Loan..quick question

loufie88

Hiya,

I'm 18, young I know but have been employed with the same employer for over 18months and am earning over £11k. I'm after a loan for a car, I tried £8k and was promptly turned down by quite a few lenders. Reason being I had no previous credit history, and they suggested I buy a contract phone to boost my credit rating (I don't trust myself with one!)

I know it's a lot of money for someone my age etc. etc. but I'm just wondering whether it would have made a difference if I'd only asked for £1k instead of £8k???

Cheers!

enjoyincubus

Were you trying to get a car loan (secured loan), or a loan for a car (unsecured loan)?

loufie88

It was an unsecured loan, although I was told this would make no difference..

To elaborate.. I was turned down for a loan of £8k from banks for an unsecured loan.

I was also turned down for Finance on a car even with a guarentor, my only option is to put a deposit down.

But I was just wondering if it was because I asked for a high amount, if I had of asked for £1k instead would they have been different?

charley_177

Have you a bank account with anyone? Usually its best to try your own bank first.

First I was with Nationwide, with full salary funded current a/c, but was always refused a CC and PL.

Halifax do lend to 18-21's but only if you have good account record.

Was the car finance through the dealer themselves? Could try going through a broker for a wider search.

HTH

loufie88

I tried my bank first (Yorkshire Bank) and they turned me down. To be honest I don't think they are a very young people friendly bank. Nationwide said no, as did Alliance & Leicester, HSBC, Freedom Finance etc etc. Due to my own stupidity and naivity I did not realise an application for a loan was held against you, I thought it was only kept on file once accepted. Now obviously I have an appalling credit history before I have even started!

I went to Vauxhall to see about Finance and Capital One were the only company that would give me Finance, however, they wanted a Guarentor plus £1,000 deposit. Vauxhall had done about 5 searches for me, all which had been turned down and I was seen to be "credit hungry" due to all the loan applications I'd done. I see their point, I have no debt, therefore I have no proof that I can pay bills.

This is why I'm wondering if the bank turned me down for £8,000 but would allow me to take out £1,000?

Cheers

mrcow

My advice:

Don't get a loan secured on your car and don't get finance from a dealer. You are either going to get ripped off, or stuck in a finance agreement where you can't get rid of the car as you've taken out finance on a car that is not worth the money you owe!

Also, if you are only earning £11000pa, don't burden yourself with a loan for £8000! What are you trying to do? Get into a massive debt over your head before you even turn 20? Take a look at the debt free wannabe boards for where you could be in ten years time with such reckless borrowing (ask some of those with £30k debt in over their heads how it all started!).

Don't buy a £8k car unless you can AFFORD it! Or unless you get a £11k pay rise overnight.

You're 18 years old. Buy a £2k car and save up for it! :rolleyes:

loufie88

mrcow. I see where you're coming from, but if I'm honest I don't drink or smoke, I don't go out, I don't spend ridiculous amounts of money on clothes etc. the reason I'm working is because I want a nice car... Not all 18 year olds are the same!!

mrcow

loufie88 wrote:

I tried my bank first (Yorkshire Bank) and they turned me down. To be honest I don't think they are a very young people friendly bank. Nationwide said no, as did Alliance & Leicester, HSBC, Freedom Finance etc etc.

You are going to get turned down by everyone (especially now you've made so many applications).

They are not going to lend £8k to an 18 year old earning £11k per year. Sorry but it's just the way it is.

You are now scrabbling around for finance and even if you do get lucky, you are going to end up with a really bad deal and will be ripped off royally.

mrcow

loufie88 wrote:

mrcow. I see where you're coming from, but if I'm honest I don't drink or smoke, I don't go out, I don't spend ridiculous amounts of money on clothes etc. the reason I'm working is because I want a nice car... Not all 18 year olds are the same!!

What's drinking or smoking got to do with loan affordability? :rotfl:

If you "want a nice car" save up and buy one!

loufie88

True.. I see your point, but what I'm wondering is, is it the £8,000 that's putting them off and would there be more leeway applying for a £1,000 loan?

enjoyincubus

I'm afraid mrcow maybe right loufie.

From a lenders point of view the only loan you are going to get is a secured loan as that reduces the risk slightly. If you think about it, if you stop paying they can legally take the car back. With a normal loan, if you stop paying they have lost their money. The problem is you have no previous credit performance to base their decision on and as far as they are aware you have had no experience managing money.

Now you have a couple of applications, which is going to reduce your already low credit score.

It would seem your options at the mo are to save up, or maybe ask your parents to lend you the money.

It is money and you can spend how ever much you want, on whatever you want, but to commit to an £8k loan would be a bit of a burden - remember you have to insure it, tax it, service it, fill it up with petrol etc