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Best option for short term borrowing ?
Sid_Cowans
Posts: 8 Forumite
in Credit cards
My 21 year old son has asked for advice on funding a car purchase and I'm struggling to know what to say so ..... help appreciated !
He is in full time employment and earns around £13,000pa. He lives at home, he has no other loans/cards/borrowing and never has. He has no outgoings other than paying his "keep" !
His situation is that he will receive a sizeable lump sum (c.£12k) in March 2015 but wants to spend £5k of that now with a view to paying that off in full next March. Ideally, he wants to minimize monthly payments between now and March.
Questions are ......
He is in full time employment and earns around £13,000pa. He lives at home, he has no other loans/cards/borrowing and never has. He has no outgoings other than paying his "keep" !
His situation is that he will receive a sizeable lump sum (c.£12k) in March 2015 but wants to spend £5k of that now with a view to paying that off in full next March. Ideally, he wants to minimize monthly payments between now and March.
Questions are ......
- Is a credit card a better option than a loan ?
- Would his age/earnings limit his chances of a getting a card ?
- How would he know what credit he would get with a card as it would be no good if the card doesn't allow him the spending power he needs ?
- What sort of monthly payment would he have to make on a £5k balance ?
0
Comments
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1. Generally - yes:
Be prepared to get charged extra for paying by a CC.
2. Yes, especially with 0% and with £5K limit - as "he has no other loans/cards/borrowing and never has" and has no credit history or very little of it. Without 0% a loan can be a better option. He can try 'Eligibility Checker' in the second article.
3. He can't, but he can try applying for the second card if the the limit isn't big enough.
4. ~1% + interest for a CC - see the article.
That said, "Don't sell the skin till you've caught the bear" springs to mind...0 -
his best bet would be to wait till next year,bearing in mind his insurance will be at least £2000,which would pay for alot of taxis0
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Not at all. I have friends who're 21 and only just passed their tests, their insurance on brand new cars was under £1000.his best bet would be to wait till next year,bearing in mind his insurance will be at least £2000,which would pay for alot of taxisCredit 'Score' - Don't buy the credit 'score' that Experian, Equifax and Noddle want to sell you. It's an arbitrary number that means nothing when it comes to applying for credit.
ALWAYS HAVE A DIRECT DEBIT SET UP FOR THE MINIMUM PAYMENT ON YOUR CREDIT CARDS, REGARDLESS OF WHETHER YOU PLAN TO LOGIN AND PAY EACH MONTH.0 -
Check that the dealer accepts credit card first...they probably will, but still worth checking.
My advice then would be to try for a 0% purchases card.0 -
I can't see him being accepted for a 0% card with no credit history...Capital One Classic Extra £2,450 [06-2012]
Barclaycard Platinum £5,200 [08-2015]
Lloyds Bank Platinum £750 [11-2015]
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In response to the insurance - my 20 year old son has just bought his first car 09 plate - fully comprehensive insurance £500 :j0
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