New to personal loans, want some reassurance

A question about : New to personal loans, want some reassurance

Hi All,

Looking at getting a loan to buy a car I really want as a treat. Been looking at a Ј5000 loan repaying over 3 years which depending on the interest rate works out about Ј150/mo, no problems for me. I do have some questions however as I;ve never borrowed money before and am a little anxious given i'm the old school of never having bought anything I couldnt pay for in full.

Firstly, I looked at my bank website (HSBC) who on a quick calculator offered a 6.2% interest rate, then there was a link to M&S loans who offered the same terms but for 4.something %. It looks like I can get a better deal online through some of the comparison sites but how do I know what is good and bad? Also I haven't had a mortgage or credit card debt so would I be considered a bad credit rating?

Secondly, I may be moving abroad in 2 years with work, so in that case would sell the car and repay the loan early, are there any issues with this?

Just want some general positive (if so) advice too as I'm trying to convince myself to take the leap so to speak, cheers.

Best answers:

• Those 4% deals are not offers, unless you have a spotless credit record you will probably be offered a much less favourable rate.
• Having no previous credit is almost as bad as having a bad credit record.
• I would choose a 24 month repayment rather than 36 months for a Ј5K car.
  No credit = bad
  Bad credit = bad
  You will struggle to get the best interest rate deals.
  Good luck.
• Thanks guys, I did suspect that having no CR would be worse than a bad one, I'll shop around and have a look today.
  Lovely that for being an honest Joe and not living outside my means I get a crappy CR though!
• Before applying for anything I'd be tempted to sign up with Noddle (free) to have a look at what they think your credit history is... it will at the very least show if you are on the system ie on the electoral roll. You say you have never had a credit card or borrowed money but have you ever had a phone contract? This will be something positive if so.
  Once you're happy that the CRAs (Credit Reference Agencies) know you at least exist you can then look at approaching someone (probably your own bank to start with) for a credit card to build a more substantial history.
• Thanks for all the replies:
  Quote:
• Thank you
• Fair point, I didn't really consider it the same, buying a Ј50 gift online as taking out a Ј10,000 loan
• All lenders what to see is your pattern of using credit. You purchase something on credit and making payment on time = good. You purchase something on credit and don't pay it back of fall into arrears = bad. You never purchase anything on credit = unknown quantity.
  You've used credit cards therefore there will be something on your credit file.