Small loan help.

Biffco

I'm looking to borrow around £2500 as I'm looking to buy a new car on 0% finance but I need a 30% deposit to achieve this. This loan will make up the shortfall and will greatly reduce the monthly payments on the car. I want to repay this over three years if possible at about £80 per month.

What would be my best bet? The unsecured loans have large APR's for this amount. Would a credit card be best? If so, what would be the minimum monthly repayment? I see some are doing 0% for 15 months, would I be able to take advantage of this? Would there be any fees?

I've never had a credit card so excuse the questions.

Any help is appreciated.

Tixy

If you've never had a credit card before you might find it hard to be accepted for a 0% one, if you are accepted you might not get a high enough credit limit (although obviously it also depends on how much you earn, what other credit you have had in the past, what your credit history its like etc).

You might find the car dealer will charge you a fee or an additional % for paying by credit card.

If you do get a card and do put a £2500 purchase on it the minimum repayment will depend on the card, some are as little as 1% plus interest, so in the interest free period could be as little as £25, other are up to 3%, which would be £75.
But if you only pay £80 off it then at the end of 15months you'll still owe £1300 and then will revert to being charged interest (which could be 15%, 20% or more).

You could also potentially have an issue in that if you apply for a loan or credit card for the deposit and then shortly after apply for the 0% car finance the first product application on your credit file could affect your chance of being accepted or of being given 0% on the car finance.

CLAPTON

if you have never had a CC before you're unlikely to get on with a 0% deal

Biffco

Would I still be unlikely even if I have an excellent credit history?

Biffco

Just checked my Halifax online and the offer a credit. Are with guaranteed acceptance. Comes with 0% for 15, 13 or 11 months.

creditcardhelp11

You will only have an excellent credit history if you have had credit i.e. without credit where is the history? What other credit agreements have you had in the last 6 years?

Tixy

Depends what you mean by excellent credit history.

If you mean experian/equifax says you fall into the excellent category then that means pretty near zilch.

If you mean you've had a few credit agreements that appear on your credit file, always made all payments on time and settled them in full and so you consider your credit history to be very good then you might. But even then if you've had no rolling credit agreements they still might not accept you for a 0% card.

Rafter

Firstly are you sure you can afford the payments and costs of running a £8000+ car when petrol, insurance, tyres etc are all taken into account?

If you have no credit currently, depending on what you earn, you might find it difficult to get both a loan for the deposit and the 0% car loan as well.

Personally I would caution against what you are trying to do. You will end up with a car that is immediately worth about 20% less than you paid for it once you have driven it off the forecourt and if you circumstances change you then cant sell it and pay off your loans: Your loans will be bigger than the value of the car.

If you can't afford to save up the 30% deposit how are you going to afford the loan payments?

Suggest you go for a £2,000 car, save like mad and then think about exchanging it for a new one in 2 years time if things are going well?

Sorry to be so negative! R.

Biffco

Rafter wrote: »

Firstly are you sure you can afford the payments and costs of running a £8000+ car when petrol, insurance, tyres etc are all taken into account?

If you have no credit currently, depending on what you earn, you might find it difficult to get both a loan for the deposit and the 0% car loan as well.

Personally I would caution against what you are trying to do. You will end up with a car that is immediately worth about 20% less than you paid for it once you have driven it off the forecourt and if you circumstances change you then cant sell it and pay off your loans: Your loans will be bigger than the value of the car.

If you can't afford to save up the 30% deposit how are you going to afford the loan payments?

Suggest you go for a £2,000 car, save like mad and then think about exchanging it for a new one in 2 years time if things are going well?

Sorry to be so negative! R.

The car and affording it isnt the issue, the car is just over 20,000 but the manufacturer is running a limited Vat free deal along with 4 years 0% finance.

The problem is that it's a limited time and I have 3 grand value in my car as part ex so need another 2.5 grand to make up the 30% deposit. I won't have the time to save up the deposit in the time remaining on the deal.