Car Finance or Personal Loan

DE_612183

The APR is slightly less, but is there any different impact on my credit score - also thinking of a mortgage this year.

I presume with car finance, the finance is secured against the asset ( car ) whereas with Personal Loan it isn't?

Thanks For any Advice!

[Deleted User]

Your credit score isn't a real thing, so although a CRA may choose to score the debts differently, it doesn't matter.

Both will show as loans and be assessed by lenders as such.

If you're looking to get a mortgage this year, pay cash for a car and increase your mortgage chances.

DE_612183

Deleted_User said:

Your credit score isn't a real thing, so although a CRA may choose to score the debts differently, it doesn't matter.

Both will show as loans and be assessed by lenders as such.

If you're looking to get a mortgage this year, pay cash for a car and increase your mortgage chances.

Yep, that makes sense but I'm hanging onto the cash for the mortgage deposit.

Ebe_Scrooge

As above, there is no difference on the impact to your credit history - they're both just loans.  Yes, the APR is likely to be lower on a secured loan vs an unsecured one.

But the most important point is as highlighted by ZX81 - taking out a loan in the run-up to a mortgage application is usually not a wise move.  It could make a large impact on either your chances of getting a mortgage, or the rate you are offered.  If you don't want to use your savings to pay cash for the car, then the wisest thing would be to buy the car after your mortgage is fully secured.

DrEskimo

Dave46049 said:

Deleted_User said:

Your credit score isn't a real thing, so although a CRA may choose to score the debts differently, it doesn't matter.

Both will show as loans and be assessed by lenders as such.

If you're looking to get a mortgage this year, pay cash for a car and increase your mortgage chances.

Yep, that makes sense but I'm hanging onto the cash for the mortgage deposit.

Then maybe you need to make a decision about whether you are in a position to buy a new car and a house.

Do you need a new car right now, or could you wait until you have completed the move?

But if you are adamant on doing both, then whatever is cheapest. Of course the representative rate may not be what you achieve. I would also be very clear about whether it has any effect on your mortgage application.

DE_612183

Thanks for all the advice