Taking loan to pay off car loan?

wrrrrmrrr

Hi guys, I noticed my APR for a car loan (HP from Black Horse) looks quite high - 13,9% . I have a balance of £11 500 to pay (50 more months) or a settlement figure- £9100. I was thinking of taking a loan to cover settlement figure which would have a lower APR. Does it make sense at all? Any thoughts?

rosiesposies

yes, and a lot of people who have less than perfect credit do this when they become more creditworthy. Car finance is easier to obtain than a standard high street loan. 

wrrrrmrrr

Thank you for your reply. However I've checked loan eligibility calculator and it looks like I'm not eligible for any loan below 39,9%. Not sure why.
I'm 26, full employed with £22.5k salary and £330 part of my mortgage with additional income of my husband £25k self-employed, age 32. He is eligible 80% for a loan with non-guaranteed 3,1% APR. Why? I don't get it. I thought it is more probable for me to get it as he is self-employed.
Weird thing- When I've changed name for mine and changed sex to female on my husband's details I was still not eligible. Is it something to do with  sex?  

MallyGirl

it is because you earn £22.5k and already have a loan for a significant proportion of that salary. They will not trust that you will use the loan to pay off the finance

wrrrrmrrr

So is the £2.5k difference between me and my husband such a huge difference? Would he need to prove it? He only started self-employment a week ago and £25k is a minimum that he will earn. But will any provider ask for a proof or would reject application because such a short expreience?

MinuteNoodles

wrrrrmrrr said:

Thank you for your reply. However I've checked loan eligibility calculator and it looks like I'm not eligible for any loan below 39,9%. Not sure why.
I'm 26, full employed with £22.5k salary and £330 part of my mortgage with additional income of my husband £25k self-employed, age 32. He is eligible 80% for a loan with non-guaranteed 3,1% APR. Why? I don't get it. I thought it is more probable for me to get it as he is self-employed.

It's to do with the fact you already have a loan for 50% of your gross income plus a joint mortgage plus any other borrowing you have such as a credit card. Lenders assume you'll not clear off the existing finance when you take out another loan due to the numbers that haven't in the past so they calculate affordability based on both existing and new borrowing, not new replacing existing. It isn't the fact your husband earns an extra £2500, it's that he doesn't already have £11,500 of borrowing.

An 80% guarantee of eligibility for a loan is basically no guarantee of eligibility for that loan so your husband really isn't in that much of a better position than you.

wrrrrmrrr

Okay I do understand it, but in eligibility calculator it doesn't really ask for any other things that my part of a mortgage. So it only shows my part which 330£. It doesn't really ask about any other loans...

rosiesposies

a soft check will probably indicate the other debt. 

rosiesposies

the other option is your husband takes out the loan but i always shy away from joint debt outside a mortgage. 

wrrrrmrrr

Thank you guys, I think we won't get a loan on better APR so we will just save to pay it off earlier.