Loan for a 22 year old with no credit history

NikNox

Hi all,


My 22 year old son has a very good job, and earns 24k per year. He is currently living at his girlfriend's mum's with his girlfriend and their baby. Prior to that he was living at home. He's never had credit, but wants a loan of £5k for a new car (his has just blown up). We have tried applying for several different loans but he's just not getting accepted for any of them - the only ones who would accept him are at huge interest rates. I would be prepared to act as Guarantor for him, but again, all Guarantor loans I've looked at have very high interest rates.


Does anyone have any advice on how he can get a loan, at a reasonable interest rate, bearing in mind he doesn't have a credit history because he's never had credit before. He's never rented a home or paid council tax either.


Thank you. Any advice greatly appreciated.

Gaz83

If you're prepared to act as Guarantor with him, a far better idea would be to take out a loan in your own name and get him to SO the payments to you every month.

Same risk to you but far cheaper rates.

nidO

He's not going to.

With no credit history to speak of his only possible choice is either his own bank or sub-prime and guarantor loans which as you've found are very expensive.

If you're willing to act as his guarantor, can you apply for a loan yourself and pass the money on to him? Obviously, in keeping with all advice always given on this forum, when either acting as a guarantor or applying for the loan yourself, make sure you're able and prepared to pay back the entire thing yourself if he doesn't.

He should probably then look into getting himself a credit card, mobile phone contract, etc to start building up a credit history.

CLAPTON

NikNox wrote: »

Hi all,


My 22 year old son has a very good job, and earns 24k per year. He is currently living at his girlfriend's mum's with his girlfriend and their baby. Prior to that he was living at home. He's never had credit, but wants a loan of £5k for a new car (his has just blown up). We have tried applying for several different loans but he's just not getting accepted for any of them - the only ones who would accept him are at huge interest rates. I would be prepared to act as Guarantor for him, but again, all Guarantor loans I've looked at have very high interest rates.


Does anyone have any advice on how he can get a loan, at a reasonable interest rate, bearing in mind he doesn't have a credit history because he's never had credit before. He's never rented a home or paid council tax either.


Thank you. Any advice greatly appreciated.

why doesn't he have any saving?
why does he need a £5k car?

presumably living at home with you was cheap and presumably living cheaply now.

better he learns to save up as eventually they will want to move out and find their own place

in the meantime he needs to ensure he is on the electoral roll and apply for a CC to help build up a credit history

Ian_875

I was in exactly the same place.

Earning 18k, 25 year old, wanting a loan for a car (with no credit history at all) when I passed my test

Bank turned me down (as expected really)

Ended up getting one via Zopa after reading through this forum. Got a £7.5k Paying 11% APR on it over 5 years.

Costs me £192.06 a month, with a total repayable amount of £9,229

To answer the person above, he may well need a £5k car because anything cheaper bumps the insurance up. With a first car its a balance between getting a cheap car but paying more on insurance every month, or biting the bullet with a slightly more expensive/newer car, and getting lower insurance.

Personally, I wanted a £5k car as I wanted the lowest insurance I could get, and as I would need to take a loan out one way or the other, I wanted to be confident the car would last the lifetime of the loan

CLAPTON

Ian_875 wrote: »

I was in exactly the same place.

Earning 18k, 25 year old, wanting a loan for a car (with no credit history at all) when I passed my test

Bank turned me down (as expected really)

Ended up getting one via Zopa after reading through this forum. Got a £7.5k Paying 11% APR on it over 5 years.

Costs me £192.06 a month, with a total repayable amount of £9,229

To answer the person above, he may well need a £5k car because anything cheaper bumps the insurance up. With a first car its a balance between getting a cheap car but paying more on insurance every month, or biting the bullet with a slightly more expensive/newer car, and getting lower insurance.

Personally, I wanted a £5k car as I wanted the lowest insurance I could get, and as I would need to take a loan out one way or the other, I wanted to be confident the car would last the lifetime of the loan

I've never noticed that as my car gets older, the insurance gets much dearer

Vikipollard

Ian_875 wrote: »

I was in exactly the same place.

Earning 18k, 25 year old, wanting a loan for a car (with no credit history at all) when I passed my test

Bank turned me down (as expected really)

Ended up getting one via Zopa after reading through this forum. Got a £7.5k Paying 11% APR on it over 5 years.

Costs me £192.06 a month, with a total repayable amount of £9,229

To answer the person above, he may well need a £5k car because anything cheaper bumps the insurance up. With a first car its a balance between getting a cheap car but paying more on insurance every month, or biting the bullet with a slightly more expensive/newer car, and getting lower insurance.

Personally, I wanted a £5k car as I wanted the lowest insurance I could get, and as I would need to take a loan out one way or the other, I wanted to be confident the car would last the lifetime of the loan

Just curious, but why did you take out £2.5k more than you needed?

Nebulous2

Where is he buying the car from?

If it is a garage then ask what they can offer on finance deals. They are usually more expensive than leading rate personal loans, but could well be cheaper than the high rate, guarantor type ones. They will often be less demanding in terms of approval as well.

born2shine

Car giant will accept anybody with any type of credit history IMO.

Ian_875

WHen I say an older car, I mean as a new driver you'll find the insurance is alot more on a 10-15 year old car with alot of miles on it, than what I bought, a 4 year old Corsa with 30k miles.

As for why I took more out, it was a number of reasons, primarily to cover myself for insurance (£800) and tax (150ish if I recall), aswell as the cost of doing my Pass Plus in my own car.

That left a little bit left over for its first years MOT and service (Having never owned a car before, I wanted to make sure I had enough to cover expenses like that as I had no frame of reference.)

What was left over once my MOT and service were out of the way I used to overpay on the repayment.

Regarding why I didn't take out finance, it was simple, I wanted to own the car outright, so that if needs must I could sell it or do with it as I wished. Obviously that hasn't had to happen, but I think given the car and associated first year costs I was better off taking a personal loan to cover the whole amount than I was in getting finance on the car and then having to meet the extra costs myself - it was a bit of security, if you like

Also, as I was able to buy the car outright in cash it allowed me alot more room to haggle, which I did, managing to get £595 off the asking price.

NikNox

Hi all,


Thanks for the replies. He's been driving since he was 17, had "throw away" cars for the first couple of years to get his insurance premiums down, and now he's paying £66 per month on a VW Bora, but it's just blown up (not literally, but it doesn't go) and the garage he took it to said it needs specialist intervention. He bought the car for £800 and just doesn't want to spend loads of money getting it fixed as he needs something more practical now he's a family. He wants something newer, more reliable and preferably with a warranty rather than buying off someone via Ebay or Trade-It, so would prefer to go to a garage. He's been looking around, and £5k will get him a decent car, hence needing a loan. It's really difficult, because he can afford to pay it back! We've tried applying online, and tried Zopa but they didn't accept him. I'm not sure he wants to be tied down to finance either, because he gets bored quickly with cars (I know, but he is a bit of a petrol head).


Someone mentioned Car Giant, haven't heard of them so will go take a look.


Cheers folks, any more words of wisdom welcome