18 years old and looking for a loan

larryuk

My brother is 18, just passed his driving test and is looking for a car. Ideally he wants to get a car for £3K or less. He is in full time employment and has been for the last 7 months. He earns a decent wage for his age and education currently taking home approx £850-900 a month. He has no other commitments bar a £37.50 a month phone contract. So with circumstances being what they are he wants to commit to a loan for £3K (average interest seems that this will cost him £100-120 a month)

Now he has been with his bank (Abbey) since a young age and has only just (in the last few weeks) upgraded to a full current account.

My question is, where would he be best applying for a loan? Should he try Abbey (i.e. will he have a better chance with his own bank) or should he shop around? i.e. using the loan comparisons on the net to get the best rate.

Ive also noticed that Sainsburys do a loan at a reasonable rate and he works for them, would this be of any benefit?

Many thanks in advance!!

tomstickland

Has he looked at insurance yet? It might well cost £1K to insure, in which case it might be better to buy a car based on cheap insurance.


There are some good loan rates out there, but he'll probably have very little credit history.

larryuk

yes we have looked at insurance at are aware how expensive it is going to be, however he does not have any other outgoings and is happy to pay the cost of it.

jonewer

Why doesnt he buy now what he can afford now instead of borrowing now against future earnings - and paying the bank a tidy fortune in interest?

Plenty of good bangers out there for less than £500.

larryuk

the main problem with old bangers is that they generally end up with something going wrong, and while hes young and can afford it hes happy to pay the extra to get a decent car. Also if he gets a loan and pays it off it will help build his credit rating!

tomstickland

Personally, I'd advise saving £500 per month for 4 months and then buying a £1K car outright. That's the cheapest way of doing it.

However, there are some good loans out there. Get him to apply for one and see how it goes.

The cheapest way of borrowing money is via a 0% balance transfer from a credit card, but this requires a good credit rating and discipline.

I think all we're saying here is be wary of taking out a loan and then regretting it at a future date.

darkcloudi

go to http://www.moneysupermarket.com/loans/ and compare the different loans, whether your eligible not sure as it will be determined on your credit rating.

Being 18 I guess he won't have much history.

The second option is to have a joint loan with a parent and he may possibly get a loan.

jonewer

larryuk wrote:

the main problem with old bangers is that they generally end up with something going wrong, and while hes young and can afford it hes happy to pay the extra to get a decent car. Also if he gets a loan and pays it off it will help build his credit rating!

Its all about warranties. The age of the car doesnt make any difference. I saw a brand new merc on the back of an AA lorry this morning. Warranty - 6 months at least. Then you at least know the dealer aint selling you a lemon.

edit - if a credit rating is so important, get a small loan rather than a huge one.

larryuk

Thankyou for the comments so far. Not to sound negative but can people please give suggestions as to the original question.

Obviously warranties are a good factor but most warranties will find a way out of paying anything.

I am not asking for advice on what my brother should do (i.e. loan or save) I am asking about the the best route for a loan.

Again I dont mean to sound ungrateful but I am merely looking for advice on choosing the correct loan.

Thanks

jonesMUFCforever

Before I answer the original poster's question can I ask him to post on here how much out of his £850 - £900 monthly wage that he has saved say over the last 3 months and also how much he has to pay each month for his keep?
The answer is related to advice given.

Girl_least_likely_to

I am going back to 1998 here so forgive me if it's not relevant anymore . I was taking home abot £750 at the time, was still living at home and had no outgoings other than £120 rent and beer money . I'd had a student, then graduate bank account for 3 years. I purchased a car for £3500 on finance (VW finance not a cheaper bank loan , Oh how I've learnt from MSE!). They accepted me straight away! I did have a student Barclaycard at the time so maybe that was worth something on my credit file but other than that I'd not had credit before.

I'd go with what the other posters have said though. Might be an idea to save for 6 months to get that £3K car. If the car was purchased with a loan over 3 years for example, things would probably start going wrong with a car before your brother had even had time to pay it off. Double Trouble