Should i bother applying for car finance

jamiej2k6

Hi All

Its coming close to April when i plan to apply for car finance. I would be after 10k car finance (not from a main dealership) with a 2-3k cash deposit over 5 years. Im 25 and am in full time employment and earned around 25k last year from my main job.

The problem is that i have 5 old defaults on my credit file from my younger days that will all show as settled next month when i finish my debt management plan. I also have an aqua card with a £200 limit which has been paid off fully and only use it monthly to try and boost my credit file. My score was between good-excellent last year when i checked Experian (i understand it doesn't make a difference). I also have an amigo loan thats coming to an end next month that has been paid off in full and i haven't applied for any credit all year.

Even with my defaults and past loan paid off fully i know that the defaults will be on my file but will just show as settled and that doesn't change the chances of me being accepted on finance.

My question is, it even worth applying for finance with the state of my credit history in April ?

engineer_amy

You haven't completed your DMP yet, but you are already planning on taking on 10k more debt?
Do you really need a £12-13k car? Can you not spend the 2-3K cash you will have on a run around, and then save the money that you were paying into your DMP to build up a new savings fund so you can get a better car in a few years time?


But to get to your original question -
defaulted accounts will stay on your record and can be seen by lenders for 6 years from the original default date. How old are these defaults?
Also, not sure how picky car finance lenders are, but some lenders do look unfavourably on recent payday/short term loans


https://www.moneysavingexpert.com/eligibility/loans-calculator/
that link might give you some idea whether you might get a loan without leaving a hard search on your file.

SeanG79

The score means nothing, the information on the credit file is everything.

How long ago were the defaults recorded?

No one except the lenders can tell you your chances of being approved. However if the defaults are 2-3 + years ago and since then everything has been paid on time, then with the 20-30%, car finance lenders are more inclined to approve the finance. You are more likely to be approved for car finance than an unsecured personal loan.

jamiej2k6

Hello

Thanks for the replys.

Engineer amy- Sorry for the misunderstanding it would be a 10k car and id be putting 2-3k deposit down against it so it would be 7-8k finance to pay off and whatever the interest rate is ontop.

My latest default is 4 years old. The rest are due to drop off my file this year. My dmp plan ends next month and im not planning on applying for finance until 2 months after that when i have no debts being paid off atall apart from my usual direct debits like my phone bill and car tax etc which arent in default and i have no recent pay day loans. Amigo loans is a guarentour loan which i took out in 3 years ago to purchase a car and am about to pay it off in full next month and i also haven't missed a payment or defaulted on it.

The car i took out with that amigo loan i have sold late last year due to its engine blowing up twice and me having to pay for it myself to get rebuilt. i currently own a "cheap" runabout and so far thats costed me nearly £300 a month in repairs and more in fuel so yes im looking to get a nice 10k car that i can easy afford to pay for and run with a garage warranty on it.

Im not expecting to get a low rate finance deal or be approved atall as i understand my credit history is poor im just seeing if its worth applying atall

And i wouldn't be applying for an unsecured loan, it would be car finance which i guess is classed as a secured loan

jamiej2k6

SeanG79 - Thanks for the reply. I understand the score means nothing. I worked for experian a while back.

the latest default on my file is in 2012 and the earliest is in the beginning of 2009. And yes agreed i wouldn't dream of applying for a personal loan with the state of my credit history

SeanG79

With the defaults being more than 3 years old, the fact that they will show as satisfied, combined with the fact that you have repaid the Amigo loan and have the credit card managed satisfactorily, I would suggest you would be able to get vehicle finance.

Lenders that would most likely turn down an application would be the ones you defaulted on, or entities within their group.

jamiej2k6

SeanG79 - Well fingers crossed but im not getting my hopes up ill just have to see at the time. The main thing for me is getting everything showing as settled so im going to leave it a month to give my credit file a chance to update then ill be applying for finance.

The main purpose of this post is just to see if its worth even applying for finance with the state of my credit file. Your input is appreciated.

Also just to add my defaults are from phone bills my friend didnt pay that was in my name 2 pay day loans for small amounts from 4-6 years ago when i had my head in the clouds.

Herzlos

Car finance tends to be quite easy to get as it's somewhat secured on the car (despite being in negative equity from the start). Who knows what rate you'll get though. 15-20%?

jamiej2k6 wrote: »

i currently own a "cheap" runabout and so far thats costed me nearly £300 a month in repairs and more in fuel so yes im looking to get a nice 10k car that i can easy afford to pay for and run with a garage warranty on it.

But borrowing £8k over 3 years with no interest will cost you £222/month in repayments alone (5 years is £133). Then you'll still need to deal with fuel and repairs (garage warranty is likely to be garbage once you've had it a couple of weeks, unless it's an original manufacturers warranty).

You're likely going to be paying more, per month, in repayments alone, in an effort to save money.

You'll be much better off buying a car in good condition for your £3k cash deposit and putting what would have been your repayments into a savings account.

jamiej2k6

Herzlos- since owning this cheap run about im currently paying £200 to amigo, a minimum of 2-300 a month on repairs or maintinence and then £60 minimum a week on petrol.

The thing is i can comfortably afford to pay all the above monthly and clear all my bills and have spare cash for the month but id rather have more spare cash and not have to pay for ridiculous repairs each month.

The plan is to get a diesel. pay 200-250 on car finance a month. Being diesel i wont have to put fuel in it constantly and diesel is also relatively cheap now and hopefully it wont fall apart like the runabout i own now. I understand there is no guaranty a car wont break but it would be nice own a decent car and not have to worry to much about wheels and windscreens falling off it ... Even if i did get the car i wanted and i still had to pay the above on it id rather do it on a car i actually wanted and like instead of what i have now ha

I am expecting high interest also. For example at 20% interest on what i plan on taking out, the monthly repayments are £211 which is £10 more than im paying to amigo at present. Ideally id take finance out over 3 years and happily pay 250-300ish. 5 years is just a maximum figure

Herzlos

You can get all of that without having to spend £10k on a car. Even if you spend £5k on a car you'll be in better shape.

Are you looking at something specific that costs £10k?

jamiej2k6

yes im after an e60 535d. Again 10k is max can get them from 6k. ideally id be looking to get one in the 9-10k range. To be honest i dont even need a new car, after my astra gsi blew up for the second time and having spend well over 10k in repairs and upgrades in the 2 and a half year of owning it i purchased a clio 182 in October 2015 for a temporary cheap run about. Problem is i have 2 kids and do alot of miles for work and my social life so im looking at 535ds. I know how much money i have spare and the running costs involved im not a dreamer i look into every little detail about everything. Again id like to clarify the running costs and repayments arent a problem atall money wise i shouldn't of even mentioned the price of the car tbh. The main question im asking is, is there a chance i will get approved for finance in the time scale i mentioned with a chance of approval