# Car finance to credit card. Any advise



## footfistart (Dec 2, 2013)

Hello,

Just wondering if anyone has done the above really. I bought my car from fraud and it totalled just over 14k with interest. But the thing is I want to buy a home and the mortgage people will look at that as it's a DD from my account. It's 230 for five years and I called the bank today and they said if I was to settle it this month it would cost me a little over 11k as there wouldn't be any interest to pay.

Now my question is....

Shall I put it into a credit card with a 0% interest and a very low balance transfer fee ie the Barclays one they have with a 34 month jobbie. Then I can pay that off in bigger chunks but of course pay the 230 like normal. 

Or.....

I keep with it and pay what I pay for the term. It's not a PCP. so the car is mine at the end with no extra payments ect ect.

If I put this on the card I'd say 3k and that's over a year's worth of payments. Would of thought that sounds pretty good. 

I'm seeing a finance advisor in the very near future about whether it's a good idea or not. 

Share your thoughts stories and advise. This may help other people too. 

Many Thanks

Ryan.


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## adamb87 (Jan 13, 2012)

The finance company may charge you to settle with a credit card


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## Kerr (Mar 27, 2012)

At a guess, the mortgage company will probably see a large amount on a credit card worse than a regular direct debit. 

Credit cards are fine if you can settle the debt quickly. If you can't the interest payments are large, especially when we are talking a reasonable sum of money. 

If you are looking to buy a house, you've got a big expense coming up. It's going to cost a lot with all the fees, mortgage repayments and you'll also need to furnish and decorate the house. Your hands are going to be in your pockets a lot. 

It makes me wonder that if your finances only allowed you to buy a car over a 5 year period that you'll be left with enough to settle the credit card bill quick enough. If you don't it will have been an expensive decision. 

It seems a little short-sighted to have bought a car on finance just before going for a mortgage knowing it was going to cause issues about your ability to afford.


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## Rowe (Jul 4, 2013)

Kerr makes sense, although it probably isn't what you want to hear. 

I'm 23 myself and have had a few tasty motors. It's now coming to the point where i want to move out. All debts are cleared, and i'm driving around in a 2004 diesel Corsa. 

Sacrifices have to be made at some point, and unfortunately with the information you've told us, it seems like the car needs to go.


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## nbray67 (Mar 22, 2012)

The £230/11k is only 1 credit payment that you've advised us on, if there are more regular repayments then the Mortgage company will be interested in all of these with the main emphasis on the balances being upto date, no missed/late payments etc.... plus, the be all and end all, what disposable income you are left with each month.

Having credit that's upto date and paid on time increases your overall credit worthiness but without disposable income, then that's worth diddly squat.


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## ioClean (May 16, 2014)

Credit card debt is worse than car finance. My advise is chop the car in, get a banger.

Once you have your house, go and get another car.


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## lofty (Jun 19, 2007)

I'd say a £11k CC balance looks worse than car finance, the CC bill could be for £11k worth of finest car wax or an expensive holiday for all the mortgage company knows, with car finance they know that you at least have an asset to part balance the loan. Ideally you should have got the mortgage then the car, not the other way around.


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## polac5397 (Apr 16, 2014)

look at your finance agreement you could always hand it back? there will be an amount listed in £,s .


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## ioClean (May 16, 2014)

Forgot to ask, how long have you had the car? and how long is the agreement?


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## Kerr (Mar 27, 2012)

ioClean said:


> Forgot to ask, how long have you had the car? and how long is the agreement?


The OP says the agreement was £230 per month for 5 years and added up to £14,000 with interest.

Settling early to avoid the interest gives a settlement of £11,000.

Sounds as if the OP had only made a small amount of repayments to the loan.

The other issue is if he does sell, buying at dealer prices and selling on the private market on likely to leave him owing money.


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## footfistart (Dec 2, 2013)

I have only had the car a short while. A few months. I earn just under 37k and I didn't have a lot of savings but I have come into a bit of money. Not huge but I have around 12k in savings and I don't want to miss out on a scheme. The company is Barclays and if I was to settle it it would be the final sum plus 1.5%. Which isn't a huge amount of money. I've got to renew my tenancy where I'm living and that's for twelve months with a six month break clause. 

If I hadn't had come into some money I wouldn't really be looking as it would take me ages to save up. 

What I was thinking if I could settle the bill without the intreast I would have roughly three years to pay it off. Thing is I don't want to loose out on money and I'll be back to square one again like I was with my focus. 
That was on a pcp and I had to sell it back to the company after having it three years as the value fell through the roof and I'd end up owing more money. So I sold the car and bought my mondeo TXS. I Bought the car for about 10k. It's a 2009 reg with all the gear and 37,000 on the clock. I bought it with 33,000. I reckon if I was to sell it privately I could get maybe 10k for it. But then I'd be without a car and that can't happen as my work is 30miles away. 

