Clearing finance with bank loan?

[ashleyqprw12]

Hi i was looking to take out a bank loan for a car purchase but the rates was a lot higher at the time so took out finance, a few months on i've been offered the amount i need at a better rate.

Basically if i took a loan out of my settlement figure, my payments would be £4 a month cheaper, and around £400 less overall... So obviously i save money.

Is this worth doing, as i'm looking to take a mortgage on next year, around apr/may would the bank loan be better viewed than the finance? mortgage likely with same bank as loan.

Also the bank loan would mean the car is easier to sell as no outstanding finance am i right?

Any help would be great

[Toaster Pilot]

I wouldn't recommend taking out a bank loan so soon after taking out car finance if you want to apply for a mortgage in the near future.

A number of credit searches so close together will affect your chance of getting a mortgage, and taking a loan so close to applying for a mortgage might make you look like you are borrowing for your deposit.

[catman]

What about a transfer to an interest free credit card? You would pay a transfer fee, but it would still be good value.

Some are interest free for 26 months.

Tim

[Toaster Pilot]

catman said:

What about a transfer to an interest free credit card? You would pay a transfer fee, but it would still be good value.

Some are interest free for 26 months.

Tim

Similar concerns as above especially if the amount would be close to the limit of a card - borrowing close to 100% of your available credit and applying for a mortgage is only really going to go one way.

[Perec]

ashleyqprw12 said:

Hi i was looking to take out a bank loan for a car purchase but the rates was a lot higher at the time so took out finance, a few months on i've been offered the amount i need at a better rate.

Basically if i took a loan out of my settlement figure, my payments would be £4 a month cheaper, and around £400 less overall... So obviously i save money.

Is this worth doing, as i'm looking to take a mortgage on next year, around apr/may would the bank loan be better viewed than the finance? mortgage likely with same bank as loan.

Also the bank loan would mean the car is easier to sell as no outstanding finance am i right?

Any help would be great

£4 a month? Is it worth it? I'd have thought the transactional losses would mop that up pretty quickly.

[ashleyqprw12]

My card wouldn't afford the settlement fee, it's not so much savign the £4 a month, or even the £400 odd overall. Just really a case of would a bank loan look better when applying for the mortgage or the finance, of course the selling issue to, if i choose to sell in the future a bank loans against me so hpi clear on the car.

[Perec]

ashleyqprw12 said:

My card wouldn't afford the settlement fee, it's not so much savign the £4 a month, or even the £400 odd overall. Just really a case of would a bank loan look better when applying for the mortgage or the finance, of course the selling issue to, if i choose to sell in the future a bank loans against me so hpi clear on the car.

No, a bank loan will not look better. Several reasons including that you were credit checked a while ago for that, you'll have a more recent credit check for the bank. Also a secured car loan's purpose is transparent, an unsecured bank loan may have been used to fund your profligate lifestyle. Selling a car with finance is not a problem either.

[ashleyqprw12]

Makes sense then! Thanks for the advice everyone, looks like im sticking to what i've got