Applying for car finance and a loan - a little advice please

Terri218

Hi all.


I am hoping to apply for car finance soon for the first time (both my previous cars were bought outright). I have a very good credit rating (962 approx. according to Experian). The car finance will most likely be the 0% deal with Vauxhall.


A close friend has asked me to help them by applying for a loan for them. They are unable to get one themselves due to a poor credit rating even though they can afford to make repayments no problem.


At the moment, I have about £1900 outstanding on my credit file, which is the value of my two overdrafts. I am in the process of selling my car privately and am going to use the money to pay off my overdrafts completely.


My question is this: what kind of impact, if any, will getting a loan (approx. £10,000) for my friend have on my car finance application? I personally make all direct debits on time - car insurance, phone contract, etc. I really want to help my friend in their difficult time but am *very* worried it'll stop me from getting car finance.


Can anyone give me some advice please? Has anyone been in a similar situation and can shed some light? Thank you

[Deleted User]

It will impact you massively. Firstly by reducing the likelihood of you getting further credit for your own needs, and secondly when they stop paying you back.

The fact they are unable to get their own loan should tell you that they are not a safe bet. Avoid like the plague.

Paully232000

It will impact your ability to get credit in the future, whilst this loan is being paid back, dependent upon how much you earn, and the level of credit you may need in the future.

Also, before you agree to the loan, read this forum about the pitfalls, and find out why (if you have not already) your friend cant get a loan, and ask yourself do i really want to lend £10K to a person who has difficulty getting a mainstream loan?

I'm not saying it will all end in disaster, but it could.

National_Debtline

Hi

As the others have said, if you take out the loan for your friend you risk the possibility of them not being able to repay you at some point in the future even if they can afford it at the moment.

Also, taking out a relatively large loan is likely to have a negative impact on your ability to get the car finance. It’s difficult to say exactly how much as it will also depend on things like your salary and ability to afford more finance, but the extra debt would certainly be factored in.

At the very least I’d suggest that you make sure of getting your own car finance first.

James
@natdebtline