Re-Financing Car loan at Lower APR?

neo1607
neo1607 Posts: 143 Forumite
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in Loans
To cut a long story short my old car died in November last year and was going to cost double what's its worth to fix it. So I traded it in at a garage and I obtained finance for a new car via CarFinance 24/7. Due to a few poor judgements 3 - 4 years ago my credit rating was shot

So anyway the lowest APR they could offer me at the time was 19.8% which I took with the idea that once my credit score Improves I would refinance at a lower rate. It's now been 6 months and I have done some soft checks online and have now found that Zuto and CarFinance 24/7 can offer me lower rates of 9.5% APR with an 80% chance of being accepted.

I have £5980 early settlement on the car so going with this lower APR I would only have £930 interest to pay instead of the £1863 I'm paying on it now. My monthly payments would also be £25 less

Do I go for this 9.5% just now or hold out another 6 months and hope I'm eligible for the likes of Tesco/Sainsburys/Hitachi at their 3.9% offers?

Comments

  • [Deleted User]
    [Deleted User] Posts: 35,242 Forumite
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    It depends on your circumstances. You may not even get offer the 9.5%, as you have a poor credit history and existing debts.

    It's unlikely you've going to be getting low headline rates from what you've said.
  • neo1607
    neo1607 Posts: 143 Forumite
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    According to Clearscore there's 80% chance I get offered that rate. The debate I'm having with myself though is I do end up getting it and I save myself close to £1000 in interest, or I get rejected and it's a hard search on my file.

    Although it may balance my file out because there's 5 hard searches due to be removed tomorrow according to Clearscore
  • [Deleted User]
    [Deleted User] Posts: 35,242 Forumite
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    A search is neither here nor there. Don't let that stop you reducing your costs.
  • neo1607
    neo1607 Posts: 143 Forumite
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    The other part of the question is Does a car finance agreement hit hard against a mortgage application? Me and my partner are due to put in a joint application nearer the end of the year will applying to re-finance my car 7 - 8 months before hand make any difference. Or will it actually help the application as my car loan total will be £1000 lower?
  • foxy-stoat
    foxy-stoat Posts: 6,879 Forumite
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    Will make very little difference as long as you only borrow what you need to clear the original finance.

    Good luck, you may or may not get a good rate as you are debt consolidating rather than borrowing for a car.
  • Penelopa.Pitstop
    Penelopa.Pitstop Posts: 1,145 Forumite
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    You can refinance now if it saves you considerable amount of interest. You will have successfully settled account on your history and new one will be couple of month old and shouldn't cause issues when applying for mortgage.
  • neo1607
    neo1607 Posts: 143 Forumite
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    Got in touch with Zuto and applied via Clearscore in hopes of the 9.5%

    Apparently the lender that offers the 9.5% APR is only for purchase of a new car from a garage, the only lenders they have that offer re-finance options are at a whopping 31% APR. They obviously got told where to go

    Looks like I will have to stick with my current finance another few months and hopefully my score increases some more that more lower APR lenders become available to me :rotfl:
  • System
    System Posts: 178,093 Community Admin
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    Why not see what your bank is offering for personal loans?
  • Herzlos
    Herzlos Posts: 14,688 Forumite
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    Yeah, you don't need to be looking at specifically car finance, just a personal loan for a car should be sufficient.
  • DCFC79
    DCFC79 Posts: 40,598 Forumite
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    edited 22 April 2019 at 5:32PM
    neo1607 wrote: »
    Got in touch with Zuto and applied via Clearscore in hopes of the 9.5%

    Apparently the lender that offers the 9.5% APR is only for purchase of a new car from a garage, the only lenders they have that offer re-finance options are at a whopping 31% APR. They obviously got told where to go

    Looks like I will have to stick with my current finance another few months and hopefully my score increases some more that more lower APR lenders become available to me :rotfl:

    Well don't go thinking your score is seen by lenders, the history is what lenders see.
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