I can't afford a car then?

[Rakatakatar]

I'm self employed, started my own business domestic cleaning 4 months ago. Has been doing really well, just gone up to 3 days a week.

My car is on its last legs, it has MOT due in March but it isn't worth saving as it's a 2006 model with a heap of problems.

I assumed I'd be able to get finance of some form but nope. Nowhere will accept me, being self employed without 6 months proof of earnings is working against me, plus I have bad credit from years ago.

This morning I decided to suck it up and ask my parents for a loan. They said no 🥴

Anyone been in a similar position? What did you do?
I'm worried that if I can't get a car sorted I won't be able to work and then I'll really be screwed.

I didn’t realise you had a DH.
Can he not lend you any money or take out a small loan?

Could you not pick up some evening work to save some money for a better car?

I’d do everything you can to get a cheap run around for a couple of months and then buy a better one from the extra money you get from the evening work.

Coming from a finance background here, specifically in sub prime.

There are lenders out there who will lend (at a cost!) To close to anyone. The exorbitant APRs are indicative of the high risk the company is taking on someone who's proven they've been unable to sustain payments to anything.

However, my main concern is your comment about £400 leaving you with close to nothing. Second hand cars are at an all time high after the pandemic. A 3k runaround in 2020 is now 5k, and 5k at a subprime rate will set you back around 200pcm for 4 years. You'll need to maintain that well for 4 years to have a chance of making it to the end of the term, and have you got the funds to do that? It doesn't sound it. You could end up trashing your credit further if you fall into difficulty.

Income - are you declaring anything on your bank statements? Sub prime companies especially can't just take your word for it and need to evidence income via bank statements, 3 months is enough for most though. So if you've said you earn 2k per month and they see nothing going into the bank, it'll be a decline.

If your bad credit truly is years ago, and you're genuinely banking all of your income, I'm really surprised no finance lenders will touch you.

If it is your only resort I would try first response finance. You can get the finance pre approved before you go to the dealers so that you know how much you have to spend and they are very good to deal with and take into account individual situations if you explain to them over the phone. They are high interest but if you need a car it’s better than not having one.

Would second this. But only if you have three months of bank statements that show a consistent income coming in, you can include benefits too. If your bank statements show sporadic or no income, or loads of late paid direct debits, you'll find it really difficult to get approved.

So DH buys the car in his name then. If he has only just passed his test it will actually look dodgier to an insurance company having you as the main driver and him as the legal keeper, however. As he would be more expensive to insure probably.

Although yes don’t put yourself as the main driver on a car that a kid is driving round miles away, but as a married couple I doubt it matters. I have to think twice which of our cars I’m the main driver on tbh. I drive both, DH drives both. No idea who uses one more than the other and when DH claimed on the one I was the main driver on they didn’t question it.

Your only options are to get a cheaper car with a year's MOT- you should be able to get one for £500. Or, depending on where your clients are, cycle, walk or use public transport.

Can't you get clients who live within walking distance?

You'd have to insist they had the cleaning apparatus etc you need.

I had a cleaner years ago who arrived on her bike.

Not sure how far away
your clients are but
what about a cargo bike or bike plus trailer?

It's not something they make up!

If you were my DD I'd loan you the money but draw up an agreement whereby you paid it back, properly each month by DD, but without interest.

I did this with my DD who was able to part finance a newer car, but I put £4K towards it and she repaid at £400 a month.

Could your parents do this?

You need to make sure that you are insured on it for business use. Given that he's not passed yet I would assume you'd need to be the main driver. In my area there's quite a wait for tests.
How much would the repayments be? If you lost a couple of clients would you be able to make the repayment?

Why not investigate joining a car club?

Op try a company called first response finance, they specialise in finance for those who can’t get it easily tho the apr is obviously high, I used them 4 years ago whilst recovering from a poor credit score they gave me a focus st worth 10k and the repayment loan was £16k which wasn’t great but it was affordable for me as a newly self employed beautician I got it and the repayments over 4 years massively helped my credit score climb also wheee I can now thankfully get good finance deals

DH is currently learning to drive, he is almost at test level. He has better credit than me and has been accepted by a car lender. He can take out the car in his name right? And I can drive it as well as him?

I can't get my head around this. Or rather why you can't see it as an option.
By 'TAKE OUT THE CAR ' surely you mean buy it on credit?

If he can get finance to buy a car, and you are a married couple, why doesn't he just buy the car you need for your new job?

The insurance co don't care who bought the car, just who is driving it.

He can be the registered keeper and you can be the driver.

You need to check the insurance for you alone and him as a named learner driver.

How old are you both? You sound quite young.

OP just on the UC issue, if you run your business as a limited Co and have separate business account and pay yourself from the business presumably you can keep the extra £ above your "wages" in the business and it wouldn't then affect your UC claim as it wouldn't be "your" money & then the business could contribute to the cost of the car. If you put your car through the business there can be tax advantages too. Whether these will be relevant on 3 days a week, I'm honestly not sure but definitely worth having a look.

If you have a local business adviser somewhere it might be worth asking about this. There are some additional requirements if you have a ltd co - you have to report to companies house every year but it's very minimal when you're a small business & you can buy an "off the shelf company for next to nothing. You & DH can be directors & secretary.

Might be worth looking into? X

There’s actually a huge shortage of second hand cars in the UK at the moment.

@Thatboymum I think it's far better to save and buy rather than use credit. You paid £4 K in interest on a loan for £10K.
That's terrible, frankly.
You'd have been better off buying a banger for £1K and saving towards a better car.

I've never, ever had a loan for a car. I saved (even as a student at uni) and bought a banger, saved and upgraded, and have kept on like that for decades.

@lizzyb The advice on being self employed is that it's not worth registering as a ltd company unless your turnover/ income (yes, different things) is over £40K.

There are lots of costs and admin involved in setting up a ltd co.

@KettrickenSmiled Literally 🤣!

I'm just going to say this the once and then skedaddle to walk the dog. OP is someone who's had money problems in the past and has a poor credit record. It sounds as if even working these three days she's making very little each month, and it's self-employed, so the work could disappear at any time. Rather than discuss this with her DH she has been first to her parents and then to the bank and then been told no. Is it really a kind thing to do to suggest to someone in this situation — and I am sympathetic, OP, I really am — to try and take out loans with companies of last resort that will charge higher interest rates than the bank? This is the way people get into financial trouble. What if, in two years' time the car that OP took out a three year loan to buy conks out and can't be repaired and she'd left to pay a high rate of interest and has no car? What if she loses a couple of clients and can't make the repayment for a month or two?

I think it's a really risky strategy to take out a high-cost loan to fund uncertain work and possibly end up with another black mark on her credit rating. Get an evening job in a supermarket, OP. It's much lower risk.

Luckily your money went further back then wasn't it.

It’s a long shot but if you’re in the UK you could try this independent bank: www.burnleysavingsandloans.co.uk/loans/

Dave Fishwick’s bank doesn’t always rely on credit checks. Worth a look imo x

Be wary of we buy any car. The price they quote is different to when you drive up. They deduct for each panel that is dented and also if the dashboard is lit up like a Christmas tree they will deduct loads. OP may be better if scrapping it depending on values

Do this and offer free cleaning for so many months in return for car repairs. Get bartering!

What about a credit union? www.citizensadvice.org.uk/debt-and-money/borrowing-money/types-of-borrowing/loans/credit-union-loans/#:~:text=A%20credit%20union%20is%20a,working%20in%20the%20same%20area

Odd comment when you have no idea what the cars cost me or what that poster could have bought for less.

It's the principle that counts.