Car finance help

thebhoy

Hi,

Bit of advice needed. I am close to passing my driving test and want to purchase a car on finance.

I have looked at my credit file and it shows its poor. However I dont have any defaults or bad credit history. I have an overdraft, contract mobile and my sky account. All are paid on time and are in the green. I have closed a previous mobile contract account which has been settled.

I am on the voters roll but stayed at my address for a year. I don't have any credit from my other address. I work full time and receive a good income. But is this poor credit rating going to stop be getting finance?

ConsumerWizkid

Hiya

If you are young it's more than likely that you have what's known as a "thin credit file". This is essentially caused by not having much credit before or by the credit bureaus not being able to locate much of a previous address history.

If you've had no defaults and payday loans you should find it still relatively straight forward to get hold of a loan, though the amount you can borrow will depend on your income and outgoings.

You can look at companies like Everday Loans as they tend to look a bit deeper than the electronic checks that online lenders stop at, or you might find luck in going to a company like carcraft.co.uk who will try and arrange bad credit car finance for you.

Good luck with your driving test!

Tixy

Ignoring the rating given by the credit referency agency - is everything on your credit file correct? Does is correctly show you are on the electoral roll?

How long have you had any of your credit accounts?
You mention you have an overdraft - do you actually use the overdraft much?

I certainly wouldn't start by looking at the tupe of subprime lenders mentioned in the post above.
Are you specifically looking for secured car finance, rather than a bank loan? Your own bank may be an option to try for a bank loan if you have run the account with them well.

thebritishbloke

I'm only 19 and I got approved for a £14,450 loan with Citroen Finance, and I'm a student! I've got a couple of credit cards which I've always paid in full, a bank account with an overdraft and a mobile phone contract.

As you've not said your age or how long you've been working or how long your overdraft and phone contract have existed, it's difficult to give you advice.

I'd get yourself a credit card and at least 3-6 months of paying it off in full before you try to apply for a car loan.

DCFC79

Save up for a car, can get cars that cost £1k or even less that run ok.

thebritishbloke

DCFC79 wrote: »

Save up for a car, can get cars that cost £1k or even less that run ok.

Some people want a car that runs better than ok. I forked out for a brand new car because I didn't want the hassle of MOT's, worrying about how many repairs will need to be done, paying for services and breakdown cover every year. Oh look, one of the tyres is worn. Oh, timing belt needs replacing. And so on and so on. The amount I forked out to repair my sisters car for her that was barely worth £800 was ridiculous.

If someone's set on a new or nearly new car, they're not going to change their mind to buying a 12 year old banger.

forgotmyname

No MOTs but only for 3 years.. Then it will need them.

Services and breakdown. Cover? Dont new cars require servicing?

Tyres can be well worn in a year or so. OK it wont need a timing belt. But my current car have never had one either.

And im sure the depreciation will easily exceed a bill of £800.

matttye

forgotmyname wrote: »

No MOTs but only for 3 years.. Then it will need them.

Services and breakdown. Cover? Dont new cars require servicing?

Tyres can be well worn in a year or so. OK it wont need a timing belt. But my current car have never had one either.

And im sure the depreciation will easily exceed a bill of £800.

I'm not gunna lie - financially it makes a whole lot more sense to get a used car. I just bought a new car and it's a luxury. It's on a 4 year plan but I hope to pay it off after about a year.

My first two cars were used cars and they lasted me 2 years and a year and a half respectively. I'm hoping to have my new car for 10 years. I just wanted something that would last me for a long time, and where I know full well there's nothing wrong with it. And if anything does go wrong, it has a 5 year warranty.

The trouble with used cars is that they're alright on the test drive and when you give them the once over, but soon there's all sorts going wrong with them.

thebritishbloke

forgotmyname wrote: »

No MOTs but only for 3 years.. Then it will need them.

Correct, but it will still be much more likely to pass it's first few MOT's with no faults than a used car would be after 3 further years of use.

Services and breakdown. Cover? Dont new cars require servicing?

Both of the new cars that I've bought came with 3 years free servicing and 3 years AA cover.

Tyres can be well worn in a year or so. OK it wont need a timing belt. But my current car have never had one either.

How many miles are you doing to wear brand new tyres down in a year? And you should change your timing belt every 50,000 to 100,000 miles. A lot of used cars are in this range and haven't had it done. It's an extra expense.

And im sure the depreciation will easily exceed a bill of £800.

Depreciation isn't always as bad as people think it is. I had a DS3 which I got £3000 off the list price, sold it for £2k above what I owed on finance. I now have a DS4 which I got £5000 off the list price, 3 year old, lower models are going for more than what I will owe at the end.

matttye wrote: »

I'm not gunna lie - financially it makes a whole lot more sense to get a used car. I just bought a new car and it's a luxury. It's on a 4 year plan but I hope to pay it off after about a year.

My first two cars were used cars and they lasted me 2 years and a year and a half respectively. I'm hoping to have my new car for 10 years. I just wanted something that would last me for a long time, and where I know full well there's nothing wrong with it. And if anything does go wrong, it has a 5 year warranty.

The trouble with used cars is that they're alright on the test drive and when you give them the once over, but soon there's all sorts going wrong with them.

This is my point exactly, sure a used car is going to cost you less to buy, of course it will. But then you're going to have to get a new one in a few years or fork out a load for repairs.

bigadaj

People will always persuade themselves that their situation is teh best but buying a. Used car is almost always cheaper, taking account of repairs and even excluding financing costs.

If you choose to spend your money on a. Shiny new car then that's fine, as for purchasing anything, but in most instances it will be far more expensive.

redcard

thebritishbloke wrote: »

Depreciation isn't always as bad as people think it is.

Quite.

It's funny how you think a new car is better for you when you're buying, but a used car is better for everyone else when you're selling.

That's rather bizarre logic.