Car finance for the first time
Discussion
I’ve never had car finance before and just got a pcp declined.
I’m 43, married, two kids, own the house outright, lived there for 16 years. Worth maybe £600k.
999 Experian credit score
£400 balance on a £2500 credit card
£5k overdraft rarely used
No loans
No other finance apart from o2 phone account in good standing
Self employed, turnover £250-300k, gross profit £150-200k. One Company been running 6 years, has healthy cash on hand and other assets.
Other company been running 15 years has little turnover (£25k but land and buildings worth £500k)
Looking to put down £20k on a £65k car. PCP or HP I don’t really mind, just trying to work out my options.
I don’t particularly want to borrow cash from my company, tax implications are horrific.
Any suggestions? Unsecured personal loan from my bank?
I’m 43, married, two kids, own the house outright, lived there for 16 years. Worth maybe £600k.
999 Experian credit score
£400 balance on a £2500 credit card
£5k overdraft rarely used
No loans
No other finance apart from o2 phone account in good standing
Self employed, turnover £250-300k, gross profit £150-200k. One Company been running 6 years, has healthy cash on hand and other assets.
Other company been running 15 years has little turnover (£25k but land and buildings worth £500k)
Looking to put down £20k on a £65k car. PCP or HP I don’t really mind, just trying to work out my options.
I don’t particularly want to borrow cash from my company, tax implications are horrific.
Any suggestions? Unsecured personal loan from my bank?
Edited by Lefty on Wednesday 15th November 11:45
The illustration looked ok but, like I say it was declined, no reason given.
I guess it’s the self employed status.
If I take a dividend from the company I’ll pay 35% tax on it. Depending on the finance deal that may or may not be cheaper than the interest.
I guess it’s the self employed status.
If I take a dividend from the company I’ll pay 35% tax on it. Depending on the finance deal that may or may not be cheaper than the interest.
Edited by Lefty on Wednesday 15th November 11:29
simon_harris said:
I've always worked on what the cost of the finance is over the period and gone with the lowest, for me that has generally been borrowing from the bank, but that has never been more than £30k required.
This. Personally I'd be using some of that £600k equity in the house rather than borrow money at PCP or personal loan rates.OP, do you have a credit card? If not, get one. Use it regularly and settle it every month. Cashback ones are the ones to go for. Try an eligibility checker first.
People usually get turned down for finance due to not having a decent credit record apart from a mortgage and a mobile phone contract.
People usually get turned down for finance due to not having a decent credit record apart from a mortgage and a mobile phone contract.
Lefty said:
The illustration looked ok but, like I say it was declined, no reason given.
I guess it’s the self employed status.
If I take a dividend from the company I’ll pay 35% tax on it. Depending on the finance deal that may or may not be cheaper than the interest.
Technically you are employed, not self employed, Id ask them to double check the inputs.. and at the same time check the detail in your credit file make sure address DOB etc is as it should be.I guess it’s the self employed status.
If I take a dividend from the company I’ll pay 35% tax on it. Depending on the finance deal that may or may not be cheaper than the interest.
Edited by Lefty on Wednesday 15th November 11:29
Deesee said:
Technically you are employed, not self employed, Id ask them to double check the inputs.. and at the same time check the detail in your credit file make sure address DOB etc is as it should be.
This, you also not mentioned your salary which I guess they asked for. Is it next to nothing to save personal tax? That might be an issue If you havent already, do a credit check on yourself across a few sites - Experian, Clear Score etc
You are by far signficantly in a better financial position to me, but I was in a similar position and had a loan declined. I have had them before, but nothing outstanding so I was majorly confused!
After some investigation I had had a bank default against my name 18 months prior for a £63 water bill from when I moved house and I had never received any of their correspondence. Thankfully I was only buying a car, not getting a mortgage. We were furious but could deal with it.
Took me a couple of months, but managed to fight said water company and they removed the bank default!
You are by far signficantly in a better financial position to me, but I was in a similar position and had a loan declined. I have had them before, but nothing outstanding so I was majorly confused!
After some investigation I had had a bank default against my name 18 months prior for a £63 water bill from when I moved house and I had never received any of their correspondence. Thankfully I was only buying a car, not getting a mortgage. We were furious but could deal with it.
Took me a couple of months, but managed to fight said water company and they removed the bank default!
georgefreeman918 said:
If you havent already, do a credit check on yourself across a few sites - Experian, Clear Score etc
You are by far signficantly in a better financial position to me, but I was in a similar position and had a loan declined. I have had them before, but nothing outstanding so I was majorly confused!
