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SuperHan
SuperHan Posts: 2,269 Forumite
Part of the Furniture 1,000 Posts
I am about to graduate from University (next week!), but have just had my car written off in an accident. So I need a loan to cover the amount for a new car.

I have a job offer to start in September at around £20K (final figure hasn't been confirmed yet, but it is at least this amount) and I work part time at the minute, earning around £500 a month. My credit rating is good, and I have had credit cards/finance agreements before that have all been settled and paid on time, so I guess my credit looks better than the average student. I currently owe around £150 on my overdraft and have £2,000 in savings.

I would like to take out a loan for £8,000-£10,000, but I am wondering who is most likely to accept my application, if anyone. I was thinking of the Natwest Graduate Loan, as I bank with them currently as my main account (I also have Halifax, Nationwide, Barclays accounts), but there is a fairly high APR of 18% representative. Would my interest rate be likely to be lower, assuming my credit is better than the average newly graduated student? Their personal loan has a much better representative APR at around 7%, but will I be accepted for this on the premise I don't yet have a full time job?

Would having a letter of confirmation of my salary as it will be in September help any applications I do?


Please help! I am sort of stuck without a car... I could buy a cheap one until I start work, and that is the fallback plan, but I was planning to invest in a more professional looking car for when I began work anyway as it will involve a lot of meeting with clients, so it makes sense to try to fork out now and not buy an interim car if I can get the funds!

I would also like to have the option to pay back early without a huge penalty, as my job will offer me a 3K interest free loan when I begin work that I could then put towards any bank loan I take out.

Thanks in advance!
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Comments

  • bargainbetty
    bargainbetty Posts: 3,455 Forumite
    Part of the Furniture 1,000 Posts Photogenic Name Dropper
    Buy a cheap car now with some of your savings. When you have the income, then start looking at a better one. Trying to get this level of credit now when you have no income is impractical. The letter isn't worth much, as offers can be revoked. Also, you don't need £8k to buy a nice looking car, you can get much nicer for less.

    We'd all like to overpay without penalties, but banks are businesses - check the small print and see what you might be facing if this is an issue.

    Having a cheaper car for a while would also help you re-establish your no-claims bonus. If your car was written off and your insurance aren't paying out, then you were at fault and that will probably affect your next premium.

    Go cheap, save your pennies. Get an older, classic car (one that has been looked after) and drive that for a while.

    Good luck
    Some days, it's just not worth chewing through the leather straps....
    LB moment - March 2006. DFD - 1 June 2012!!! DEBT FREE!



    May grocery challenge £45.61/£120
  • HeadAboveWater
    HeadAboveWater Posts: 3,941 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker Debt-free and Proud!
    Well, I would get rid of the overdraft first of all!

    I agree with bargainbetty: I'd also just get myself a decent reliable car for the time being. No point putting yourself into unnecessary debt when you don't have to. Use some of your savings. When you're working a while then 'upgrade'.

    My first money mistake was buying a car on HP. 13 years later I'm finally out of debt. My advice is don't go there. A car eats up a HUGE amount of money. Stick with what you can afford.
    Wealth is what you're left with when all your money runs out
  • SuperHan
    SuperHan Posts: 2,269 Forumite
    Part of the Furniture 1,000 Posts
    My insurance is paying out, not my fault at all. So I can buy another equivalent car, but the new car I was looking at buying will save tax, insurance and petrol costs.

    The reason I'm thinking of getting a better car is because, like I said, in 6 months time that was the plan anyway, and I didn't think it was necessarily worth the hassle of insuring/taxing/buying/selling a cheap interim car and then getting a nicer one in a few months.

    My overdraft isn't an issue for me - it's something that gets paid off regularly, and is interest free, so it's pointless moving money out of my ISA to pay it off.

    I thought the problem would be with my income being very low at the moment as I only work part time. I may have a word with Natwest regarding their graduate loan, as they allow early repayment with no penalty and will pay out loans to students who don't have secure jobs yet, so they should be willing to offer me something! I will be able to pay off the entire thing in a years time, so I'm not hugely spending outside of my budget.

