Car finance and mortgage

Spannerchops

Hi everyone, 

I got tied down into car finance two years ago and unfortunately at the time my credit was not great so was offered a high rate loan. I was desperate for a car as I needed it for work so accepted it. Anyway I still have three years finance at £210 but I am looking to get a mortgage next year. My last defaults drop off my credit file in a few months but when I’ve checked to see how much I can borrow there’s a huge difference just because of my car loan. I don’t owe anything else but this stupid car. I know I have an option to pay settlement next year but it’ll be a massive amount from my house deposit. Any suggestions of what I could do? Thanks guys 

heidiiii

you can try to refinance the car loan into the mortgage perhaps

[Deleted User]

Get the loan paid off and build your deposit even quicker because you're not throwing money away on interest.

enthusiasticsaver

heidiiii said:

you can try to refinance the car loan into the mortgage perhaps

The OP does not have a mortgage yet but even if they did this is an awful idea. 

enthusiasticsaver

Spannerchops said:

Hi everyone, 

I got tied down into car finance two years ago and unfortunately at the time my credit was not great so was offered a high rate loan. I was desperate for a car as I needed it for work so accepted it. Anyway I still have three years finance at £210 but I am looking to get a mortgage next year. My last defaults drop off my credit file in a few months but when I’ve checked to see how much I can borrow there’s a huge difference just because of my car loan. I don’t owe anything else but this stupid car. I know I have an option to pay settlement next year but it’ll be a massive amount from my house deposit. Any suggestions of what I could do? Thanks guys 

Wait until the defaults drop off your file and overpay the loan as much as possible especially if it is high interest even if it means taking it from house deposit fund which presumably is earning you nothing in interest practically.  I would pay it off now if you are able to access it from savings then build up the house deposit fund with the money you were paying in loan repayments.  That will save you a packet in interest.