Financial novice needs help with car purchase financing dilemma

Oakeshott

The dilemma is this: I want to buy my car, which is coming to the end of its PCP, and then sell it right away for a profit (my balloon payment is £4500 and the car is supposedly worth around £6000). I have the money, but it's mostly in a Help to Buy ISA. I don't want to do anything that will negatively impact my ability to apply for a mortgage soon. Is there a way, aside from borrowing the money off someone,  I can finance the purchase of this car without jeopardising my ability to buy a house in the next six months? 

In other words I'm looking for sources of finance that don't involve a hard credit check. I have a credit card, but unfortunately I opted for a low spending limit of £1000. Would I be able to bump that up to, say, £5000 without affecting my credit score? I'm guessing not. I can take the money out of the ISA but it'll take more than a year to put it all back in, so I would lose my 25% bonus if I do decide to buy soon. 

PRAISETHESUN

Oakeshott said:

The dilemma is this: I want to buy my car, which is coming to the end of its PCP, and then sell it right away for a profit (my balloon payment is £4500 and the car is supposedly worth around £6000). I have the money, but it's mostly in a Help to Buy ISA. I don't want to do anything that will negatively impact my ability to apply for a mortgage soon. Is there a way, aside from borrowing the money off someone,  I can finance the purchase of this car without jeopardising my ability to buy a house in the next six months? 

In other words I'm looking for sources of finance that don't involve a hard credit check. I have a credit card, but unfortunately I opted for a low spending limit of £1000. Would I be able to bump that up to, say, £5000 without affecting my credit score? I'm guessing not. I can take the money out of the ISA but it'll take more than a year to put it all back in, so I would lose my 25% bonus if I do decide to buy soon. 

I'd avoid taking out new credit in any form just prior to a mortgage application, regardless of if it is a hard or soft search - the search isn't really the issue, it's having access to new credit which will impact your affordability. Using existing credit would probably be fine but I'm not sure if a substantial limit increase on an existing card would turn off a lender either - the fact you are looking for more credit suggests existing facilities won't cut it however. 

The other thing is that you are not guaranteed to sell the car either. If it takes a while to do, under your proposed plan you've got an interest-bearing loan of some sort eating away at any potential profit. For the sake of ~£1000-1500 it's probably not worth it IMO to potentially jeopardise your mortgage application.

foxy-stoat

Oakeshott said:

the car is supposedly worth around £6000

Where did you get that information from?  Webuyanycar valuation or man in a social distanced pub?

No one will lend you money without credit searches - I wouldn't worry about searches on your file effecting your mortgage application, its the debt you will owe appearing on your file.  If you can get the loan and sell it within 14 days then you can repay the loan straight away.

DrEskimo

You can't settle the PCP loan with a credit card anyway.

As above, what do you expect to get for the car as a straight trade (get lots of quotes from dealers and garages and WBAC) compared to what you expect to sell privately? If the difference is not large, you can just sell it to the garage or WBAC and they will settle the finance and pay you the difference without worrying about the hassle of getting finance and selling privately.

Shop around for quotes and haggle for the best price with dealers and garages.

Oakeshott

DrEskimo said:

You can't settle the PCP loan with a credit card anyway.

As above, what do you expect to get for the car as a straight trade (get lots of quotes from dealers and garages and WBAC) compared to what you expect to sell privately? If the difference is not large, you can just sell it to the garage or WBAC and they will settle the finance and pay you the difference without worrying about the hassle of getting finance and selling privately.

Shop around for quotes and haggle for the best price with dealers and garages.

I should have mentioned, the £6000 valuation is from We Buy Any Car, so I shouldn’t have a problem selling it right away. 

But DrEskimo, you seem to be saying that they will settle the finance for me and give me back the difference between what the dealership want and what WBAC are offering? Is that something they do? If so it would certainly solve my problem! 

foxy-stoat

Their business model is, we take the car and promise to pay you in a few days - not sure I would be happy to proceed on this basis but worth an ask.

DrEskimo

Oakeshott said:

DrEskimo said:

You can't settle the PCP loan with a credit card anyway.

As above, what do you expect to get for the car as a straight trade (get lots of quotes from dealers and garages and WBAC) compared to what you expect to sell privately? If the difference is not large, you can just sell it to the garage or WBAC and they will settle the finance and pay you the difference without worrying about the hassle of getting finance and selling privately.

Shop around for quotes and haggle for the best price with dealers and garages.

I should have mentioned, the £6000 valuation is from We Buy Any Car, so I shouldn’t have a problem selling it right away. 

But DrEskimo, you seem to be saying that they will settle the finance for me and give me back the difference between what the dealership want and what WBAC are offering? Is that something they do? If so it would certainly solve my problem! 

Yes they will settle any finance on your behalf.

Shop around though. Check that £6,000 is a fair price. A garage or dealer would do the same thing (although not all will simply buy the car without wanting to sell you another one...).