Can I pick your brains please?

lordgaz

A young girl at work has just asked me to help her find a loan - she is 21 with her own mortgage, and very little disposable income..
I want to offer her some advice, but I hate the idea of her getting a 7 year loan (which is what she was asking about)

She has a £1400 overdraft with Lloyds
She earns about £1100 p/m
Her outgoings are about £900 p/m - (house + bills) with £200 to 'play with' - In reality she is getting deeper and deeper into debt.

She was asking me about a £5000 loan over 7 years to help pay off her overdraft and change her car - (she currently has a car worth about £2000 - in need of changing before it starts costing her even more money)

I don;t think she should do this - it just doesn;t seem right - too much debt over too long a time

My advice was to change banks (A&L) - but I want to know whether she should take out a loan just to cover the O/D (£1500 or so) and just have that debt, or should she not take the loan, try and pay the same amount off p/m as she would with a (5yr £1500 loan) while the O/D is at 0% for 1 year...

There is no guarantee of course that A&L will give her the full £1400 overdraft either...

In some ways I think it would be better for her to switch Banks, get this £1500 loan, and have no overdraft on the new account -

Confused...

Any help appreciated..

Gaz

lordgaz

I forgot to say - this girl has no credit cards - and we have talked about ways of saving money on home bills - its just this loan thing......

MrsTinks

Hmmmm tough one... IF you think she'd be able to control it then I would suggest a 0% apr credit card but ONLY if she can refrain from spending on it!!! Would she have the diciplin to do this?

If not then I would suggest she shops around for a loan *sigh* but I would say Sell the car and DOWNGRADE instead of upgrading. By taking out a loan on a more expensive car then she'll end up paying more in the long run than a chap run around is likely to cost her. I have had £200 cars and £3000 cars (and now the OH has a £15000 car) and guess which end up costing most? Yup... OH, my £3000 and then the cheaper ones in that very order... Services cost more, parts cost more and so on.

Her alternative is to increase her income and reduce her out goings but that is standard stuff Best advice... get her on here and let everyone try to help with a SOA and so forth

CLAPTON

suggest to her she should post a Statement of Accounts on this board. its only by looking at the total financial picture that it is possible to give best advice. People here will be able to help her draw up a realistic budget and suggest ways of reducing spending.

from what you have posted her most urgent task is to understand exactly where her money is going and to address income and spending rather than further borrowing.

unless a car absolutely essential for her job there is no way she should borrow to buy another car and even then only the minimum.

also i see no reason why she should move current a/c ...how will that help?

Kevicho

Not to put to fine a point on it, but maybe you should say to this girl that getting out a loan (more debt) is maybe not the best way to deal with her current money problems

Ask her to post on here and we can help her look at ways to make her money stretch longer.

With a bit on patience and determination she would probably be out of debt within a year, as opposed to several and she will save tonnes of money

lordgaz

CLAPTON wrote:

suggest to her she should post a Statement of Accounts on this board. its only by looking at the total financial picture that it is possible to give best advice. People here will be able to help her draw up a realistic budget and suggest ways of reducing spending.

from what you have posted her most urgent task is to understand exactly where her money is going and to address income and spending rather than further borrowing.

unless a car absolutely essential for her job there is no way she should borrow to buy another car and even then only the minimum.

also i see no reason why she should move current a/c ...how will that help?

A&L current account is 0% interest on O/D for first year -

lordgaz

I will have a word with her! - See if I can get her to liaise via these boards.

dinkylou

She has nothing to lose by posting her SOA on here.

If she doesnt want to listen to our advice then she'll get a loan.

Nothing lost.