Top tips for borrowing cash

Kevina_2

Well I'm in over my head, and need help

Im interested in buying a few big purchases such as a TV and home cinema kit, would be under £1000 I imagine. I just want to know the best way to go about it by borrowing, as I don't have the disposable cash - and would like to pay it off over a period of time than one big lump sum.

I'm under 21, and earning 12k a year, pre tax. Be great if anyone can help me - as all this AER, APR and all the other percentages are giving me headaches :mad:

Thanks in advance, Kev

P.s. If you need anymore info don't hesitate to ask

YorkshireBoy

How much do you currently save each month (that could be used to service the debt instead of saving)?

Kevina_2

I would estimate my disposable income to be around 400, max 500, per month. I think we'll stick to 400 though lol (£)

YorkshireBoy

Then why not wait a couple of months and pay cash for your toys?

Kevina_2

That's an option, but im a sucker for saving. Id only go and spend it on something else. I guess that's the most sensible option however. I might just setup a buy now pay later with the retailer which carries no interest, and will force me to save lol.

Thanks for your help :beer:

YorkshireBoy

Kevina wrote: »

im a sucker for saving. Id only go and spend it on something else.

Exactly! You'd (probably) get a credit card, spend £1,000 on the toys, and then make only the minimum payment each month.

After 6 months you'd then still owe around £900. :eek:

Sorry if I've stereotyped you.


PS: Buy now pay later deals are only any good if you're disciplined to save up in the interim. With many (all?) of them, if you don't settle the bill in full at the end of 12 months then they apply interest from day one. This will add around £300 in interest to your £1,000 purchase.

Always have a plan B.

Kevina_2

YorkshireBoy wrote: »

Exactly! You'd (probably) get a credit card, spend £1,000 on the toys, and then make only the minimum payment each month.

After 6 months you'd then still owe around £900. :eek:

Sorry if I've stereotyped you.


PS: Buy now pay later deals are only any good if you're disciplined to save up in the interim. With many (all?) of them, if you don't settle the bill in full at the end of 12 months then they apply interest from day one. This will add around £300 in interest to your £1,000 purchase.

Always have a plan B.

Aye, you're probably right and I'd just fall into a big debt hole haha. I guess i just need to be patient and save up, better in the long run i suppose.

Thanks for the help

Kevina_2

meh its more like 200, i didnt deduct my bills and crap - i thought i was kinda rich there.

Looks like alot more weeks of saving

SiuLoong

Kevina wrote: »

meh its more like 200, i didnt deduct my bills and crap - i thought i was kinda rich there.

Looks like alot more weeks of saving

Working this out now is much better than after you've stuck them on a credit card! If you can't save enough each month for a potential future purpose, be wary that you may not be able to 'save' towards a debt. If it helps, setup a separate high interest savings account and pay into it every month as an extra £200 'bill'. After 6 months you'll see if you can save and have a nice bundle of cash to do something with. If its not sat in your current account you'll find it easier not to spend it.

Kevina_2

Gonna go check the savings account section of the site then - thanks

Kevina_2

So how do they actually work? Do i set up a direct debit to pay cash into the savings account on the day my wages arrive? Or is there a specific date to maximize interest in which you should pay your cash in?