After some investigation I had had a bank default against my name 18 months prior for a £63 water bill from when I moved house and I had never received any of their correspondence. Thankfully I was only buying a car, not getting a mortgage. We were furious but could deal with it.
Took me a couple of months, but managed to fight said water company and they removed the bank default!
Ouch, that’s a pain. You are by far signficantly in a better financial position to me, but I was in a similar position and had a loan declined. I have had them before, but nothing outstanding so I was majorly confused!
After some investigation I had had a bank default against my name 18 months prior for a £63 water bill from when I moved house and I had never received any of their correspondence. Thankfully I was only buying a car, not getting a mortgage. We were furious but could deal with it.
Took me a couple of months, but managed to fight said water company and they removed the bank default!
Yeah Experian score is 999, same with the credit score on my banking app (RBS).
Somebody said:
OP, do you have a credit card? If not, get one. Use it regularly and settle it every month. Cashback ones are the ones to go for. Try an eligibility checker first.
People usually get turned down for finance due to not having a decent credit record apart from a mortgage and a mobile phone contract.
Yeah I do and use it a bit, at the moment I have a £400 balance with a limit of £2500, it gets cleared every month. People usually get turned down for finance due to not having a decent credit record apart from a mortgage and a mobile phone contract.
hajaba123 said:
Deesee said:
Technically you are employed, not self employed, Id ask them to double check the inputs.. and at the same time check the detail in your credit file make sure address DOB etc is as it should be.
This, you also not mentioned your salary which I guess they asked for. Is it next to nothing to save personal tax? That might be an issue I did choose self employed though and I guess that’s maybe not correct. I’m technically a company director. Doh
Most asset finance divisions of a bank will have a directors loan/car scheme where they will look at the business and lend personally. They your bank (ie Lombard in this case).
Perfect credit score does not always mean ability for the lenders scorecard to assess to repaying the debt… if there’s no personal mortgage shown being paid on your credit report (goes back say 6 yrs) they will not know you have a property in the background… why to my clients I always recommend they retain a small personal mortgage (say 5/10k).
A couple of ways to play this..
Keep 2 k on the card then pay it down 4/500 a month, shows you can meet and keep up with a debt, and you’re not just meeting your costs, and clearing once a month.
The ability to show you can repay a debt is paramount for a lenders scorecard.
Current account maintain a higher than normal balance perhaps the amount your are looking to service as a repayment and grow that per month, show the surplus monthly.
Credit score in numbers is largely irrelevant for lenders scorecard in proving you can handle debt.
Or as I priced for a client a FFRR (hybrid) on 5% bik late last week, the BIK was something like 800 pa in tax, but then the road tax/insurance etc paid for by firm.
If you have a company paying for things like this gross, before you pay 20% corp tax then 35% div tax, the bik can work in your favour. Why use 45% of money when the business can use 100%.
Perfect credit score does not always mean ability for the lenders scorecard to assess to repaying the debt… if there’s no personal mortgage shown being paid on your credit report (goes back say 6 yrs) they will not know you have a property in the background… why to my clients I always recommend they retain a small personal mortgage (say 5/10k).
A couple of ways to play this..
Keep 2 k on the card then pay it down 4/500 a month, shows you can meet and keep up with a debt, and you’re not just meeting your costs, and clearing once a month.
The ability to show you can repay a debt is paramount for a lenders scorecard.
Current account maintain a higher than normal balance perhaps the amount your are looking to service as a repayment and grow that per month, show the surplus monthly.
Credit score in numbers is largely irrelevant for lenders scorecard in proving you can handle debt.
Or as I priced for a client a FFRR (hybrid) on 5% bik late last week, the BIK was something like 800 pa in tax, but then the road tax/insurance etc paid for by firm.
If you have a company paying for things like this gross, before you pay 20% corp tax then 35% div tax, the bik can work in your favour. Why use 45% of money when the business can use 100%.
Deesee said:
Most asset finance divisions of a bank will have a directors loan/car scheme where they will look at the business and lend personally. They your bank (ie Lombard in this case).
Perfect credit score does not always mean ability for the lenders scorecard to assess to repaying the debt… if there’s no personal mortgage shown being paid on your credit report (goes back say 6 yrs) they will not know you have a property in the background… why to my clients I always recommend they retain a small personal mortgage (say 5/10k).
A couple of ways to play this..
Keep 2 k on the card then pay it down 4/500 a month, shows you can meet and keep up with a debt, and you’re not just meeting your costs, and clearing once a month.
The ability to show you can repay a debt is paramount for a lenders scorecard.
Current account maintain a higher than normal balance perhaps the amount your are looking to service as a repayment and grow that per month, show the surplus monthly.
