How likely is this?

gizmo111

My daughter aged 20 earning £15,000 wants to buy a new car costing £9000
She has £2000 saved up and is owed £800 by her sister which she will return in July. The car she has at present will get about £800 when sold.

She wants to get a loan for £7000 now and then pay the 2 x £800 off when she gets that back. (No prob with sister repaying as she has money coming to her on her 18th)

She has a HSBC credit card since age 18, limit £1500 paid in full every month and has banked with them since about age 14, slary paid in there and savings with them also. Other outgoings are mobile phone £31 pm and keep to me £200 pm. Income is £1042 take home.

Is she likely to get a loan of £7000 given that her income is £15,000? - HSBC is first point to apply as it their loan allows overpayments. She wants it over 2 yrs repayment is £312 ish per month.

antonic

My first suggestion would be that she applies for the loan with whom she banks with.

Also with an income of £15k and asking to borrow £7k with a CC limit of £1500 that means her credit will be about £8500.

Most lenders wont lend if available credit is greater than 50% of income - BUT - this may not be a problem if she tries her bank first, as they can see how she runs her account.

Hope this helps.

Denning.

You should really be trying to talk your daughter out of buying a £9000 car on that salary, not to mention a brand new car.

As for the likelyhood, if her bank doesn't give it to her it is unlikely any other mainstream lender would.

gizmo111

Denning. wrote: »

You should really be trying to talk your daughter out of buying a £9000 car on that salary, not to mention a brand new car.



As for the likelyhood, if her bank doesn't give it to her it is unlikely any other mainstream lender would.

Why talk her out of it?

Denning.

gizmo111 wrote: »

Why talk her out of it?

Because you are her mother and should be guiding her to make sensible and prudent financial decisions. Borrowing half a years salary to purchase an unneccesssarily item that will lose 40% of it value by the time she paid of the finance is not a sensible financial decision.

iolanthe07

Has she factored in insurance? That is likely to be very high for a 20 year old. Madness to buy a brand new car with a loan of more than half her income at that age, imho, but it is exactly what I would have done, had I not had a very sensible dad.

AFK_Matrix

I too wouldn't advise getting a 9k car on that salary, or at that age tbh. As prangs and what not do happen, i remember when i was that age lol. I bought a VW golf Y reg that was in perfect condition 2 years ago and has needed nothing doing to it since and runs a dream and that cost me £3000.

So get looking on autotrader etc and wait till July when she has the £800 sell the car and then look for cars around the 3k mark as there are some awesome deals to be had. And it saves your daughter taking out a loan with all that can go wrong with that.

gizmo111

Denning. wrote: »

Because you are her mother and should be guiding her to make sensible and prudent financial decisions. Borrowing half a years salary to purchase an unneccesssarily item that will lose 40% of it value by the time she paid of the finance is not a sensible financial decision.

Whatever happens she will buy a new car this year because that is what she wants, and a year old one is about £200 cheaper than a new one.
She doesn't want to sell hers and wait for the new one so the loan with overpayments makes sense, and works out much better for her than taking finance from Ford. Assuming her car takes a couple of weeks to sell she will make an immediate overpayment of around £800 an then in July another £800 overpayment.
I can't stop her all I can do is help her get the best deal. Shes thinking about waiting until July now - when she will have another £2800 to put towards it - making the loan just over £4000.

lynnemcf

I have no idea how easy it will be for her to get a loan, but I suggest she gives herself a "trial run" of being in debt by paying £312 a month into a savings account so she can find out if she can manage without that sum of money.

gizmo111

lynnemcf wrote: »

I have no idea how easy it will be for her to get a loan, but I suggest she gives herself a "trial run" of being in debt by paying £312 a month into a savings account so she can find out if she can manage without that sum of money.

Shes been saving £500 a month for quite some time now.

[Deleted User]

gizmo111 wrote: »

Shes been saving £500 a month for quite some time now.

She should have more than 2k saved up, then, surely? Unless she's actually only been saving for the last 4 months.