Zero percent loan and new job

thebirches

Hope this is the right place to post.

I have recently been made redundant after 22 years of constant employment, but luckily found a job two weeks into my twelve week notice period.

My first day at my new job is on Thursday (1st Oct 15).

I am thinking of using some of my redundancy to buy a car, keeping the capital in a savings account and using zero percent interest.

Will my credit rating have taken a beating due to my change of circumstances?

I would obviously not want to apply for a loan I would have no chance of getting.

Again, I was not sure whether to post in the credit rating forum or this forum, so apologies if this is the wrong place.

Any advice would be appreciated.

jonesMUFCforever

How much redundancy will you get?
If it is more than the loan required, go for it because you will have the funds to pay the loan in a worst case scenario.

thebirches

Thanks for the reply.

My redundancy is more than the loan.

I just remember when I have applied for zero percent loans before they need to know details of current employer and length of service.

Obviously I havent even started the new job yet so worried how this would be viewed, and if this would have any bearing on whether the loan would be approved.

Just dont want to apply for something I will get rejected for and harm my chances in the future.

Hope this makes sense.

uncreative

First of all congrats on the new job, I am sure that must be a great feeling.

Its simply a maths question. If you qualify for 0% car finance and you already have the money in the bank then it is mathematically advantageous to take the finance and put the money in the bank earning x% interest.

Could you get a better deal just paying cash vs taking out finance? EG if you can get a £10,000 car for £500 less paying cash vs taking out £10,000 interest free finance and earning £250 interest on the £10,000 its mathematically better to pay cash.

Remember there is also the opportunity cost of having £10,000 in the bank as an "emergency" fund, although this exposes you to the 0% loan.

0% finance has to pay for itself somehow so you are invariably paying too much in the first place......remember the car finance will also have admin and documentation fees to take into account.

thebirches

Thanks, it was quite the relief to get a job, especially after being so comfortable for so long.

I have negotiated a good deal for the car already which the salesman has said is open until tomorrow (end of the month), I wasn't aware the zero percent was an option until I spoke to another customer. I was just going to add the zero percent on, so I suppose there is no guarantee they will do it, but I am willing to walk away if they don't.

I would prefer to keep the capital in an interest earning account, and just direct debit the money from there into my current account to pay for the loan. I know it wont yield huge interest but every little helps.

nomoneytoday

IMHO i'd wait until you're passed the probation before buying a new car, unless your old one is on its last legs (wheels?)

Pixie5740

The 0% finance deals on cars aren't always as good as they first sound. With a 0% deal the dealership doesn't have the same scope to negotiate the price with you compared with you taking a different finance deal. So whilst on the face of it 0% looks pretty good you might end up paying more for the car.

27col

A job with a probationary period should not be considered a permanent job until the probationary period is over.
Good Luck with it, anyway.

[Deleted User]

if you get the loan and put the money into savings its not going to earn much interest atm,say £10k will earn around £400 in 2 years at best,as for the deal being open only till tomorrow I'm sure a new one would suddenly appear the day after

shane1104

p.s are your old employers who made you redundant happy with you starting a new job in your notice period? have they paid you in lieu?


when i was made redundant. i had 12 weeks notice, i found a job before the notice even started but i was put on garden leave for the 12 weeks. i wasn't allowed to start my new job for 12 weeks without fear of losing my redundancy package.

Playing_with_Fire_2

Your employment status won't affect your credit score/report.

The loan application will generally ask about your employment status and history, this could impact what they will offer you.

Be aware that you need to check and sign the loan application. Some car sales people will put all sorts of rubbish on the application form to get it approved and bump up their sales figures.