Bit of advice needed... 2 part question

biged670

Hi all,

I'm going to be applying for car finance in the next couple of months and in preparation for this I'm very reluctant to apply for any credit to limit the damage to my credit report.

My credit history isn't great but I currently have a credit card (My only card)with a balance of about £370ish on it. (The limit is only £450)The APR is quite high, off the top of my head its roughly 30.4%. I have been paying about £30 off it over the last couple of months trying to clear a bit of the balance in preparation for the HP application. Haven't spent on it at all, just chipping away at the balance.

Basically the first part of my question is, is it better to switch my balance to a new 0% balance transfer card which apparently I have a 90% chance of being accepted for (According to MSE eligibility checker). The card has a higher APR at 34% but the 0% balance transfer last for 6 months, this would potentially save me paying 2.5% interest each month and as long as I clear the balance in 6 months I should be in a better situation.

The second part of my question... Would this application, being so close to the HP application hurt my chances of obtaining the car finance? I'm planning on making the finance application in roughly aug-sept.

Does anybody have any opinions? Really unsure what to do, Should I just keep my current card, suck up the monthly interest, and leave my report the way it is until the HP application to improve my chances of being accepted?

Or, should I switch the card (If accepted) clear the balance within 6 months saving monthly interest payments for the next 6 months, but potentionaly damage the chances of the HP finance getting accepted?

All opinions welcome...

[Deleted User]

HP tends to be easier to get, as it is secured on the car, so I wouldn't worry too much about a single card application.

However, if you are only managing to pay £30 a month off the credit card, how will you be able to afford the HP payments each month?

biged670

Deleted_User wrote: »

However, if you are only managing to pay £30 a month off the credit card, how will you be able to afford the HP payments each month?

We're paying off some other things at the minute which will all be paid up in Aug... We'll have more money to play with for the HP come Aug hence not applying now.

Tixy

If you can pay off the card within 6 months then on the existing card its only going to cost you around £40 in interest
(assuming 2 more months just £30 and then 4 equal payments, which would need to be around £85 per month).

For the sake of a £30 saving (factoring in a balance transfer fee) it might not be worth getting a new card as there could be a small chance it could impact on you getting further finance.

biged670

Tixy wrote: »

If you can pay off the card within 6 months then on the existing card its only going to cost you around £40 in interest
(assuming 2 more months just £30 and then 4 equal payments, which would need to be around £85 per month).

For the sake of a £30 saving (factoring in a balance transfer fee) it might not be worth getting a new card as there could be a small chance it could impact on you getting further finance.

Yeah this was part of my of thinking... Then I was also wondering would a new application being accepted look better for me? Also it would potentially give me a credit card with a zero balance on a £450 limit. Would this be a good sign as it would be unused credit, also a new credit card with a greater credit limit being paid off monthly and no spending? Would these be better signs to a lender or worse?

Tixy

It is really impossible to say.
Different lenders have different criteria and will place a greater or lesser importance of the items you raise.

There is no right answer for all situations and all lenders.