Loan advice please

angelyaz

Hi all,
I need some advice and figured you guys here are the best to ask. The situation is this:
My 24 year old niece in London has been renting a family friend's 3 bed house (with her boyfriend) for the past year or so, but still has her official address as with her father. She has now been given notice on the house and her and her boyfriend need to find somewhere else to live, but have no savings for rent, deposits etc. She was unemployed for quite a time, now has 2 part time jobs (one since Sept '09) and earns about £700 pcm. Her boyfriend is on about £16K pa. The reason they have no savings is that all of their money has gone on rent and bills for the house (it's a v old house and the utility bills are astronomical), particularly during her unemployed period. Whilst she wishes she could have saved, getting and keeping the bills paid was her priority.

Whilst I have helped her out as much as I can financially, she is left with the current problem - her bank have refused her a loan as they still have her down as unemployed (I imagine taking in her last 3 payslips plus a letter from her main job confirming her employment would solve this, but have yet to put this to her - am I right in thinking this?) and the only other loan she has been approved for is for a whopping 48%!! I have agreed in principle to being the guarantor on her loan, if this is possible - I know it is on mortgages, but on loans? - but at 48% APR I am sure she is being ripped off, and have told her I will do some research to see what rates I can find for her. I am financially ok, and will help as much as I can, but am not prepared to risk my finances too.
Anyway, she needs to borrow £2k over a 2 year period. Apparently neither her or her boyfriend have ever been declared bankrupt, but he does not have a good credit rating (I don't know whay) - hers is ok, so she has been doing the applications in her name only. Can you guys give me some advice on the best way to help her? Is is possible to be guarantor on a loan? What are the best websites to look on to compare loans for her situation? Is 48% APR higher than she could get in her situation?

Many thanks in advance for your help.

Angelyaz

DaddyCool_2

Zopa.com/loans


These are loans between people and not banks - could be worth a go

angelyaz

Thanks Daddycool, will check it out.

jamesd

angelyaz, I doubt that her income or job stability will meet Zopa's minimum requirements. A better idea here is trying some of the 0% credit cards that will pay a balance transfer into a bank account, say Virgin's 4% fee then 0% for 16 months deal. Before applying she should check the minimum income requirements, for some of the deals her income will be lower than acceptable.

Telling her bank about her new job would be a good idea. Even so on a £2,000 loan she'd probably end up with an interest rate around 25%.

Another reason Zopa isn't very suitable for her situation is the £118.50 application fee. It'll be included in the APR quoted to her for a three year term but it's going to add about 6% a year to the cost of the loan when spread over two years on an average loan balance of £1000.

Declaration of interest: I both have loans via Zopa and offers to lend via Zopa that just might be taken up, though it currently looks more unlikely than likely.

angelyaz

Many thanks James. We have now resolved the problem - I have taken the money out on my credit card at 0% and she is going to pay me back over the length of the promo rate. I've also said to her to let her bank know about her employment and have advised she get her credit rating checked.
Thanks for your advice.