It is a large some of money and I should of thought about it a bit more than I did. But needed bigger car with growing family ect ect.

But like I said I didn't really think of moving until this help to buy came along and I had a bit of money. If I hadn't had the money I wouldn't be thinking about it.

I'm in a bot of a rough spot. Financially I'm doing good as I'm always left at the end of the money with some money. 

The car is the only big thing that comes out other than rent and other normal bills. 

I guess ill see what the advisors have to say and then that will help me decide what to do. But I can't be without a car and its the only car we have. 

I ha e done a credit check with experian and my score is 968. So I have nothing to worry about there. The I my down thing about it was that in my history I didn't ha e a credit card which held my rating. But I got one ( 3 years ago) and that sorted the problem. I have had no late payments of any kind and always paid what I owe as soon as it was possible. 

The car is five years and I have had it approx four months. 

If I was to sell it to Ford or somewhere I'd probably get like 8,000 for it so that leaves me with 6k still to pay for. 

So what do I do? Sorry if this post it's a bit all over the place but I'm typing as I'm thinking.

Thanks for advise

Ryan


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## footfistart (Dec 2, 2013)

Even on Parker the most I'd get with a good buyer would be around 8.5k. The car is in very good condition. It's got full Ford service and mot history. And I'm the third owner. And it's only been around my area. So I think I'm a bit stuck.


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## polac5397 (Apr 16, 2014)

your finance agreement will have an amount on ( which you are entiltled to give it back) ive done it twice with no negative effect on finance trail/checks etc. if you have only had it 4 months you should be well under that amount


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## footfistart (Dec 2, 2013)

Sorry but could you explain that. I need to be spoken to like a three year old when it comes to things like this as it sinks in better. Sorry. I kinda get whatb you mean. So I go back to Ford and hand the car back is what your saying? That's where I got the car from and Barclays are the finance people they use.


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## lofty (Jun 19, 2007)

You can hand the car back once you've paid 50%, you'll be a long way from that though, more info here :http://www.thecarexpert.co.uk/car-finance-voluntary-termination-pcp-hp/


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## footfistart (Dec 2, 2013)

Oh right I see. I'm not sure what my agreement is. It's not a contract purchase or a hire agreement. It's just one of those ones where you pay a monthly fee and at the end of the term it's yours regardless of mileage ect ect. What is that type of agreement called. I haven't got paperwork as am now at work.


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## rf860 (Jul 24, 2011)

If I were you, I'd sell the car, cut your losses and put your savings and the car sale money together to buy a house rather than renting. Set aside maybe 2-3k to buy a reliable family workhorse.

More to life than having a decent car.


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## Darlofan (Nov 24, 2010)

Sell the car, get a cheap runner then go for mortgage. After u have mortgage if you are ok go get another car. Mortgage will look at cc payments same as finance. Only time they'll ignore debt is if it will be settled in next few months. 
We got mortgage in November and I had to cancel 7 cards I had with nothing on as bank see this as available credit if I wanted to use it. Also stop any memberships to gyms etc as our mortgage advisor said you can always start them afterwards. 
The only other thing you could do is tell them the car will be paid off with shares/relatives money etc. We had a loan that I wanted to pay off with shares but had to wait another 3 months or shares (work ones) would have been taxed heavily. The bank put a clause saying loan would be paid/partly paid off with shares. So that loan wasn't counted, like advisor said they will only check if it has been paid if you default on mortgage or we could pay part of it off to keep our side of contract.


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## suspal (Dec 29, 2011)

http://www.tiac.net/~mabaker/rule_of_78.html

Do a like for like comparison and see which one works out best for remember loan make finance companies money.


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## footfistart (Dec 2, 2013)

Any way I look at it I'll be out of pocket buy a few quid and I can't afford to sell the car and buy another car. There must be away where I'm not going to loose outv too much as I don't want to go into my savings. I'll have to see what the advisor says to me on Saturday. 

Is there anything in particular I need to say, mention or ask that may help me out a bit? 

Thank you so much for the advise. 

On the off topic does anyone know how long these housing schemes going to last? 

Ryan


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## lofty (Jun 19, 2007)

It will depend on how much your borrowing, if your mortgage payment is only say £400 per month, other outgoings £1000 per month and salary £2500 per month then you should be ok, if however your mortgage is going to be £1400 per month then you'll have to sell the car as you would fail on affordability.


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## shine247 (Mar 1, 2010)

footfistart said:


> Hello,
> 
> But the thing is I want to buy a home and the mortgage people will look at that as it's a DD from my account. It's 230 for five years and I called the bank today and they said if I was to settle it this month it would cost me a little over 11k as there wouldn't be any interest to pay.
> 
> Ryan.


