Is it worth taking out a loan?

somethingcorporate

Kamen_Rider_W wrote: »

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?

Varies lender to lender so hard to say with anything concrete. Even with a squeaky clean record in the current environment expect it to be at best 50% of your annual salary.

But since you already owe £3k then expect this to be taken into account so probably much less than 50% (banks nowadays tend to include even 'to-be' consolidated debts into the affordability calculations given there is no guarantee you will settle other debts with any loan given).

On this basis I'd put your chances of getting £7k at your age and income somewhere between 0 and nil. Sorry it's not better news.

Kamen_Rider_W

CHR15 wrote: »

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

What kind of disaster?

owitemisermusa wrote: »

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.

Do you mean debt consolidation is a sinkhole?

somethingcorporate wrote: »

On this basis I'd put your chances of getting £7k at your age and income somewhere between 0 and nil. Sorry it's not better news.

Age is taken into account as well? How old do you have to be before you're considered a decent risk for a loan?

JasX

Kamen_Rider_W wrote: »

I had intended to pay for insurance so that repayments are covered if I were to be unemployed

ummm, more cloud cuckoo land thinking here I'm afraid, Take out a loan, with protection, hand in notice on your job and expect all your loan payments to be covered while you job hunt..... ?

Doesn't work like that i'm afraid, YOU need to pay the loan yourself while you are unemployed unless something completly unforseen comes along (not excluded by the long list of Ts and Cs your cover has) and you lose your permanent job due to circumstances beyond your control, not decide to jack it in yourself/don't get your contract renewed etc etc

CHR15

Kamen_Rider_W wrote: »

What kind of disaster?

Okay, I thought it was obvious but here goes...

You are making a HUGE assumption you are simply going to walk into another job and be better off.

Lets go off on a tangent and assume you do manage to take out this loan based on your current income..

You get the loan and spend the money, you are now endebted with a £7k loan, repaying nearer £8k, so you are almost £8k in debt.

You hand your notice in and leave. Your income is Zero.

You apply for a job but hear nothing, you apply for another and hear nothing. You apply for loads and hear nothing.
Perhaps you are lucky enough to be one of the 20 attending for an interview.... but you don't get the job.

By this time your first payment of your loan is due, your income is still Zero.

What are you going to do???

crispy_chris

Plus earning £6/hour working a standard 37.5 hour week, £7000 works out as over 50% of your yearly salary, which in the current economic climate, is far more than any sensible lender will give you.

lynzpower

What interest rates are the University and the housing association placing on the debt.

Im guessing none? So it would be crackers to start paying interest on a debt when you are not paying it already!

Peelerfart

CHR15 wrote: »

By this time your first payment of your loan is due, your income is still Zero.

What are you going to do???

Sue the bank,as she clearly shouldn't have been given the loan

Kamen_Rider_W

JasX wrote: »

Doesn't work like that i'm afraid, YOU need to pay the loan yourself while you are unemployed unless something completly unforseen comes along (not excluded by the long list of Ts and Cs your cover has) and you lose your permanent job due to circumstances beyond your control, not decide to jack it in yourself/don't get your contract renewed etc etc

I have a "permanent" job ie. I work for the company directly, not via an agency (if that's what you mean.) I know the insurance wouldn't cover me after leaving that one, but it would cover me were I to be fired, made redundant or whatever during the repayment period.

crispy_chris wrote: »

Plus earning £6/hour working a standard 37.5 hour week, £7000 works out as over 50% of your yearly salary, which in the current economic climate, is far more than any sensible lender will give you.

I work 42 hours a week but it's not a lot more, is it?

Peelerfart wrote: »

Sue the bank,as he clearly shouldn't have been given the loan

She ... er, can you sue a bank?

lynzpower wrote: »

What interest rates are the University and the housing association placing on the debt.

Im guessing none? So it would be crackers to start paying interest on a debt when you are not paying it already!

University is charging me interest - they don't work the same way as the SLC. Housing association isn't but as they have threatened me with court that could potentially kill my credit rating

lynzpower

I have a "permanent" job ie. I work for the company directly, not via an agency (if that's what you mean.) I know the insurance wouldn't cover me after leaving that one, but it would cover me were I to be fired, made redundant or whatever during the repayment period.

I think youll find most dont ( I had this problem) if you are a temp or within probationary period.

lynzpower

University is charging me interest - they don't work the same way as the SLC. Housing association isn't but as they have threatened me with court that could potentially kill my credit rating

But if you just pay it off regularly then they wont need to take court action. Whats the rate you are paying this off at the moment ?