Settling finance early

[phil1975]

I'm in a position to settle my finance with vw 2 years early than planned, I thought I read or heard (possibly dreamt) that this can affect your credit history in the future as your considered not such a good customer in the future?

[Tortaruga]

Do you mean your credit history with VW?

VW aren't going to be tight with finance in future if you want to buy a new car, absolutely not.

If it's to do with your general credit rating, I was told in my bank that paying off a loan early is actually very good for your credit rating.

[phil1975]

Do you mean your credit history with VW?

 I mean credit history in general, I'm sure I heard that if an agreement doesn't run its full course your considered not such a good customer as they lose out on some of the interest. I'm fairly sure it can't be correct, but that doubt is in the back of my mind.

I must admit next time I will get a bank loan so the money is borrowed against me rather than the car, giving me more freedom and avoiding the initial acceptance fee and final settlement fee of a finance agreement.

[tony_danza]

I'm pretty sure that's rubbish. Just settle early.

However, having a regular payment ticking over such as a credit card does make you look better, maybe that's what you're thinking of?

[phil1975]

Thanks tony, getting mixed results having just googled it http://uk.answers.yahoo.com/question/index?qid=20090731081217AA5bEzf

I think the fact I'm 3 years into a 5 year agreement works in my favour rather than say  if I settled 6 months into a 5 year agreement.

[Apollo]

Contrary to popular believe settling early does not give any adverse affect on your credit history. You have made regular payments for enough time to gain a good report.

[phil1975]

Thanks for all the answers guys

I have all the usual, credit cards, phone and broadband contracts. Just had some money in the bank with low returns thought I'd clear the finance.

No plans to sell or trade the gti yet, after all what do you replace it with? (seen all the other threads "what car next???") their just such bloody good cars!

[Tamiyoman]

Your credit report history is on your ability to make payments (preferably on time), it will not be affected (Positively or negatively) by repaying a loan early  

Your "Adverse" credit history is what most lenders/banks/finance houses are interested in (late/missed payments, Mortgage arrears, CCJ's for council tax, household bills etc), using your CC to pay for Fuel each month is a good way of gaining regular payment credit history, simply put if you use it to pay for fuel and pay off each month is shows regular payments for credit history however on the flip side it means that your bank is less inclined to increase your lending as they don't make money from you and technically you don't need it  

If your concerned with your credit report you can request a copy of it from Equifax or other companies, I did it several years ago and found 2 "Missed payments", one from Orange Mobile and one from Vodaphone, called them both about it and it was their error (as usual) as they forgot that my contract had ended and both were removed.

[MC71]

 Asked this very question a couple of years ago when I got my own credit report. Answer was NO. 

As mentioned, the lender of the credit likes to see a balanced report with a decent length of credit and a decent length of payments being made. I was (and still am amazed) at how in depth my credit report is covering everything I have ever done over many years

When my wife and I went to buy a house approx' 15 years ago we were initially turned down for a mortgage (even though we had decent sized deposit and earned enough to afford the repayments) because neither of us had a credit history to speak of. We were told to get credit cards and buy things and pay the minimum payments and carry on in that fashion as we needed to build up a "history". Was amazed to find out I was a "risk" because I was a saver and not a spender.

And we wonder why the country is in such trouble 

[scooba]

Hi ,I am buying my sons Polo using VWFS finance thing  they are giving £1000 manufacturers  support towards the deposit ,I told the sales guy I wanted to pay it up early he said could I let it run 3 months as they the supplying dealer get penalised heavily by VWFS.

I suppose VW dont want to encourage dealers to promote finance to get the manufacturers support to then have the customer just settle up , My man said early repayment  equates to 1 months interest 

[Moz]

I settled mine today feels great knowing the Marker is gone. Settled 9 months early.