Car Loan

Craigsup

Hi,
I'm currently looking to change my car - I own a Vauxhall Corsa just over one year old.

Stupidly I bought it new in July 2014 with just over 10,000 on finance.
I'm now wanting to change my car to an older, but nicer car.

To do this I'm looking into taking a bank loan of around £8000 to pay off my existing car finance, and then either sell my car privately (to generate more value) or p/x with a dealer (less value). However when trying to apply for loans they are refusing me.
I know my credit score is in the high 900's as I used my one month free trial a while back (no finance since). I've never missed a payment on anything.

I only have this car finance, an overdraft and a few direct debits on my accounts.

Any reason why I'm being declined?

[Deleted User]

Income?

Your score doesn't tell you anyhting about how likely a lender is to accept you. It's all based on credit history, income, affordability and so on.

Nearlyold

You are probably being declined because from the new lenders viewpoint you are asking to borrow a further £8,000 when you already owe £8,000 which would mean £16,000 of debt in total and they don't think that looks a good risk. NB is the Vauxhall Corsa finance a 0% APR deal, if it is, you might like to check the paperwork as occasionally some of them are not HP but personal loans which means you could just sell the car without clearing the finance. Can't see what you would gain anyway by borrowing first to pay off the loan if you part ex as the dealer could clear the finance as part of the deal

Do you actually need a "nicer" car?

DCFC79

Craigsup wrote: »

Hi,
I'm currently looking to change my car - I own a Vauxhall Corsa just over one year old.

Stupidly I bought it new in July 2014 with just over 10,000 on finance.
I'm now wanting to change my car to an older, but nicer car.

To do this I'm looking into taking a bank loan of around £8000 to pay off my existing car finance, and then either sell my car privately (to generate more value) or p/x with a dealer (less value). However when trying to apply for loans they are refusing me.
I know my credit score is in the high 900's as I used my one month free trial a while back (no finance since). I've never missed a payment on anything.

I only have this car finance, an overdraft and a few direct debits on my accounts.

Any reason why I'm being declined?

You liked the car when you bought it right ?

Whats changed over the year ?

Not having a go.If it were me Id stick it out or do as Poppasmurf has suggested.

poppasmurf_bewdley

Nearlyold wrote: »

You are probably being declined because from the new lenders viewpoint you are asking to borrow a further £8,000 when you already owe £8,000 which would mean £16,000 of debt in total and they don't think that looks a good risk. NB is the Vauxhall Corsa finance a 0% APR deal. Can't see what you would gain by borrowing first to pay off the loan if you part ex as the dealer could clear the finance as part of the deal

Do you actually need a "nicer" car?

All the above is true. To service a debt of £16k, you will need a salary of about £32k. Do you have that sort of salary? If not, that's probably the reason why you were declined.

You may be better off trying to borrow enough to pay off half the current credit agreement and hand the car back under the early termination clause (assuming you have it on HP). Only you can tell if that way would be cost effective to you.

Tiddlywinks

Can you really afford a 'nicer' car or do you have a severe case of 'champagne taste but only beer money'?

Nearlyold

Tiddlywinks wrote: »

Can you really afford a 'nicer' car or do you have a severe case of 'champagne taste but only beer money'?

Tiddlywinks is right to ask, Flashcaritis is a disease that can cause serious financial difficulties, you should only ever buy the nicest car you can easily afford to buy and run.

forgotmyname

£8000 loan to pay off a car thats worth less than £6000?

So with £2000 left to pay on the loan after selling the car where will the money come from for the other car?

As you have already been declined, when you do find a loan it maybe at a poor rate and won't you will then need another loan after that to buy the new car? Whilst still paying off the £2000 difference?