Does a Payment Holiday on a loan impact a new loan or car finance application?

AJ84

Hi all,
Apologies in advance of a massive starter thread but one thing I have seen in numerous threads is lack of information and then drib/drabs flowing in throughout making it messy.  If you prefer going straight to the query, go down to "The question really is" 

Background Checks:
CRAs are all good aside from showing a no update on a loan for 3 months payment holiday.  It is showing around £2400 more on CC balance than there actually is as the banks have not updated Experian yet for instance for almost 2 months) putting the CRAs as 21% of credit utilisation vs 17% in reality.
Salary circa 55k + a contractual car allowance on top (combined with partner salary is double)
Outstanding Debts: 8k 0% CC (due to be £0 by May/June) and 8k unsecured loan (more about this below) + joint mortgage
Other cards include 2x Amex but are revolving - day to day expenses go on this and on pay day, they're paid off.  A Cap1, Halifax and BarclayCard with 0 balance (and have been 0 for a while) - all in all, around 50k of available credit ... maybe a bad thing?  Not impacted me before however in terms of mortgage or loans.

Story:
As I get a car allowance (around 500 a month), I put as much of this as I can into the car payments usually ending up with around £30 left over.   Thats my budget.
For the current car, I took out an unsecured loan as rate vs dealer was much lower at 3% (25k) This is with my current bank + a small HP with the dealer for the balance (5k) - the latter I paid off earlier on in the year.
I am in a unique position whereby the car I have has gone up in value despite dieselgate to the point if I trade it in, I can pay the loan off and have around 9-10k in my pocket towards another car which I have seen. 
Advice:
What I have done however is just come off the payment holiday on the loan with the resuming of payments going out a few days ago - I know as a result, the current bank is no longer interested in providing any topup options.  Is this likely to impact me elsewhere too?
I attempted a Halifax 25k loan last week and was declined it although unsure if this was a glitch as it kept saying no initially on identity checks but then suddenly went through to the hard search and fell over.  I doubt it's the credit files as I check these very regular and all that happens is overall debt just goes down - I do however only have a credit card with them that has remained on £0 for a while now.

The question really is - I don't want to keep hitting the hard searches so do I stick with the dealer finance which will be higher APR (within allowance) but likely to be more successful as its secured on the car, or should I attempt to do one more search?
Currently Experian Car Credit soft search brings up My Car Credit as 7.92% Guaranteed or Tesco Bank 90% change at 3% - rates may vary.
My gut says try Tesco but if it fails due to the payment holiday with current loan, its a wasted hard search.  If I I go for My Car Credit, it's over twice the rate as Tesco  (if I got the 3% which I doubt) but lower than dealer HP rates - My guess is MCC is also a secured loan so the "Guaranteed" is what I will get.

Common Questions from reading other threads:
Why Change/do you need a high value car?
The monthly payments I can budget with the allowance, I've always worked on HPs/Loans (cars are a passion of mine) and the change now is looking like a long-term one this time round so unlikely I will chop and change anytime soon.  I also do not think in a year or so I would have as much value in the car + there are various maintenance bits that are upcoming based on mileage schedule + some wear and tear. These are not cheap.

Based on your salary, why do you need the loan?
I don't have disposable cash to just pay up front, I always go for HP of some sort.
Also HP has saved me a couple of times - Twice I've had to use it to get out of a lemon of a car and then once happy, I pay it off. I know a lot of you save as you earn etc, I'm not like that - I put a large chunk of my salary into the company share scheme and company pension so thats my "savings" as there is far more benefits on that vs paying 10% apr on a loan.

What about the current Loan:
The dealer is happy to part-ex half the car towards the new one and cash on the other half to pay the loan off.

Why payment holiday?
In short, panic, naivety and stupidity after Corona lockdown.  I ended up putting the 3x monthly aside and will either pay it back in or if the loan/HP is approved, put it towards the new one once the existing is paid off.

Hopefully you are still awake after all this - thanks in advance !

foxy-stoat

A lot of words to ask should I go ahead with 7.92% or try a lower rate with Tesco.  If I were you I would apply with Tesco and see what rate you get, if higher than 7.92% look at the ERC's on both and see which one has none for part payments.

Your numbers are very similar to mine, apart from the car I drove is around £2K and is fine for work and company car allowance, it will need replacing in a year but I have a pot of £4,000 to replace.  If you can afford a £25K car then go for it, we could all be dead in a year.

RelievedSheff

On you initial question of does a payment holiday on a loan impact on a new loan or finance application? Yes it does. The lenders will see that your balance did not decrease and probably increased due to the added interest. So they will know that you took a payment holiday.

You are unlikely to get decent rates with the payment holiday so recent on your credit files of you can get the loan at all.

Let this be a lesson. Payment holidays should always be a last resort.

AJ84

Thanks both
I have come across more threads answering the PH query and this of course resonates with the above.  As mentioned, this was a silly thing to do based on emotions rather than head screwed on.
On that basis, if it is a case of high rate or no offer at all, is it just better to stick with the higher My Car Credit as my 1 and final hit given this looks to be a secured and so more likely?

At the moment it is now likely to be put on hold as I need to test drive the car and this is obviously now a no no due to lockdown 2.0 so maybe it is worth waiting until then by which time at the very least, the first payment since the holiday will at the very least show on the CRAs.

jonesMUFCforever

Any payment holidays taken until the end of October will not be reported on your credit files. Any taken from this month will be.
If I was a lender and looking at someone's application it would show to me that someone was possibly over committed with little or no savings - not a good risk IMO.

Thrugelmir

jonesMUFCforever said:

Any payment holidays taken until the end of October will not be reported on your credit files. Any taken from this month will be.

The lack of reduction in debt owed will be picked up whatever the circumstances. 

AJ84

Yes everything would have gone down in debt owed be it cards, mortgage etc, just not the loan which has 3 entries of the same amount