Credit score in numbers is largely irrelevant for lenders scorecard in proving you can handle debt.
Or as I priced for a client a FFRR (hybrid) on 5% bik late last week, the BIK was something like 800 pa in tax, but then the road tax/insurance etc paid for by firm.
If you have a company paying for things like this gross, before you pay 20% corp tax then 35% div tax, the bik can work in your favour. Why use 45% of money when the business can use 100%.
Really helpful, thanks a lot. Perfect credit score does not always mean ability for the lenders scorecard to assess to repaying the debt… if there’s no personal mortgage shown being paid on your credit report (goes back say 6 yrs) they will not know you have a property in the background… why to my clients I always recommend they retain a small personal mortgage (say 5/10k).
A couple of ways to play this..
Keep 2 k on the card then pay it down 4/500 a month, shows you can meet and keep up with a debt, and you’re not just meeting your costs, and clearing once a month.
The ability to show you can repay a debt is paramount for a lenders scorecard.
Current account maintain a higher than normal balance perhaps the amount your are looking to service as a repayment and grow that per month, show the surplus monthly.
Credit score in numbers is largely irrelevant for lenders scorecard in proving you can handle debt.
Or as I priced for a client a FFRR (hybrid) on 5% bik late last week, the BIK was something like 800 pa in tax, but then the road tax/insurance etc paid for by firm.
If you have a company paying for things like this gross, before you pay 20% corp tax then 35% div tax, the bik can work in your favour. Why use 45% of money when the business can use 100%.
Lefty said:
I’ve never had car finance before and just got a pcp declined.
I’m 43, married, two kids, own the house outright, lived there for 16 years. Worth maybe £600k.
999 Experian credit score
£400 balance on a £2500 credit card
£5k overdraft rarely used
No loans
No other finance apart from o2 phone account in good standing
Self employed, turnover £250-300k, gross profit £150-200k. One Company been running 6 years, has healthy cash on hand and other assets.
Other company been running 15 years has little turnover (£25k but land and buildings worth £500k)
Looking to put down £20k on a £65k car. PCP or HP I don’t really mind, just trying to work out my options.
I don’t particularly want to borrow cash from my company, tax implications are horrific.
Any suggestions? Unsecured personal loan from my bank?
I don’t understand the issue, if your company has plenty of cash then take a dividend to fund the car as you will end up paying just as much tax in the end as you will end up having to draw more salary to pay the PCP presumably at the 40% /45% rate. You also won’t be paying a double digit APR on the £40K you have to borrow. If your worried about tax then obviously buy a Taycan, used or new on the business and you can buy it with pre-tax cash and save some corporation tax as wellI’m 43, married, two kids, own the house outright, lived there for 16 years. Worth maybe £600k.
999 Experian credit score
£400 balance on a £2500 credit card
£5k overdraft rarely used
No loans
No other finance apart from o2 phone account in good standing
Self employed, turnover £250-300k, gross profit £150-200k. One Company been running 6 years, has healthy cash on hand and other assets.
Other company been running 15 years has little turnover (£25k but land and buildings worth £500k)
Looking to put down £20k on a £65k car. PCP or HP I don’t really mind, just trying to work out my options.
I don’t particularly want to borrow cash from my company, tax implications are horrific.
Any suggestions? Unsecured personal loan from my bank?
Edited by Lefty on Wednesday 15th November 11:45
£45k loan for 3 years at 6.5% costs £5k. At 8% it’s £6k. Taking £45k as a dividend will cost me over £15k.
I can afford the payments on my current income so wouldn’t need to up my salary or dividends.
I don’t want a taycan, I’m not buying a car just because it’s tax efficient
I can afford the payments on my current income so wouldn’t need to up my salary or dividends.
I don’t want a taycan, I’m not buying a car just because it’s tax efficient
Edited by Lefty on Wednesday 15th November 17:55
Lefty said:
£45k loan for 3 years at 6.5% costs £5k. At 8% it’s £6k. Taking £45k as a dividend will cost me over £15k.
I can afford the payments on my current income so wouldn’t need to up my salary or dividends.
I don’t want a taycan, I’m not buying a car just because it’s tax efficient
Taking a loan of 45K will cost you 6 K interest and 30K in tax on the assumption you will have to pay yourself an additional 75K in salary to net you 45k to pay for the loan and the 6k in interest will actually cost you 10k of salary so that’s another 4k tax I can afford the payments on my current income so wouldn’t need to up my salary or dividends.
I don’t want a taycan, I’m not buying a car just because it’s tax efficient
Edited by Lefty on Wednesday 15th November 17:55
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