First time loan advice

RTC87

Hi, hoping I can get some advice.

My partner and I found out we were expecting our first child a couple of weeks ago. We're pretty excited as you can imagine but were keen on making a few changes before the baby gets here. Namely we wanted a more practical car, to move home (from rented apartment to rented house) and obviously purchase any items we need for baby/home.

I earn £27000 annually and my partner £18000, we don't bank together and all the bills come out of my bank (she transfers me £480 a month to cover a variety of bills/savings). I went to Lloyds today (been banking with them for over 10 years) expecting to be offered a decent loan and interest rate but was left shocked when I was offered a £7500 loan at 24%APR.

I currently have £1800 on an interest free credit card which we have put our holiday on (will be cleared by Feb 15) and pay £170 car finance per month (again finishes in Feb 15). Apart from that we have the usual bills household bills.

I suppose my question is, do i stand a decent chance of getting a better loan elsewhere? or should I knock the idea on the head?

I wanted to borrow between £7000-£10000 over 5 years but didnt want to pay much more than £200/month.

I've always tried to be quite careful with money, never missed a payment for anything. Some general advice on what people think we should do would be great.

DCFC79

The 24% maybe the best you can get or maybe you don't fit the criteria for Lloyd's, try elsewhere but do you want to get into debt when you have a kid on the way.

jonesMUFCforever

Be careful - what will happen when you rely on your sole income whilst your wife is on maternity leave and beyond?

CLAPTON

with a child on the way you want to get some savings not extra debts


you already in 3,500 of debt and you want to add 7-10,000?




being careful with money means having saving and never getting into debt

RTC87

Ideally I wouldn't get in any more debt. The car we need as mine is only a small 3 door hatchback with a very small boot, not really kid friendly. Our apartment is on the 2nd floor and overpriced which is why we want to move.

We are paying off £600 a month to clear the existing debt before baby comes (with the loan we would clear both immediately so we wouldnt be adding to existing).

I am aware it probably comes across as a silly move which is why I asking for advice. My partner was only planning on 10 weeks maternity (6 weeks would be 90% salary). Our family don't have much money to offer but are able to help with childcare meaning going back to work isn't too much of an issue.

gardengull

I would really advise you against tying yourself into a loan for 5 years for a vehicle (amongst other things). You will be wanting to change it before you get to the end of your loan, and will end up in a spiral of increasing loans, especially if this baby isn't an only one...

i put £7,000 over 5 years into money supermarket (first result on google) with a fake email address, and got these results:

https://www.moneysupermarket.com/loans/quick-search/results/?enquiry_id=273893286820192532


The top one said:
Representative example: If you borrow £7,000 over 5 years at a Representative APR of 17.2% and an annual interest rate of 17.20% (fixed) you would pay £170.14 per month. Total charge for credit will be £3,208.36.
Total amount repayable is £10,208.36

That is a LOT of interest - more than a month's wages!

Congratulations on the baby. Think carefully before borrowing. x

RTC87

gardengull wrote: »

I would really advise you against tying yourself into a loan for 5 years for a vehicle (amongst other things). You will be wanting to change it before you get to the end of your loan, and will end up in a spiral of increasing loans, especially if this baby isn't an only one...

i put £7,000 over 5 years into money supermarket (first result on google) with a fake email address, and got these results:



The top one said:
Representative example: If you borrow £7,000 over 5 years at a Representative APR of 17.2% and an annual interest rate of 17.20% (fixed) you would pay £170.14 per month. Total charge for credit will be £3,208.36.
Total amount repayable is £10,208.36

That is a LOT of interest - more than a month's wages!

Congratulations on the baby. Think carefully before borrowing. x

Thanks for all the responses everyone.

Will take all this on board before making a decision. Any other thoughts welcome...

Guess I just wanted everything in place for when baby arrives. Moving is the main thing and will probably cost around £1300.

dealer_wins

RTC87 wrote: »

Hi, hoping I can get some advice.

