Second Loan Application

vickeydee · 17 May 2013 at 1:12PM

Hi,

I need to borrow money for a new car very soon. I currently have a default on my account which is due to drop off next year. My dad has agreed to put the loan in his name for me and I will pay the amount he owes back.

My dad already has a secured loan of his own. He borrowed £5000 last year and has £5700 left to pay back (including interest). I was just wondering what are the chances of him being accepted for another loan while he is paying one back? The whole point of my dad taking out the loan for me is to get a a lower rate of interest as be has better credit than I do. His current loan is from his bank so they know that he can't really afford to pay back another loan at the same time. Is it better to mention that it's me that will be paying it?

Any advice would be appreciated.

Thanks

Eonel · 17 May 2013 at 1:41PM

It will depend on the state of his credit rating.

His income vs his unsecured debts. ( both available credit limits and exisiting credit balances ). Any missed payments or defaults on his accounts? Amount of equity he has in his house?

Why does he have a £5,000 secured loan? Was it for renovations or improvements to his house, or is it debt consolidation?

Do you know this information? & are you able to anonimously share it ?

Apples2 · 17 May 2013 at 1:53PM

Dont be tempted to opt for Car Finance (HP) with this arrangement, you will run into trouble if your dad takes the finance but you have the car.

No such problems with an Unsecured Personal Loan.

I'm struggling with grasping how someone who took a SECURED loan of only £5k. It suggests he was already a very high risk prior to taking on £5k so the chances of further borrowing seem remote.

Why not struggle on for a year until your own default drops off?

Tixy · 17 May 2013 at 2:05PM

Telling his bank its for you will have no positive effect on them considering a loan application from your father.

They will assess if they think he can afford to repay the loan from his income alone as well as pay living costs and all his existing credit agreements.
They will also then consider his credit history and any other information they have in relation to him.

Any other potential lender will assess the same information, and will need to know his income and existing financial commitments and will also assess if he "can't really afford to pay back another loan at the same time".

How much are you hoping to borrow? do you have a car already?

vickeydee · 17 May 2013 at 2:06PM

Apparently he didn't research it and wasn't aware of the difference. Stupid, I know. I've already told him lol.

I think his credit is ok to be honest. I don't think he has any other loans etc. Just his mortgage and the loan mentioned.

I can't struggle on. The car is falling apart and will cost more to fix than I will get for it.

Do you think he is likely to be accepted? The only other option I can see is guarantor loan which is ridicukously high interest.

Thanks

vickeydee · 17 May 2013 at 2:07PM

It would be no more than £4500 I think.

Thanks

Tixy · 17 May 2013 at 2:13PM

vickeydee wrote: »

Do you think he is likely to be accepted?

Depends on
His income
His debts
His monthly commitments
His credit file
The credit file of anyone he is financially associated with.

vickeydee wrote: »

Do you think he is likely to be accepted? The only other option I can see is guarantor loan which is ridicukously high interest.

Thanks

Who were you thinking of asking to be a guarantor? If someone is willing to be a guarantor for you then you would be better to ask them to take out the loan in their name for you. Far cheaper in terms of interest, plus at least they know that payments are being made on time.

It sounds like the best option in your situation will be to struggle on with current car for a couple of months whilst saving up as much as you can. You could then try to sell your car and use that and your savings for a cheap runaround (which you should be able to get for less than £500).

Then keep on saving what you would have used for loan repayments so you can afford to buy a better car in a year or so

DCFC79 · 17 May 2013 at 2:18PM

Your father being a guarantor is a very risky move and 1 should only decide to be 1 once they have an understanding what 1 entails.

vickeydee · 17 May 2013 at 2:23PM

I can't struggle on. The MOT is due and there's a big problem which is going to cost about £800 to fix. The car isn't worth that much so it needs to go and I need to get a new one. I need it to be realiable and safe also so a cheap car isn't an option either.

Are there any other options from what I've said?

Apples2 · 17 May 2013 at 2:31PM

vickeydee wrote: »

I can't struggle on. The MOT is due and there's a big problem which is going to cost about £800 to fix. The car isn't worth that much so it needs to go and I need to get a new one. I need it to be realiable and safe also so a cheap car isn't an option either.

Are there any other options from what I've said?

Difficult to advise without the answers to the questions above. Maybe it's time we discount other people getting loans for you.
Sadly nobody has an entitlement to a new car.

Even with a default, you may be accepted for a HP deal as the loan is secured on the car (so their acceptance is slightly more relaxed).

You won't be getting any headline rates and anything you do get accepted for is going to cost you more than the £800 you would pay now to get your car ticketed for another year.

heartbreak_star · 17 May 2013 at 3:34PM

My last car was reliable and safe, it was an X-reg Matiz that cost £600 and got me around for 6 months - in that time I replaced a fan belt and filled the oil, about £50 all in all. Admittedly, I ran it into the ground and got rid when the radiator cracked, but still got £200 trade-in for it when I bought my Corsa (outright, 54 plate, £1600, no finance here).

Said Corsa is running fine and gets me all over the country.

Old cars aren't necessarily bad!

HBS x

Second Loan Application

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