What are my chances of getting a loan to buy my first car?

hero9989

Ok, so I'm looking to buy my first car at some point before September (firstly cos getting to work (almost 10 miles away) is proving to be not the easiest of things, especially when I'm doing night shifts and secondly to build a no claims bonus.

I have a full time job (admitedly not far above minimum wage but still £800-£900 a month after tax)

I've had a credit card since I was 19 (now 23) and I've never missed a payment, paid it off fully several times but not every month)

The only set outgoings I have is paying rent to my folks which is £200 ish a month and I suppose my phone but I don't spend much on that - maybe £10 a month - absolute tops. The rest of my money is completely disposable/savable.


So in short - what chances do you guys reckon I have of getting a loan for a car (most likely a used one around the £3500 mark) and where would be the best place to look for said loan? I ask cos I don't want to be applying for loans if I'm just going to get refused left and right. Also - if I don't get a loan - are the chances of hire purchase higher or lower than a car loan?


Thanks in advance!

InsertWittyName

Hi.

Let's do the math:

£850 a month income (middle figure).
£210 a month outgoings.
Surplus: £640

Saved for 3-4 months (depends on when you get paid in the month) = £1,920/£2,560.

Save for another month or two and you'd have the £3,500 for the car

Even if you don't reach the £3,500 at least you wouldn't need to borrow the full amount for the car and are more likely to be accepted for a loan.

Hope this helps.

richardruff

Always a tricky one when you're talking about motoring, and remember the cost, doesn't stop with just buying the car.

Provided you've not missed payments on your credit card in the past and you've kept any bank accounts in order, I think you'd stand a good chance of getting accepted - if your credit card is the same company as your bank, then you're probably most likely to get accepted for the loan with the same bank, as they already know you and may even have "pre-approved" offers for you.

I have a friend who recently applied for a credit card with Natwest (his main bank) on a similar income to you and was shocked when they gave him a £4.5k credit limit, and an introductory 0% on purchases for something like 7 months, despite the fact he was in arrears with other creditors! Needless to say he balance transferred all the accounts he had in arrears to the Natwest card, and is well on his way to becoming a smart, debt-free wannabe.

But I would encourage you instead to bear in mind the true cost of motoring. I'm 20 and have been driving two years, and after my rent, driving is by far my biggest expenditure, my Insurance renewal has just come in at around £1,200, car tax £200 / year and not to mention the cost of fuel & the MOTs, god help you if you need repairs!

Though it may cost more, I'd recommend getting a car from somewhere that will give you at least a year's guarantee, like Carcraft or something. It may cost you a little more, but all too often I've known friends who have bought a car that seemed reasonably good value (but not dirt cheap) and forked out loads for repairs. Or maybe you have a trustworthy friend or family member who is looking to get rid of one?

In my first two years of motoring, I worked it out that factoring in the cost of my insurance and fuel alone, that it cost almost the same to get a taxi to and from work every day rather than actually drive, though of course that won't get you a NCB and may be more expensive if you're working into the night!

Hope you find this useful!

Caz3121

my SS has a similar wage to you and spends about 50% of his wage on running his car (this excludes the cost of buying the car as no loan) he is about £300 per month insurance £30 week fuel then tax/tyres/maintenance etc (he had to borrow money to get it through it's MOT) he knows that he will be stuck living at home until either his insurance drops significantly or his wage increases. By the time he pays his digs and his mobile he goes out about once every couple of months. He could get taxis everywhere he goes for less than he pays to run a car.

BugsyBrowne

It's a bit unfair these days how hard working youngsters want abit of independence but the saving for a car is possibly the easiest bit as it's the insurance that's the killer.

Some boy on our road is really struggling he's saved up around £1500 for a nice little motor and insurance is around 2.5k where monthly instalments are crippling.

bargainbetty

Have you considered getting a moped or scooter? You can often find offers that include a brand new machine, crash helmet, first years insurance and delivery to your home for less than £1k. The petrol, maintenance and everything are significantly cheaper, parking is often free, and you will save a fortune on road tax etc.

Have a look on Google - you'd be amazed what you can get for your money.

Dinah93

Have you checked the cost of insurance on one of the cars you're looking at? My brother is 22 and was looking to get insurance on a group 4 (or whatever the new equivalent is) car and the cheapest quote he got was £3400.

If you decide its something still to do then personally I'd consider bangernomics - buy a £200 banger, run it until it needs something doing to it, then just swap for a different banger. It'll probably last you the 4-5 months unitl you've saved up for the car you really want, but you'll still have wheels in the short term.

eschaton

Maybe time for a spending review?

You must spend all your disposable income at the moment if you don't always pay off your credit card?

You need to reduce your outgoings if you are going to be able to repay a new loan and also run a car.

lilymay1

richardruff wrote: »

I have a friend who recently applied for a credit card with Natwest (his main bank) on a similar income to you and was shocked when they gave him a £4.5k credit limit

That is staggering.

Earning £12k a year and he has a £4.5k creditcard?! No wonder people today are in such a mess.

OP - I think the advice already given on here is pretty sound. The cost of running a car comes to much, much more than just the purchase price. Have you looked at the price of insurance/tax/fuel etc etc etc for your potential car?

bouncydog1

If you only have outgoings of £200 per month and spend the rest I think you are going to be hard pushed to get a loan, as how are you going to repay without a huge lifestyle change?

Best place to start is your own bank as they know how you manage your money.

Alternatively save the amount of car repayments plus insurance/mot/fuel for a few months and see how you feel. You may find that it is preferable to take the scooter option and have transport and still money left to go out on.