Settle car finance or not

JubilantDoor972

Hi, a couple of years ago I made a few mistakes with my credit and was a bit silly. Got myself out and now here I am today debt free but with the dreaded very poor credit file along with a couple of defaulted accounts.

As a result of my poor credit my car finance interest rate is extremely high. I have enough money to be able to settle it if I wanted to and save around 1500 total on interest.

My question is this, is it more beneficial for my credit file to just leave the agreement in place and finish it? I've heard some credit is better than no credit. I do have a store card, credit card(which I regularly use to show I can pay) and mobile phone in my name all with an excellent record.

I am interested in saving the money I would just pay on interest, but at the same time would like to prove I can stick to an agreement.

Maybe middle ground would be to pay 90% of the settlement and continue the duration of the finance with a much lower repayment along with much lower interest? Is this something a finance provider would do?

Please could someone offer up any advice you may have? Many thanks in advance.

cjmillsnun

Pay the car off. If it saves you £1500 in interest, it's a no brainer. The cards and the phone will cover repairing your credit file.

JubilantDoor972

Thanks CJ. In comparison the credit card & store card are small balances. Does this matter? Or is it just the fact i'm clearing them in full that matters?

MallyGirl

continuing good behaviour is what you need. Pay off the car finance and be glad that doing so is saving you so much interest.
there should be no need to 'buy' good credit history

StopIt

£1,500 in your pocket is a far better balance than hoping that you'll get a better credit "score" by continuing with high cost credit.


Pay it off, and carry on using the CC in a responsible manner. Get another one and split the balances a bit if you want multiple accounts but paying huge amounts of interest to better your credit files is never a good idea.