maxtream

I agree, I think Dozy may be in for a shock as to how much the settlement amount might be. Apparently the front loaded interest is charged heavilly at the start of the loan, so most or all of the payments made so far, will be interest. In regard to Dozy's comments about not losing a penny, I am presuming this is related to a guaranteed minimum value after a certain period of time. The minimum value must leave behind some depreciation, for Dozy to pay, on top of any interest the car finance people think is due. This could be several thousand and when added to a new finance deal for a new car, this would make the new monthly payments quite high.

I must admit, I personally tend to avoid car finance myself and would rather run an old banger. Cars produced over the last 10 years are far more reliable and can be cheaply serviced. They are not like the old British leyland cars where you had to have your head under the bonnet every weekend.

Huckster

dozy172:

I do not pay a settlement fee. Apparently this is due to it being a front loaded finance or something along that line where the interest is on from the beginning.

This rings all sorts of alarm bells here. I hope that they don't calculate the settlement figure by simply saying that you have 54 payments to make at £225 which comes to a total of 54 x 225 = 12150 and then, very kindly, they don't add a settlement fee on to that. You will find out if you ask for the figure.

Dozy

Have a read of this link. http://www.safermotoring.co.uk/CarFinanceSchemes.html

I would think the best option would be finance through a garage as getting a personal loan with the current credit rating may prove to be difficult. The finance through the garage as you say is connected to the car, so if you defaulted they could take the car back.

Huckster

that is exactly right.

i did not realise you could do that. (swap finance)

i wil bear that in mind thank you for your help it has been brillaint.

my next question is what would be better a loan or finance and what has a higher acceptance rate ( i presume finance as it is put against the car as a sort of equity)

Dozy

I presume all you need to do is approach the car finance people and ask them for a settlement figure from a given date. You then approach another garage to buy the car you are looking for and apply for finance. If they agree to arrange finance, they will arrange to settle the current finance on your current car and this will leave a balance for you to pay by cash or within a new finance arrangement through the new garage.

I hope this is understandable. Put simply you are arranging to replace one car on one finance arrangement and replace with a different car on a new finance arrangement.

Huckster

Thank you for your comment. Valid point however I should have mentioned when taking out the finance I confirmed that I do not pay a settlement fee. Apparently this is due to it being a front loaded finance or something along that line where the interest is on from the beginning.

It was a brand new car I purchased and if I where to sell it I would not lose a penny.

I am after a loan so I can sell the car. With the finance I cannot ell the car without initially paying off the finance.

Dozy172

I agree with maxsteam, getting out of the current finance arrangement may be more difficult than you think. The finance company may not agree to the car being sold, unless you have the funds to pay them, if there is a deficit to be paid.

In regard to your credit rating, if you do a google for 'repair your credit rating' you will find many guides. I think it could take you a few years to get your rating up to a good level.

Huckster

My advice for the future is to avoid car finance, use the time that you would be spending worrying about it learning how to tell the difference between a good car and a worn out one, save up for a few months and go shopping with that.

I do not know the type of finance that you got. If it was a personal loan, you can repay it at anytime with a repayment penalty not greater than two months' payments. It is possible, however, that you may be tied in to your finance to a greater degree than this and you should ask the finance company for a settlement figure before pursueing any alternatives so that you know the situation. You are currently either paying an apr of 26% or you are being charged for extras (payment insurance, perhaps?).

With your option you will be penalised for settling the existing finance and you will be getting yourself into a similar situation with another car and another finance deal next year.

I purchased a car on finance 6 months ago. I had a poor credit rating when I got the finance and got a load for 7500 over a 5 year period with payments of £225 a month which I’m sure you will agree is poor. I also had to put my mum as a guarantor.

I am 21 live at home and have a full time job with the council earning £1200 per annum.

The reason for the poor credit rating was I missed two payments on a credit card which had a limit of £750. All my other payments where all pay. I have an extensive credit history for my age and I am generally a good payer.

I have since paid off my credit card and lowered my outgoing substantially. Before paying off my credit card my score had gone up from 59 to 350. My profile has not updated with my credit card paid off yet but I am hoping this will push my credit rating up a bit more.

I have not made any loan application finance etc for the past 6 months.

I am wanting to get a loan in Jan so I cancel my car and buy a different one as the car I purchased is not suitable for my job.

What I want to know is:

1. Is there any way I can get my credit history up to 999 between now and then going on the basis that my credit rating is 350 now.

2.what can I do to boost it.(even though I have paid my credit card off I have not cancelled it I have just lowed my limit to £250).

And what’s the best company for me to apply for. I previously had a guarantor (my mum) and she would be willing to be one again.

Help please.

Other details that might be use full are I have lived at my address for 10 years and been with my bank 9 years. I will have been in my job for 8 months when applying.