Motor Finance - Less than perfect credit history

Spudzrus87

Hi,
I am looking to change cars however I had a defaulted 2nd credit card of balance of only €1000 which was cancelled due to non payment which has since been paid in full.

Other than that my credit history is perfect. My bank has refused to lend to me for 2 years due to the default. Are there any lenders which would consider my application?

My earnings are more than adequate to sustain repayments to the value of the car I would like to change to and other than this default I have never missed a single payment on a loan or credit card in the past 10 years.

Also does anyone have any advice on how this would affect me in applying for a mortgage maybe two years down the line?

Best Regards

Atlantic Dawn

How much are you looking to borrow?

Spudzrus87

Approximately €22k with €5k of a cash deposit.

Atlantic Dawn

PCP might be the easiest option, far less background check but you would likely need a larger deposit.

If your going for a mortgage in 2 years time is buying a €22k car now a wise decision, mortgage providers will see the outgoings on the car and this will reduce your ability to repay.

bazz26

I'd say the credit card defaults could be a problem as shows a pattern of failure to repay outstanding debt. Have you tried applying for finance through any car dealers? They can tell you if you have been preliminarily approved/disapproved pretty quickly. Your only other option would be the credit union but you may need to show them that you are a regular saver with them before they give you a loan.

Spudzrus87

My earnings would sustain both a car repayment and mortgage no problem - Earnings is not the problem fortunately. Just the credit card default. PCP isnt an option for me as I drive >40,000km per year.

Thank you for the response

bazz26

Mileage cap on PCP only comes into the equation if you have to hand the car back and walk away. If you decide to buy the car at the end of the PCP term then mileage makes no difference as you just pay the agreed GFMV figure that was set out when you bought the car. If you decide to go for another PCP deal then all the dealer will do is adjust the trade-in value of your car to take account of the mileage. This could mean though that you may not have much equity in the car to put as a deposit on the next one. In this instance it might be better to roll over into another PCP deal when the car is 2 years old so that with 80k km on the clock you won't lose a huge amount in equity. With PCP you need to know that you can afford the car in the first place.

Cee-Jay-Cee

Have you a credit union account? A CU loan is probably the easiest method of financing a car after PCP.

Spudzrus87

bazz26 wrote: »

Mileage cap on PCP only comes into the equation if you have to hand the car back and walk away. If you decide to buy the car at the end of the PCP term then mileage makes no difference as you just pay the agreed GFMV figure that was set out when you bought the car. If you decide to go for another PCP deal then all the dealer will do is adjust the trade-in value of your car to take account of the mileage. This could mean though that you may not have much equity in the car to put as a deposit on the next one. In this instance it might be better to roll over into another PCP deal when the car is 2 years old so that with 80k km on the clock you won't lose a huge amount in equity. With PCP you need to know that you can afford the car in the first place.

Just when I checked online with the mileage I do the payments went up considerably. Because on pcp the car has to be serviced by the dealer would the payments be increased when they see 40k km per year instead of the minimum 10k km. If you are right it probably would be the way to go so as it's likely I will just be rolling over to a different car at the end of the period anyway.

Spudzrus87

Cee-Jay-Cee wrote: »

Have you a credit union account? A CU loan is probably the easiest method of financing a car after PCP.

I have a CU account but in this case I'd need to put 25% of the loan value as security which is essentially my deposit meaning I'd have to get a larger loan

colm_mcm

You'd still have the 25% sitting there at the end though.