Graduate Looking for Car Loan Advice

mturner93 · 2 September 2016 at 11:18AM

Hi, just looking for some advice. I'm a 23 year old who recently graduated university; I have had a credit card since I was 18 to build credit - never been in any debt, always made repayments and generally should have a good credit score. However, my parents rent and we usually move once a year - this seems to have severely impacted my credit score (as it should). I've held a noddle account since they opened way back when and my credit score has gone from the original 5/5 all the way down to under 500/1000 with them. I've just started full-time employment on a £18,700 salary.

Anyway, I've had my first car for 3 and a half years and want to buy a new one for £5995, spread over 3 years. Using the eligibility calculator on MSE, it insinuated that Cahoot could provide a loan as low as 4.4% (I know this is represenative and not everyone will get this rate) however, the pre-approval gave me a rate of 15.9%. I also applied to the Post Office, which has given me 10.9% APR. My question or advice I am looking for is is it worth still shopping around? I know that too many loan applications too quickly can really impact your credit score and there is a chance the loans could still be rejected upon underwriter approval, but jeez, 10.9% seems extremely expensive to me bearing in mind the interest rates currently. HSBC offer graduate loans; I've held an account with them for 8 years and they didn't even want to offer me a loan on pre-screening. Just looking for advice whether this is the best I will get as I don't want to keep looking and wreck my credit score even more.

TL;DR: 23 Year Old Grad, 18.5k salary, £6k loan over 3 years, moved around a lot, is 10.9% APR loan good? Other info: £1k Interest Free graduate overdraft at HSBC, £500 on credit cards.
I hold a few thousand in investments but obviously this is not liquid cash and I invested for long-term.

Monthly Outgoings:
Rent £0
Gym £16
Mobile £7.50
Credit Cards/Overdraft: As and When
Car/Petrol: £90

fwor · 2 September 2016 at 1:46PM

I suspect that you are just a victim of the statistics that lenders use to assess borrowers - the fact that you move around a lot obviously doesn't help, but the worst factor will be having just started your first job. Lenders know that you will probably be on a probationary period and can be sacked without consequence, so if the economy takes a downturn you will be the first out of the door.

I would guess that what you have (at 10.9%) is probably as good as you'll get for now. If you're prepared to wait for a while and make sure that you look more settled (e.g. making sure you're on the electoral roll at your current address) I have no doubt the rates will start to look better when you've been in the job longer.

mturner93 · 2 September 2016 at 1:58PM

Thank you, that is really helpful advice and essentially what I suspected. I think 10.9% still isn't bad for a situation like mine and the difference is a few hundred quid rather than thousands. Appreciate the help.