everything seems fine there - no late payments, no court judgements, everything settled and up-to date, but I couldn't see my score without paying the £5.95.

Is it worth the money just to find out my score?

The only thing I'm concerned about now, is when I apply for the finance and they ask about my income can I just name a reasonable figure?

Rafter

The score is meaningless as regardless of your credit worthiness whether a lender will give you credit depends on other factors in their 'scorecard'. These will include your earnings, occupation, years with bank, postcode, age and anything else the wizz kids in their credit departments have found which correlates with the risk you may default.

Generally self employed or company directors find it much harder to get good value credit than someone who is employed by a larger organisation. You don't have the comfort of redundancy programmes, sick pay and other things that might keep you afloat is something meant you could not work for a bit.

If the business is doing well could you not take out a loan to increase the cash there and pay yourself a divident or indeed loan yourself the money at the same terms through the company?

Otherwise your best option might be some sort of HP deal with a car dealer. Particularly if you are putting down a large deposit, they have the security for the loan of the vehicle and will be less concerned about your occupation.

As to whether to fabricate your income on a loan application, you are breaking the law. However, if you feel that the business would support your drawing an income of say £30,000 a year but you just choose to draw £400 a month (do you live in a cardboard box?) then perhaps you can argue it is your choice to keep reinvesting but your notional income is higher than that you choose to pay yourself.

Enjoy the car! I was drooling over a nice car a year ago and now I just smile every time I get into it!

R.

spaced_2

Hi Rafter - thanks for the post... very useful info there!

The £10k I'm putting up in cash is actually a dividend which is why I'd like to finance the rest.

I suppose the business could loan me the remaining 10k as well but 20k just seems like so much to take out of the company in one go!

My accountant says I could draw the equivalent of an annual salary of round about the £24k mark (including dividends) - so if I were to name this amount as my annual salary would I still be breaking the law if I said I will earn £24k in 2007?

james_and_nicky

You should speak to a proper motor finance company who i would think could arange this very easily for you - they did for me last month! I hadn't had credit for a while and thought the same thing but it wasn't a problem at all. I've got the guys number if you want to talk to him - I'd better not put it on here but if you would like it then drop me a mail and I can forward it to you. Good luck with whatever you choose.

jonesMUFCforever

james and nicky - That's two posts I have read now where you ''offer'' to help by people mailing you.
What's the matter are you too shy to offer help on the boards?, perhaps its more profitable if you declare your real intent.