Loan settlement and improved credit score

Chrissy2k2

My 25yr old son is selling his car to settle his finance early, with a view to him buying a cheaper car (to run and purchase), using a personal loan. We’ve checked the loan eligibility calculator and the only loans he would be accepted for are 40% apr 😳. Will this improve once he’s paid his finance off and if so, how soon might that be? Thank you

Altior

Nobody knows for sure, too many variables (lender & borrower). But the settlement will need to have filtered through to the credit reports as a minimum.

Isthisforreal99

https://forums.moneysavingexpert.com/discussion/6654744/loan-settlement-and-improved-credit-score

Maybe, maybe not but only currently being offer 40% apr suggests something amiss with his credit history or lenders full his current outgoings are too much relative to his income, which might improve once the finance is cleared.

Generally speaking it's easier to get car finance than a personal loan.

born_again

https://forums.moneysavingexpert.com/discussion/6654744/loan-settlement-and-improved-credit-score

Credit score is a pointless figure never seen by lenders.

Given the only loans are 40% then your son has to much debt to income, for mainstream lenders to touch.

Waiting till current finance is settled, might get batter deals.

MEM62

Nobody can predict that as each lender has their own criterion. (Your son does not have a credit score.)

His best bet would be to buy one that he can afford to pay for in cash. OK, so that may be a little older but the savings in not paying interest of an asset with the rapidly falling value are considerable - even more so if he is not getting offers at decent rates.