Ryan, is your aim here to make it appear have less to pay out monthly? You have £230 per month now, if you move the balance to a card regardless of what the cc company request each month, the mortgage provider will very likely build in their own assumed amount, typically 3%. You will then be viewed as having £330 per month to pay. If it were not for the fact you are considering a mortgage it sounds worthwhile doing the swap provided you can get the cash from the card to repay the finance. May have to go via your bank account if that is available.

Depending on the lender, if they know why you have the card debt and can demonstrate what you did, they will not necessarily take a dim view of the debt. They have underwriters to look at things like that.

Being able to clear the debt for a couple of percent transfer fee is appealing and you would have more options how to repay down the line without penalty. The problem may be getting the limit you need from Barclay Card. I know you have a "good" Equifax score but they are to be taken with a pinch of salt.

Whatever the case, you are not in an easy position, the above are just some points to consider, particularly the monthly payment.


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## footfistart (Dec 2, 2013)

So I've spoken to the mortgage advisor and long story short about the car....

Because of my credit history which is excellent I will not have any trouble with getting a mortgage through him. He is just mortgages who are in partnership with haart. I explained the situation I am in and he said that I am in a good position. Even with the car he said it will be a good idea to get the car off loaded to a card. Working it out I will shave approximately 14 months worth of payments. I have already made 4 so far. So I will end up with around three years to pay it off. So now I need to get a good credit card with a limit of around 11k. I believe this will be hard but even if I can get most of the car paid off ill be in a better position.

So next advise will be about a card. I need one that will give me around three years intreast free and a low fee or next to no fee and possibly zero per cent transfer fee. I think I am asking too much for one card. But as near as possible would be great.

I said to the guy about my out goings and he said that with what I spend I can clear the car a lot quicker with higher payments. 

So my car no longer has to go for the time being. I can't be without one anyway.


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## Kerr (Mar 27, 2012)

I'm not convinced your financial advisor is giving you the correct/best information. 

Why didn't he advise you what credit card to use if that was the best route? He can't give you advice and not provide a solution. 

Most people finance their cars. Seeing a finance payment for a car is common on people's bank statements. Seeing £11,000 on a credit card isn't. 

You can't predict you'll shave 14 months off as you've no idea. Buying and maintaining a house will eat into your finances far more than you predict, then suddenly rather than paying larger amounts off on your credit card, the money goes into the house. 

3 years 0% transfers? You're really down to a select few on their very best terms. The kind of deals that few people actually get. They will also be subject to balance transfer charges. The finance company will also likely charge you for settling finance with a card. 

Reading other statements some credit card companies treat paying off finance as cash balances and are subject to horrendous interest payments.

Even considering they don't you're likely to have to pay 3% to the finance company and 3% transfer fees. There is £660 before we start. 

To me you've got two options. 

1) apply for the mortgage and hope they are happy you've got the funds to afford the repayments with the car coming off. 

2) sell the car and settle the finance and see what you have left. 

Do not apply for more credit to settle more credit.

Credit is a dangerous game when not played right. The more you have the more things you've got to go wrong with your life. You'll always be under pressure and worrying about making ends meet. 

Don't apply and take credit you don't need to. This also harms your credit rating.


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## ChuckH (Nov 23, 2006)

Just beware a financial adviser is out to sell you a product. He may push for certain deals that will not be the best for you long term. They are after all trying to sell you a product please remember that first and foremost .


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## minnis (Apr 4, 2014)

Have a play with some mortgage calculators. 
I've just had a play with the nationwide calculator, and if you have £230/mth on HP they will lend you £30,000ish more than if you had £11K on CCs.


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## ffrs1444 (Jun 7, 2008)

Just one on Morgage stuff Town & country are very good and you won't pay them anything they get there money from the lenders


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## footfistart (Dec 2, 2013)

minnis said:


> Have a play with some mortgage calculators.
> I've just had a play with the nationwide calculator, and if you have £230/mth on HP they will lend you £30,000ish more than if you had £11K on CCs.


Wow really? I have had second thoughts about it and I don't think I'll be going down that road. Instead I'm going through all my finances and chopping and changing bills ect. Like today I switched energy companies and saved 160. My place is only electric and its now 36 per month . Just need to sort virgin out as it's a rip off.


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## Darlofan (Nov 24, 2010)

Is mortgage advisor charging you or is it free advice? I think you need to sit down with someone who is financially savvy and go through everything. Don't take this wrong way but if you are only just working out you can save money switching electricity suppliers then you need advice before going for a mortgage.


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## footfistart (Dec 2, 2013)

I'm saving enough as it is and have a fairly decent lump. I needed to chop and change anyways. I do need to see someone your right. I don't really like speaking to someone on the phone. He said he would get back to me with some mock up proposals to give me some sort of idea on how much things will be. He gave me two sets of figures that I could potentially borrow in different circumstances. The government schemes end the end of next year. So I've got at least nine months to save hard to increase my deposit. 

I am fairly good with my money as I have said before but I am trying to optimize my money and to get the most out of it.


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