Is it worth taking out a loan?

Kamen_Rider_W

I'm unhappy with my current living situation and want to move back to London (I'm currently just outside), where I could potentially find a better-paying job. I earn minimum wage so after rent and existing debts, I have very little money for anything else. I haven't got any savings either. The only solution I can think of is to take out a personal loan, but is it a good idea?

I currently owe:

£3000 student debt. This is directly with my university, NOT with the Student Loans Company - so they expect me to pay it back now, not when I am earning £15 000 a year. I was forced to leave after a year because of health problems, so I didn't get my degree.

About £500 to the housing association where I used to live, and to utility companies

I have a job but would need to find a new one in London. So taking out a personal loan of about £7000 would enable me to pay all my existing debts and to move. It just seems easier to pay off all my creditors in one go and have only one source to owe money to. The major advantage of taking out a loan is that the housing association is threatening to take me to court - not because I refused to pay them but because I've had angry words with them over the way they treated me while I lived there. So taking out a loan and paying them off now would prevent that and stop me potentially getting a CCJ. Also, I would happily pay any amount of money to move away from my current situation. Can anyone offer any kind of advice? What major risks are there in taking out a personal loan for the first time?

CHR15

Kamen_Rider_W wrote: »

I have a job but would need to find a new one in London. So taking out a personal loan of about £7000 would enable me to pay all my existing debts and to move. It just seems easier to pay off all my creditors in one go and have only one source to owe money to.

All sounds wonderfully Rosy and simple doesn't it??

That is, until you face the reality that you will have to repay the loan.

How would you intend paying the loan?
If it is on the strength that you MAY get a job soon, then sadly your dreams will remain just that... dreams.

Nobody is going to lend an unemployed person £7,000.

If you intend taking the loan out on the strength of your current job, shortly before leaving work, more disaster awaits.

On top of that your current debts make you beyond a sensible Risk for lenders even with your current job taken into account.

Sorry but it isn't going to happen.


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Kamen_Rider_W

I would have to pay the loan by getting a job!! Perhaps something like telesales or charity mugging with a high turnover rate! I had intended to pay for insurance so that repayments are covered if I were to be unemployed BUT over 4-5 years of repayment that would add around £2000 if not more onto the amount ...

They wouldn't be lending an unemployed person £7000. I would have to apply for the loan while still employed, before I'd given my notice in

CLAPTON

could you not get a job in London first and commute for a while and only then actually move ?

Kamen_Rider_W

It's a possibility but the cost of commuting would be horrendous, I currently pay £15 in bus fares a week to get to my job and even that is a lot of money for me

CLAPTON

what sort of money could you earn in London?

how much would commting cost per month

surely you would only need to commute for short period while you looked for somewhere to live.

Kamen_Rider_W

Probably would not earn much more than I am earning now. I have some advantages employment-wise which includes speaking 3 languages fluently but the big disadvantage is I don't have a degree. On the other hand, my living situation now is making it difficult for me to concentrate at work which means if I lose my current job, I'll be unemployed AND still be threatened with a CCJ. At least banks are usually reasonable enough if you can come to an arrangement with them, unlike the housing association saying "we're threatening you with court because we don't like the way you spoke to us"

Fiddlestick

Kamen_Rider_W wrote: »

At least banks are usually reasonable enough if you can come to an arrangement with them, unlike the housing association saying "we're threatening you with court because we don't like the way you spoke to us"

You don't just go to the expense and hassle to take people to court over frivolous things like that.

What did you really do/say to them that they are threatening court action?

somethingcorporate

If you earn minimum wage there is no way you would get a loan for £7k.

Kamen_Rider_W

Fiddlestick wrote: »

You don't just go to the expense and hassle to take people to court over frivolous things like that.

What did you really do/say to them that they are threatening court action?

I was living in sheltered accommodation and on housing benefit. When I got a job, they agreed to reduce my rent until we found out how much housing benefit I was now entitled to. The council said "none", so the housing association gave me a bill for the difference. The staff where I was living said "if you don't follow your repayment plan, it is the housing association's policy to take you to court." I told them to man up and talk to me themselves rather than hiding behind "the housing association said this/that." There was an argument over this and they then said that if I argued with them further, they'd consider it a refusal to pay and begin court proceedings. I know that to take me to court they'd have to prove I was actually refusing to pay. As far as I'm aware they are just threatening me because they are annoyed with me, but now I'm worried that if I miss a repayment they'll go through with it.

somethingcorporate wrote: »

If you earn minimum wage there is no way you would get a loan for £7k.

I'm 19 and earn £6 per hour, which is more than the minimum wage for a 19-year-old, but only 20p over the minimum wage for someone over 22 ie. most of the country. And the minimum wage is about to go up.

Why would you not get a loan for £7k? How is it worked out?

owitemisermusa

CLAPTON wrote: »

could you not get a job in London first and commute for a while and only then actually move ?

CHR15 wrote: »

All sounds wonderfully Rosy and simple doesn't it??

That is, until you face the reality that you will have to repay the loan.

How would you intend paying the loan?
If it is on the strength that you MAY get a job soon, then sadly your dreams will remain just that... dreams.

Nobody is going to lend an unemployed person £7,000.

If you intend taking the loan out on the strength of your current job, shortly before leaving work, more disaster awaits.

On top of that your current debts make you beyond a sensible Risk for lenders even with your current job taken into account.

Sorry but it isn't going to happen.


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Kamen_Rider_W wrote: »

It's a possibility but the cost of commuting would be horrendous, I currently pay £15 in bus fares a week to get to my job and even that is a lot of money for me

Please don't, it's a sinkhole. You shouldn't think of this as a quick fix, regardless of what the TV adverts say. It will simply spiral out of control.