Searching for credit. Paypal as a lender?

MSR01

Hello,

I need a £5k loan for a car to commute a couple of days a week to a job I'll be starting in September. I'm having a hard time finding credit because I'm self-employed (and will continue to be, even though the new "job" is a permanent contract for the next few years), and because I'm receiving disability and working tax credit. Also, I haven't had any regular work the last two years, so my income history looks patchy. All in all, every bank I've looked at considers me a bad bet, even though when I've spoken to advisers, they admit that my expenses are stable, I have never missed a repayment on any previous loans and my credit score has always been excellent (currently well north of 950).

I've been advised by some to apply in-branch where a human will examine my last two self-assessments and hear me plead my case... but also advised that this is not certain and will result in a hard inquiry. Also, it won't help that my last two SA's will look bad because, as I said, work has been thin on the ground, so it might appear to an outside observer that I've been living mostly on benefits (which is not far from the truth), and if they conclude that, it's an instant no.

So, I'm scrambling around for ideas.

This morning I made a purchase on Paypal and the thought occured to me that they do some form of loan/credit card, but the opinions I've scraped up off the internet are varied and sometimes contradictory, so if anyone on here has experience or knowledge of the pros and cons, and whether Paypal or Klarna or something similar are a good idea for a loan, I would be grateful for your advice.

Cheers

PartyOfFive

Paypal and Klarna do not do loans.
Save what you can between now and September and buy a Banger from Autotrader to see you through the first 3 months  of your contract. At that point you'll be in a better position.

Why a 5k car?

CliveOfIndia

I'd second what the previous poster has said.  Even with the current high prices of used cars, there are still plenty of decent little runabouts available for less than £2K.

Alternatively, if you're only needing it for 2 days a week, can you use public transport?  That way you'd also be avoiding all the other costs associated with running a car - tax, MOT, insurance, maintenance, repairs, they can add up to a decent chunk of money over the course of a year.

Brie

I agree with the others but also would ask if you have a credit card.  Interest rates can be high but if you have one that's clear there may be a 0% transfer deal or even a low % deal available.  Lots of car dealers will take a credit card at least for a deposit if not the full amount and this will give you some protection.  If you have 1 card you might find it easier to get a second with a new customer deal on it sufficient to get what you need.  

sourcrates

PayPal and Klarna offer buy now, pay later options, as above, they do not provide loans themselves, although PayPal offers a credit card facility.

I`m going to throw my hat into the ring with the other posters and say try and save up for the motor, lots of cheap cars on Facebook marketplace or auto trader, plenty of decent cars for under a grand these days, that's your best bet, I wouldn`t hold out for a loan, and please don`t go with one of these guaranteed finance companies that charge you an arm and a leg in interest.

MSR01

Thanks for the replies. I was clearly misinformed re: Paypal and the nature of the credit they offer.

To address the most popular, and well meaning, suggestion:

In my original post I mentioned disability, which I don't want to get into, but suffice to say that I have a list of requirements/features that a new car must meet. I am not a motability candidate, no, but there is a broad spectrum of needs that many of us must sort out, ourselves. So my choice of vehicle is more limited than most, and my tolerance for possible mechanical unreliability lower than average. I have been down the old banger route for a previous job and it didn't work out. Rather than commute, I should probably have said long motorway journeys. It's not just a case of running into the local town. Having surveyed the market, I've got my eye on a few candidates and that's the lowest price point, so far.

But, thank you all for your well meant suggestion. That's part of why these places are useful. Maybe I should have been more forthcoming about the limits I'm operating within.

An acquaintance just suggested Zopa. Interest rate seems a bit high, but they are apparently a proper bank, now, not just a peer to peer thing. Their website is very sparse, which is making it hard to judge whether they're suitable.

Any alternative suggestions gratefully received!

This is a very annoying chicken-and-egg situation. Come the New Year I can pay it all off early, but I need the mobility, first.

CliveOfIndia

MSR01 said:

An acquaintance just suggested Zopa. Interest rate seems a bit high

That's putting it mildly

Herzlos

How much can you afford in repayments? Because you'll have that x 6 by the time you need the car in September.

PayPal and Klarna, etc, will do a buy now pay later but likely to be capped at a price well below £5k and likely in 4 installments.

You may find you have more success getting car finance (secured on the car) than just a loan. Your bank is probably the best place to start, but most reputable dealers should be able to sort you some kind of finance.

Financing is virtually all automated these days - going to a bank in person will just result in them entering details for the computer to say yes/no.

Without knowing the commute or your needs it's hard to suggest any alternatives. Depending on where you stay relative to a car hire place, and how much you'd earn for the contracting, you may be better off just hiring a car for the 2 days a week until you can afford to buy one. Or some combination of taxi and public transport or ride sharing.

In terms of the actual car though, you should be able to find more or less anything at each price point, though if you need something bigger / higher up that'll cost more than a supermini.