Am I being realistic?

Squipper592

Hi all, first post on here and looking for some advice.

I am looking to take out a small loan of approx £5000-£7000 over 3 years to buy a new vehicle. How realistic am I being with a credit file that reads like mine?

I'm 28, in the Armed Forces and earn roughly 23k p/a. I'm married and live in SFA where my rent + CILOCT are £350. After paying for my share of all other bills + food and putting £200 into my save to buy ISA I usually end up with between 500/750 p/m depending on what I've decided to buy that month (silly things i don't actually need usually)

The kicker is I have defaults on the account. I have 2 that are on the cusp of being 6 years old that occurred when I lost my civvy job around that time, I also have 3 from around the time I joined the services when JPA royally shafted me with pay being charged BR for almost 6 months, leaving only enough on the initial rate of pay (14500 at the time) to cover my private flat and not enough else. These defaults are around 3/4 years old now. All have been paid in full and have been paid for nearly 2 year now.

I have 3 credit cards, 1 with a balance of £900@0%, the others with 0 on each balance after moving onto the 0% card. Total available credit combined across all 3 cards is £4200. I am paying off the card at a rate of £100 p/m, I don't spend on any of them.

I know the advice is will be to save, and that would be my advice to me as well however my wife is due to give birth to our son in September I'd really like to get a more suitable family car for when he comes as our little 3dr fiesta will be a bit impractical. We intend to keep the fiesta for me to travel to work as its super economical and at the present moment, not worth that much (08 plate, 104k...) with the bigger car for her and the little one to get around in.

In my mind the loan would be affordable but I know lenders look at things a bit differently

Any advice is much appreciated, I really am not sure where to set my expectations with this. I am thinking they should be quite low but happy to hear what this community has to say.

bengalknights

You might stand a better chance via PCP as its secured against the car

Squipper592

I'd never do PCP, I don't like the idea of the large payment at the end to keep the car, I'd much rather do HP but I think the vehicles I am looking at most likely would not meet the criteria for a HP due to their age. Last time I had a car on finance (HP) it was a maximum of 7 years old I could look at and the repayment period got shorter as you got nearer to that age, making it more expensive on a month to month basis. I may be wrong and things may have changed in this regard. It is something I will keep in mind.

Shakin_Steve

Another thing that needs taking into account is the fact that a child can work out to be a serious drain on resources, and you may well find that having £500-750 left at the end of the month will be a thing of the past.

Vikipollard

Certainly not an expert, so take this with a pinch of salt!

Have you had a look through your own bank's online banking to see what they *might* offer you? Mine lets you get a quote, but clearly I have no idea whether it gives you the interest rate you would actually get IYSWIM.

At least it may give you an idea whether a reputable lender would consider you with the defaults still listed. I'd personally wait until the two which are nearly six years old dropped off.

I will say what I normally do - how much do you actually save each month? You say you have approx. £500+ per month left - what do you do with that? Whilst you wait for the two defaults to drop off, put that money into a savings account - that way, you will see if it really exists, and the Brucey bonus is you should have £500+ to put down as a cash deposit.

I managed to get a loan for a car with effectively no credit history per se (in that I was 18 months the clean side of a six year IVA, so clean file, but no loans/credit card/mobile contract green ticks) from my bank. £7,500 at around 4.9%, so £330/month over two years (overpaid and paid off early), but I was putting £800/month into a savings account, as we need some pretty expensive renovation work on our house and I'm damned if I'm borrowing more if I can help it.

(And yes, the car was more of a want than a need in my case, although it was to replace a 13yr old rust bucket with 207k miles on the clock when my DH got a job much further away!)

HTH

Robisere

Squipper - any chance of you achieving promotion and a rise?

I know things will be radically different from my time in the 60's and 70's Army, but that was one thing I used to consider.

Just don't get caught on the debt merry-go-round, the advice about an addition to the family causing more expense than you think, is correct.