My partner and I found out we were expecting our first child a couple of weeks ago. We're pretty excited as you can imagine but were keen on making a few changes before the baby gets here. Namely we wanted a more practical car, to move home (from rented apartment to rented house) and obviously purchase any items we need for baby/home.

I earn £27000 annually and my partner £18000, we don't bank together and all the bills come out of my bank (she transfers me £480 a month to cover a variety of bills/savings). I went to Lloyds today (been banking with them for over 10 years) expecting to be offered a decent loan and interest rate but was left shocked when I was offered a £7500 loan at 24%APR.

I currently have £1800 on an interest free credit card which we have put our holiday on (will be cleared by Feb 15) and pay £170 car finance per month (again finishes in Feb 15). Apart from that we have the usual bills household bills.

I suppose my question is, do i stand a decent chance of getting a better loan elsewhere? or should I knock the idea on the head?

I wanted to borrow between £7000-£10000 over 5 years but didnt want to pay much more than £200/month.

I've always tried to be quite careful with money, never missed a payment for anything. Some general advice on what people think we should do would be great.

I dont mean to be patronising but the finance for the highlighted items should have been saved up before trying for a baby.

Having a baby will involve significant additional expenses, and possibly a drop in income also.

If you cant afford it now, taking out finance could leave you all in serious financial trouble!

roubaix

I was meant to take 16 weeks of maternity leave and before she arrived I kept thinking (and telling people) I was going to be bored stuck at home and desperate to get back to work. I ended up taking 11 months off as when she arrived everything changed and I fell so in love with her I couldn't bear to leave her so early.

Your girlfriend may afterwards not change her mind and still go back after 10 weeks and everyone is different so if that is what is best for her she should do that. However, prepare yourself that her opinion may change a lot after the arrival of your gorgeous little one. You don't want to take on lots of other financial commitments like debts so she is forced to go back at 10 weeks if she changes her mind and would have liked longer.

Congratulations on the new baby

RTC87

dealer_wins wrote: »

I dont mean to be patronising but the finance for the highlighted items should have been saved up before trying for a baby.

Having a baby will involve significant additional expenses, and possibly a drop in income also.

If you cant afford it now, taking out finance could leave you all in serious financial trouble!

While i appreciate all the responses in this thread and will very likely not take out a loan now, this response is not helpful at all.

The fact that you state "I don't mean to be patronising", suggests that's exactly how you do mean to be.

Firstly my partner is on the injection as a form of contraception, we have been together 4 years and although this wasn't planned we believe we are ready to love and support a child (we're not people who don't work and we have a reasonable income).

I know I don't need to explain myself but just wanted to get that out so atleast if I'm going to be judged I'm being judged correctly.

Anyway as I say, we're going to avoid taking on the loan. Better in the long run and we should have enough to move without it. Just a case of accepting we can't purchase everything at once.

CLAPTON

RTC87 wrote: »

While i appreciate all the responses in this thread and will very likely not take out a loan now, this response is not helpful at all.

The fact that you state "I don't mean to be patronising", suggests that's exactly how you do mean to be.

Firstly my partner is on the injection as a form of contraception, we have been together 4 years and although this wasn't planned we believe we are ready to love and support a child (we're not people who don't work and we have a reasonable income).

I know I don't need to explain myself but just wanted to get that out so atleast if I'm going to be judged I'm being judged correctly.

Anyway as I say, we're going to avoid taking on the loan. Better in the long run and we should have enough to move without it. Just a case of accepting we can't purchase everything at once.

the reality of life is that debt has become 'normal'
it's normal to want a new car
a nice holiday
meals out


etc
nothing wrong with anything of those things of course, if one can 'afford' them


sadly, today 'afford' means 'afford to borrow' and not 'afford' as in 'I have money saved in the bank'.


it's not patronising but once it was accepted wisdom: today debt is normal


all school children should be taught the simple basic rules : save first and then spend
never have debt except a mortgage
use credit cards by all means but always pay in full every month


save a little of your salary every month
stuff happens in live and not being in debt is a wonderful thing.




good luck with the baby: hope all goes well