Loan for a 19 year old

spadoosh

duggankieron wrote: »

First time poster here, so please bare with me.
I am about to move into a new job and my monthly income would be around £1200.
I am looking to treat myself to a new car. The car I am looking at is around £8000, however because of my small credit history and low credit score (even though I have a Gym membership, a phone contract and among other monthly contracts), however when it comes to applying for a loan, the interest just from around 3% to sometimes up to 22%. Is there any way around the stupidly high interest?

P.S. Please don't suggest that a 19 year old doesn't need a £8000 car, I know I don't, but I want it.

If you want an £8k car with no credit history and not putting any money down you need to be prepared to pay nearer £12k for it. If youre not, youre not getting an £8k car until you save for it or have built up your credit file to get more favourable rates.

I want a chateau in france. I reckon someone in the world would lend me the money for it, the problem being theyd probably want to take my liver as collateral. Sometimes its worth dismissing what you want for what you need.

Sncjw

It will loose value soon after you drive it.

Given your job is just new maybe save up for it. Then when you have the money you can see if you still want it.

Given it!!!8217;s a new job I wouldn!!!8217;t get a loan I would save as I know I could change how much I save depending on what I have spent in that month. With a loan you can!!!8217;t chop and change how much you have to pay each month. You got to think about the running costs of the car on top of the loan payments. Saving up for the car may result in you paying off the car faster than a loan would.

enthusiasticsaver

Do yourself a lifelong favour and learn how to manage money now before you end up thousands in debt and paying half your monthly wage on loans and credit card payments. You are on a basic starting salary. An £8000 car is almost 7 months salary. Add the interest on top of that and you will be paying for that car for a long time affecting other things you can save up for and do.

Learning the difference between needs and wants is also useful. Treating yourself when you have been working for a few years and have some savings behind you is fine. Treating yourself to a car you cannot afford when you have not even started work is just crazy. It will depreciate at an alarming rate. Also the cost of the car is just the start. You also have insurance which will be very high as you are young, cost of maintenance and fuel and car tax if there is any.

Fireflyaway

Seems you have already decided that an £8000 car is what you are going to get so you will just have to accept whatever payments are offered. You may not have heard of Dave Ramsey but he has a good saying. Adults devise a plan and follow it. Children do what feels good.....

Red-Squirrel_2

jimbo747 wrote: »

I want it all and I want it now. No wonder Brexit is going tits up.

Congratulations! You've won the shoehorn of the week award!

Red-Squirrel_2

OP I presume you live at home and pay no rent. If you saved up you could have that car paid for in cash by this time next year.

You might find that when its your hard earned cash sitting in the bank that you've worked hard to earn and gone without to build up, you might think twice about whether the car is really worth giving it up for, and I know I sound like a complete old fogey but that's a really important lesson to learn as young as possible!

dealer_wins

I would urge you to save up for your dream car.

When you see how hard it is to save up £8000, there is no way you would spend it all on a car trust me!!!

AstroTurtle

High interest on a depreciating asset.

You'll pay more than the car is worth when you bought it and be left with a car thats worth half of it later.

Spend £10,000 on an £8,000 car in 2018

Sell it for £4000 in 2019.

You lose £6,000.

bd10

@duggankieron:

You have 2 scenarios to choose from:

(1) Take out a 8k loan say over 5 years to keep the monthly payments small against your salary. You'll between 3.4% with a major high street bank. That's £140 per month. Total interest is £700. Over 5 years a car is likely to depreciate by 60% (if not more, but let's just use 60%), that's £4,800. So, that way'll you be £5,500 worse off by 2023.

(2) Save up and buy a car which has seen most of its depreciation. I would get a car which has a long standing history of keep running. That one you pay in cash (or debit card) and the remaining monthly installments which you do not have to pay vis-a-vis option (1), you have saved money and end up ahead!

If you want that car now which is beyond your financial means, what else do you want in 5 or 10 years? Do yourself a favour and don't sign up to a lifetime of living on credit. Buy hey, feel free to leverage yourself up in debt and learn the hard way. Either way, that'll be your problem.
Buy assets and accumulate. But to get there, spend your money wisely. If you can buy a 8k car in cash, go for it.

Caz3121

bd10 wrote: »

@duggankieron:

You have 2 scenarios to choose from:

(1) Take out a 8k loan say over 5 years to keep the monthly payments small against your salary. You'll between 3.4% with a major high street bank.

Not sure if you missed it in the first post but OP is getting offered at 22%