Unable to get loan for new car

jcalow

Hi,

I'm am 20 years of age, just started a new job and due to my need to commute have decided to get myself a reliable new car. However, I am finding it impossible to get a loan to cover this. I am looking to borrow £7500 over 36 months and so far have been to both my bank, Natwest and Alliance and Leicester. I was refused by Natwest as my account has had a few charges in the past 12 months and Alliance and Leicester would not give a reason. Is this just purely due to my age? I have no other debts and have a good credit rating (got a copy of my credit report just to check and nothing on there). I earn a respectable salary and live with my parents with few outgoing costs. I have shown myself to be good with credit successfully repaying a loan before now. Is there anywhere that may consider me? I have looked at a hire perchase scheme with the dealership I am buying the car from and they may consider me but they want to charge between 10-12% APR and am sure I can do better than that for a 3 year loan. Any recommendations?

Many thanks in advance,


Josh

liz105

Have you tried any other lenders?

Id say whatever you do, dont do HP or finance

Troubleatmill_2

hmm... £7500 for a car.... right let's see what we can do.....


Hmm.... nearly new small car for under £5K..
http://www.trade-sales.co.uk/offer.asp?img=5&cmboManuf=ford&cmboModel=ka

Saving of £2.5K before you start, cars nowadays are pretty reliable - you have to look hard to find a lemon.

I would look to reduce your budget on the car.... and in a year or so.... look to upgrade.

Once you have a track record of earning.... life will get easier for credit ( oops I mean debt )

Best
Troubleatmill

YorkshireBoy

jcalow wrote:

I'm am 20 years of age, just started a new job and due to my need to commute have decided to get myself a reliable new car...I am looking to borrow £7500 over 36 months...Any recommendations?

OK, reality check time.

I'm twice your age, and I have a son around the same age as you. We both have reasonable commutes.

I sold a very reliable Mondeo 3 years ago for only £1,600.

I bought my son a £450 Fiesta 5 years ago to teach him to drive. Including the 'lessons' and his use after he passed his test, the car did over 14,000 miles in 12 months - and never let him down once. I sold it after a year and got my £450 back.

My son now drives a 1.2 R reg Corsa - bought for £1,500 3 years ago. This car has never let him down.

Still want to spend £7,500 on a "reliable new car"?

Timmne

I suffered too, at the age of 19 (nearly 20)- bought myself a clio brand new three years ago for reliability, or that's what I said!

Really if I was honest it was down to the excitement of owning a new car, and to be seen in one would be great, I thought. Looking back I wished I'd just bought a £1500 car, or kept my Y reg Fiesta that was perfect in so many ways! When we got a mortgage a year after I bought the Clio I realised I was in trouble as no-one would lend me enough as I had a car loan hindering my finances!

If you've got plans to move out of home in the next few years I would reconsider the large loan!

Sorry this hasn't helped you out with your original request for advice, but hopefully it's made you reconsider buying a new car!

jcalow

Many thanks all for your help.

Would I be right in thinking that I am more likely to get the loan from a lender that is not a bank?

Would anyone have names of good companies that I can approach?


Thanks again,


Josh

Timmne

Have you tried getting an M&S credit card and doing a 3.9% LOB transfer? I have just received mine with a healthy £7.5k limit - this is by far the best "loan" you could get, as long as you make sure you cut up the card when you transfer the balance!

kittiwoz

Do bear in mind that if you actually are interested in reliability then you should know that the failure probability curve for cars is a classis bathtub shape meaning that they suffer a period of "infant mortality" which then levels out by about three years and then the reliability is constant for years and years til at least 100,000 miles. So if you buy a brand new car it will be less reliable than if you buy a secondhand car providing that it isn't nearing the end of its life.

If you want to buy a new car anyway because new and shiny does it for you or whatever then that's your call but if you are actually wanting to make a practical choice centred on reliability you'd be better off with a secondhand car. VWs are particularly good, very reliable, very solid and hold their value well secondhand because of it.

Timmne

kittiwoz wrote:

Do bear in mind that if you actually are interested in reliability then you should know that the failure probability curve for cars is a classis bathtub shape meaning that they suffer a period of "infant mortality" which then levels out by about three years and then the reliability is constant for years and years til at least 100,000 miles. So if you buy a brand new car it will be less reliable than if you buy a secondhand car providing that it isn't nearing the end of its life.

If you want to buy a new car anyway because new and shiny does it for you or whatever then that's your call but if you are actually wanting to make a practical choice centred on reliability you'd be better off with a secondhand car. VWs are particularly good, very reliable, very solid and hold their value well secondhand because of it.

Agreed, sort of - my clio has gone back to the garage three or four times for very expensive repairs, although it's covered by warranty until 28th feb this year.

So yes, new cars are unreliable, but cost nothing to repair, depending on warranty.

Chelsea_Boy_2

You don't state how much the car is going to cost! Is it £7500? or do you have some money already saved to add to this? My son wanted to borrow the same amount a year or so back for the same reason, but it would of meant him borrowing a 100% of the purchase price. I told him to save 20% of the value to use as the deposit & then he could borrow the rest.
I was told by my bank several years ago that you are more likely to get accepted for a car loan if you have a deposit towards the car, because if you do then it is more likely the car will be worth more than the outstanding loan should things go wrong and you need to sell the car.

You don't say if you have a car already, if not you will also have to take into account insurance, petrol & maintenance etc. If you have budgeted for all of this and you can still afford it, you are young and are appear to have no financial ties then go for it. Good luck.

kittiwoz

Timmne wrote:

So yes, new cars are unreliable, but cost nothing to repair, depending on warranty.

Well that's why new stuff comes with waranties, but it is still inconvenient if it breaks down.