Require a loan with a less than perfect history - any advice?

A_Lee

This is my first post and I was looking for a bit of advice.

There is a very high chance our car is going to fail it's MOT next month, my husband has just this week started a new job after a couple of weeks out of work, but it is essential he has a car to get there - there is no public transport system and it's too far to walk.
So , basically we could do with a loan to get another car.
From an economical point of view I was looking at trying to consolidate that with paying off a small amount I have on a catalogue and store card account and some money my parents lent us. Also my husband is paying off something he took out literally years ago that has been referred to a debt-collection agency and although they've okayed a very small monthly figure it will take literally decades to clear it all.

Practically, a loan for around £9,000 would clear everything we owe, get my husbands past debt paid off and we could get another cheap car, which is the main priority.

However, as you can tell, my husband does not have a good credit history, and although mine was flawless, I defaulted on a loan in my name 3 years ago due to personal circumstances. We have checked our credit reports through Experian and we both come out as 'fair'. My husband has already been declined twice this week.
All I want to know is does anyone have any idea where I may be able to get a loan - without a ridiculous APR - I was just going to ring around but I have read on this site that that can count against you as well.

If I can't consolidate everything we will just need money for another car, although I have worked out that that may be more expensive in the long-run, with the monthly payments on the other things. Obviously, is still a problem if no-one will lend us anything.
If the car is off the road and we can't afford another one, my husband will not be able to do this job.
For information, I am at home with 2 young children, we rent and our income is supplemented with tax-credit and housing benefit.

Any advice please?

Many thanks

Alison

sophia02

Hey lee this is sophia dear.
u need loan for a car. but sorry dear i have no idea of it. but if i will get any site or bank i will defiantly tell u
Bye

A_Lee

Thanks for the response Sophia.
To pose the question another way:
Would I be doing untold damage to my credit score by ringing round a list of companies asking if it would be possible for me to borrow anything between £800 and £9000?
If anyone has any suggestions of companies where I may have a chance I would obviously contact them first.

Or is it really just a case that one default - which I did clear in full before the loan term would have ended; it has just been referred to a credit agency at that point - no chance of credit within a 6 year period?

many thanks
Alison

pinkpig08

Hi, just a thought but would you stand a better chance if you just took out a loan for the car and not one to cover everything else aswell? Don't know whether the amount you want to borrow has any effect?

CLAPTON

from what you say both credit records are poor so you will not get a low APR loan

you haven't posted your current borrowing or their APRs but I would give up the hope of refinancing them all in one go.

if you ring round they will want to credit check you... noone will make a serious offer without credit checking you.

too many credit checks in a short period will adversely affect your credit record for 12 months although a few dont do much harm.

if you have a good relationship with your bank you could try there.

can OH cycle to work or get a cheap motorbike which should be a lot cheaper than a car?

wolseley_2

Consolidation is not normally a good idea, and if you have a less than perfect credit history then you will not get a very good rate. Personally, I would avoid this at all costs.

It would be helpful if you could break down (i.e. give the amounts for) the things that the loan would be used for. You say that it is to pay of a bad debt for your husband, a calalogue balance, pay your parents back and buy a cheap car.

What term would you be looking for? On a 4 year loan, your repayments will be at least £200 per month, and I can tell you from experience that if your husband justs needs a car for transport, without caring about what it looks like or image, then it is possible get a servicable car for not much more.

A_Lee

Thank you all for your most helpful responses.

I owe my parents £2,000, which we borrowed for moving and are paying back at £50 per month.
I owe about £300 on a store card - I try and pay at least £10-£20 per month on this.
A similar amount on the catalogue which is currently a minimum of about £30 per month.
The problem debt is my husbands. He took out a couple of credit/store cards defaulted, acquired loads of interest and now owes £800 on one and about £4,500 on another. These have both been referred to debt collection agencies and through arrangement is paying back at rate of about £25 per debt (total £50 per month) although I'm not entirely sure how long they will let us keep this up
He has been told they will reduce the final balance if we could clear it.

My husband doesn't mind a cheap car, but unfortunately we had a really nice second-hand cavalier that my husband kept in excellent condition - he's really good with cars and car-maintenance - but last September someone ran into it, it was a write-off and the insurance paid the absolute book-price which was a fraction of what we paid in the first place and what we could have got if sold in the condition it was.
We needed a car, bought a really cheap one, because that was all we could afford and now everything seems to be going wrong with it.
Surely it's not economical to keep buying really cheap cars every 6-12 months. If we borrowed money once then that would be all we could afford until it was paid off. What if the next car packed in?

It takes my husband 45 minutes to get to work in the car, so although obviously not impossible it wouldn't really be a practical solution to bike it.

many thanks, once again

Alison

wolseley_2

It looks like about £1400 of the loan would be for the car. Cars are always a gamble, you could spend £500 and have on that lasts for years, or could spend £5000 and have it break down every month.

Is the loan from your parents interest free? I know that you probably feel that you should get the money back to them ASAP, but if they do not urgently need it then I wouldn't transfer this to a loan. Even with a good rate of 7% over 4 years, this would cost you an extra £300 in interest.

Store cards almost always have horiffic rates, so almost anything is likely to beat leaving the balance on there. The first rule with any store / catalogue card is that if you have not done so already, cut it up.

If your husbands debts are with a debt collection agency, then there is a good chance that the interest has been frozen on them. If this is the case then you should not consider paying them off with a loan unless the settlement reduction is substantial.

A_Lee

Thanks Wolseley

Do you know how long debt collection agencies give to pay debts off before they take further action?

Thanks

Alison

wolseley_2

A_Lee wrote: »

Do you know how long debt collection agencies give to pay debts off before they take further action?

Not a clue I'm afraid. However, I'm sure that someone on the DFW board will know (http://forums.moneysavingexpert.com/forumdisplay.html?f=76). I would suggest posting about your siruation on there as it is full of helpful and knowledgeable people who will take the time to help you out.