    I don't want to go down the HP route, or any sort of car financing option, as like you say, I appreciate they're not inexpensive ways of obtaining money!

    I will have a think about the merits of a cheaper car, but I am in a good place financially, or will be in 12 months time, I'm not just trying to get an expensive car then struggle with repayments - I know what I want to do is affordable. I was just wondering what the chances of a loan with little income would be, and bargainbetty's answer is as I expected!
  • bargainbetty
    bargainbetty Posts: 3,455 Forumite
    Part of the Furniture 1,000 Posts Photogenic Name Dropper
    OK, I've been raving about this site for months, largely because I got a car off it... http://www.carandclassic.co.uk

    I got a lovely BMW, fabulous working order, looks brilliant, drives well and is very reliable for £2700. It is a car trade site for people who love their cars and look after them. Have a scoot around on there, working out what you can get with the insurance money (sorry about that) and a bit of your savings.

    Classic cars can also be insured quite cheaply using the specialist sites. Lots of people have 'professional' cars, have something a bit unusual but wonderful instead!

    Good luck x
    Some days, it's just not worth chewing through the leather straps....
    LB moment - March 2006. DFD - 1 June 2012!!! DEBT FREE!



    May grocery challenge £45.61/£120
  • 19lottie82
    19lottie82 Posts: 6,029 Forumite
    Part of the Furniture Combo Breaker
    OK, I've been raving about this site for months, largely because I got a car off it... http://www.carandclassic.co.uk

    I got a lovely BMW, fabulous working order, looks brilliant, drives well and is very reliable for £2700. It is a car trade site for people who love their cars and look after them. Have a scoot around on there, working out what you can get with the insurance money (sorry about that) and a bit of your savings.

    Classic cars can also be insured quite cheaply using the specialist sites. Lots of people have 'professional' cars, have something a bit unusual but wonderful instead!

    Good luck x

    Classic Cars are well and good, but they can be total money pits. I don't think I would be comfortable relying on one for my main mode of transport if I was driving a reasonable amount of miles and needed it for work.
  • fwor
    fwor Posts: 6,861 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    SuperHan wrote: »
    I was planning to invest in a more professional looking car

    There seems to be an element of wishful thinking here. In the business world, nobody is going to be impressed by (or even notice) the fact that you are driving a £12k car instead of a £2k one.

    And in 3 years time your £12k car won't be worth a lot more than £4k, but you'll probably still be paying for it.

    Go for a cheap one paid from savings (and avoid classics as everyday runabouts, because they will let you down when you least expect it, and they won't be nice to drive in the middle of winter).
  • chesky369
    chesky369 Posts: 2,590 Forumite
    Fwor beat me to it! Unless you're actually working for a car producer, not many clients are going to even notice what you're driving (unless you make a hash of parking in front of their office). And certainly nobody would expect somebody who has only just graduated to be driving a plush car.
  • bargainbetty
    bargainbetty Posts: 3,455 Forumite
    Part of the Furniture 1,000 Posts Photogenic Name Dropper
    Any car is a potential money pit. As my mother used to say, 'If it's got wheels or testicles, you're going to have problems with it.'

    Unless you are buying brand new with a warranty in place, you have to consider the previous owners and usage. It was just a thought though!
    Some days, it's just not worth chewing through the leather straps....
    LB moment - March 2006. DFD - 1 June 2012!!! DEBT FREE!



    May grocery challenge £45.61/£120
  • 27col
    27col Posts: 6,554 Forumite
    Are people so shallow, that they are bothered about the type of car you drive. If it was me I would be thinking "flash git", and how much of my money was going to go towards the flash wheels.
    I can afford anything that I want.
    Just so long as I don't want much.
  • BugsyBrowne
    BugsyBrowne Posts: 5,697 Forumite
    27col wrote: »
    Are people so shallow, that they are bothered about the type of car you drive. If it was me I would be thinking "flash git", and how much of my money was going to go towards the flash wheels.

    I say that about couples living in a four bedroom house with a nice garden, I think flash gits with their flash bedrooms and garden and how much they payed 'towards their house.
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