Loan to pay car off

Blitzwing85

I have car finance with Audi for a new car.

I am simply paying the interest and will owe the final balance after 3 years.


The current loans on offer today are about 2.5% lower than the APR with Audi.

Am I able to take out a new loan, to pay off the Audi finance or is that classed as debt consolidation and come under a different loan type? (which would have a high APR and be pointless).

Basically, I intend to use a loan to 'buy' the car outright but wasn't sure if I would be given the loan for that reason as it is essentially just using a better loan to pay off a finance agreement + final balance.


I took the finance out because I got £1000 off for doing so, which made it about the same as if I'd used a loan instead i nthe long run. And the finance has no early payment charge

redpete

Blitzwing85 wrote: »

Am I able to take out a new loan, to pay off the Audi finance or is that classed as debt consolidation and come under a different loan type? (which would have a high APR and be pointless).

I got a loan from Sainsbury to pay of a VW Finance loan for a new Skoda - so similar situation. The interest rate you will be offered depends on a number of factors though, including amount of existing credit.

Blitzwing85

redpete wrote: »

I got a loan from Sainsbury to pay of a VW Finance loan for a new Skoda - so similar situation. The interest rate you will be offered depends on a number of factors though, including amount of existing credit.

Thanks

I guess I'll apply for the loan then and see if I get the lowest offered APR.
I've been told from a few financial providers that i'm their 'ideal' customer when applying for things and that it came out as good as it can so I imagine I'll be able to get the best rate.

Apples2

It will be considered debt consolidation as you are using one loan to pay off another.
The lenders will add the two loans together when considering your application and subsequently assigning an APR.

The acceptance and rate is dependant upon your financial position.

Blitzwing85

That was the bit I wasn't too sure on. Where does the Audi Finance stop, and the purchase of the car start as the finance is only paying the interest then you can buy the car or trade it in for another.

Hm, I think I'll just pay everything off with my savings to make things easier. I like to have the money in the bank and the loan would only cost me about £500-£700 over 5 years so I figured I'd prefer the money in the bank but it's still throwing money away when I don't need to if I have the cash to pay it all off.

It's not like I'll need a lump sum of cash anytime soon so it doesn't make much sense to have a loan running.

pvt

Blitzwing,

I'm curious that you say it is an interset only loan. I have not come across this for car finance before.

Did you pay a very large deposit? I would have thought the loan company would never want to be in a situation where the value of the car was less than the outstanding loan.