Advice on getting my first loan, please?

Kirsty1988

First off I'll start with a bit of background information on my previous debts.
I had a Dorothy Perkins card, a Freemans account, Oli account, and Very account all of which i have recently paid off.
I have a credit card with Asda financial services which is backed by Santander I owe just over £1700. At one stage i owed £2400 but I have cut up my card and no longer use it.
I have never had a late payment or missed a payment.
I have an Overdraft of £150 but i hardly ever use it and when i do i only go between £10 and £50 into it.
I had a free trail on my CreditExpert and my credit rating is about 944 so its really good.
I want to pay off my credit card and I also need to buy a newish car. Im looking at a Toyota Aygo as they are very cheap on insurance and are only £35 on Road tax for a year.
I went to my bank Santander and got a quote for a loan of £7500 over 5 years at 8.9%. But while I was there she tried to apply for a credit card for balance transfer on my exsisting credit card which was refused.
Will this effect me getting a loan? Also will bringing my boyfriend in on it help? Where is the best place for me to apply?
Sorry for all the questions but im completely cluesless at the moment.
Thankyou

Beast

Heres my view:

You have had credit previously and paid it off so this should act in your favour.

You have some existing debt, which will be considered and compared to how much you earn in a year.

You need to make sure you're on the electoral register at your current address as this will have a big impact on getting accepted for new credit agreements.

Your credit 'score' means absolutely nothing, it's a money making stream for the credit agencies. You need to look carefully at your actual credit report and make sure everything there is in good shape.

The fact that you were turned down for a credit card shouldn't have an enormously negative impact on applying for a loan. In fact your credit report won't even show the outcome of that decision, merely the fact that you've been credit searched. A high number of credit searches in a short period can have a negative impact.

Adding your boyfriend to the loan will increase your chances of being accepted if he has spotless credit as his income will also be considered when looking at affordability. However, it's worth knowing that you are both responsible for the WHOLE loan until it is paid off. Not only this, but you will then share a joint financial product which means you will be financially linked and a missed payment or negative mark on either credit report will impact the other.

Finally, the Toyota is undoubtedly an economical car with cheap tax and insurance but is it *that* economical that it outweighs the cost and interest of getting a loan to pay for it? Would it still be cheaper than buying an older car for example?

Kirsty1988

Thanyou for your feedback.
Me and my boyfriend have been together for 4 years and have lived together for 3 and a half, we're very serious about our future together so linking us together financialy isnt really a problem. He does earn considerable more than me but he he hasnt had much credit in the past. Just finance for a motorbike.

My main reasons for the car is because I have already owned 2 used cars, a vauxhall corsa which cost me £700 and within 3 months i have paid out £600 fixing it up before it finally packed in and that doesnt include MOT or RoadTax. I currently own a Rover 214si which cost me £1200 3 years ago and since then the rapairs and upkeep has cost me around £2000 again this doesnt include MOT's and RoadTax.

I currently pay between £150 and £250 off my credit card each month. And with all the previous accounts I had I was paying between £40 and £150 a month.
For the loan quote with Santander I would only be paying £154 a month therefore saving me money for other things.

Mine earnings are around £7000 to £8000 a year and my boyfriends are approximately £14000. The problem is though my boyfriend broke his leg in december and was on sick pay for 3 months. We went to his bank (Barclays) and the quoted the same amount of the same period but at nearly 10%. Im worried adding him to loan may secure us getting it but also push up the interest.

Beast

The problem is - you're very unlikely to secure the loan at the advertised 'typical rate'. These rates are for the ideal customer who probably earns a bit more and doesn't have any existing debt.

Beast

Added to say - I've just woken my brain up and done the maths - If you're asking to borrow £7500 on a salary of £8,000 there is no way on earth you're going to be accepted. Most banks start to refuse at a debt to salary ration of around 40-50% and this is pretty much 100%

clairbear1000

Kirsty,

Taking a loan out that equates to your salary might be a stretch. Did the bank say you had been accepted for this?

You also need to be careful about consolidating your cc debt and then re-spending as with quite a small salary, you could easily end up in double the debt with a loan that still has several years to go.

Kirsty1988

so i deffinately need to include my boyfriend in the application.
thankyou for your advice, il have to make another appointment with the bank and just see what happens.

Beast

Depending on how much your boyfriend owes on his finance even with his salary included you're going to be on the very brink of affordability in the eyes of a lender

Kirsty1988

clairbear1000 wrote: »

Kirsty,

Taking a loan out that equates to your salary might be a stretch. Did the bank say you had been accepted for this?

You also need to be careful about consolidating your cc debt and then re-spending as with quite a small salary, you could easily end up in double the debt with a loan that still has several years to go.

They didnt say i had been accepted it was just a quote. The women i spoke to said that she didnt want to apply for it the same day i had been refused a credit card with them.
After seeing my mum drowning in debt i am very aware of what might or could happen but i know now that if i want to buy things i shouldnt just take out a store card or catalogue i should save for them instead.
I previously made this mistake but i have managed to pay it off.

Kirsty1988

Beast wrote: »

Depending on how much your boyfriend owes on his finance even with his salary included you're going to be on the very brink of affordability in the eyes of a lender

He currently owes nothing. He had finance on a motorbike of about £3500 which he paid off completely in a year.

Kirsty1988

Just to add a bit more info.
We both live with my mum, between us we pay £300 on housekeep and about £150 on food and other essentials a month.
I pay for a phone at £15 a month and my car insurance is £42.74
He pays for a union at £10 a month, and his bike insurance is £44.
I am currently working part time but im looking for a full time job hopefully earning more money.
If i was to show all our outgoings to a loan advisor would this help with getting the loan?