Paying off a car loan whilst at University

Murphy_1989

Hi there,

Just trying to do some research for my girlfriend who is currently at Univirsity in Scotland.

A few years ago she bought a car (Car Loan) then sold it before she went to university, with the money the dealership gave her for the car, she put into a separate account and from this the loan company take the direct debit each month to pay off the outstanding balance.

However the money she was given for the car no way covers how much she has left on the loan (Money runs out in 6 months) With her being a full time student and working when she can shes going to be stuck with 5K of debt and no way to pay this back. I want to help her in any way possible. What options does she have?

Many Thanks

Murph

19lottie82

Murphy_1989 wrote: »

Hi there,

Just trying to do some research for my girlfriend who is currently at Univirsity in Scotland.

A few years ago she bought a car (Car Loan) then sold it before she went to university, with the money the dealership gave her for the car, she put into a separate account and from this the loan company take the direct debit each month to pay off the outstanding balance.

However the money she was given for the car no way covers how much she has left on the loan (Money runs out in 6 months) With her being a full time student and working when she can shes going to be stuck with 5K of debt and no way to pay this back. I want to help her in any way possible. What options does she have?

Many Thanks

Murph

How much are the loan payments? If she's working pt can she really not afford to pay?

If not then she can simply not pay. There will be consequences of course. The debt will not simply "vanish". Chances are, after her credit rating is trashed, the debt will be transferred to a collection agency, where she MAY be able to renegotiate more affordable repayments.

A trashed credit history is no laughing matter though. It means a headache, finance wise for up to six years, and eliminates many job prospects within the financial sector.

Surely with a few basic calculations she could have forseen this situation and realised it wasn't wise to start university until her finances were sorted?
If you wish to help, you could help her to make the payments.

shayshay

Was the loan arranged on the actual car itself or a loan to your girlfriend who then purchased the vehicle?

Murphy_1989

shayshay wrote: »

Was the loan arranged on the actual car itself or a loan to your girlfriend who then purchased the vehicle?

It's a personal loan on the car through Santander. I'm not to sure but could she arrange to bring the monthly payments down to a price she can afford to pay, failing that because she is still paying the interest would it be worth taking out a new loan and a lower APR?

Murphy_1989

19lottie82 wrote: »

How much are the loan payments? If she's working pt can she really not afford to pay?

If not then she can simply not pay. There will be consequences of course. The debt will not simply "vanish". Chances are, after her credit rating is trashed, the debt will be transferred to a collection agency, where she MAY be able to renegotiate more affordable repayments.

A trashed credit history is no laughing matter though. It means a headache, finance wise for up to six years, and eliminates many job prospects within the financial sector.

Surely with a few basic calculations she could have forseen this situation and realised it wasn't wise to start university until her finances were sorted?
If you wish to help, you could help her to make the payments.

She can afford to pay some of it, not at the price shes paying at the moment though. Not paying it is not an option, I for one dont want her to trash her credit rating and thinking long term for both of us I dont want it to effect us when we come to get a joint morgage once she is working full time. I have offered to help but she is very stubborn and determined to resolve the issue her self. I have thought about taking a loan out and paying it for her , but i'm looking to buy a house next year so not sure where this would put me. I'm thinking maybe going 50/50 on the loan to help her out.

19lottie82

What's the current APR?

I doubt anyone will give her another job if she can't afford to pay this one, not to mention the fact she doesn't have a steady income.

If she's determined to "resolve the issue herself", then she'll have to find a way to pay THIS loan. From the sound of it, another loan isn't an option.

andyfromotley

She needs to either cut back her spending to pay the loan, or she needs to increase her income to pay the loan. Either way the loan needs to be paid.

What does she think the solution is?

MEM62

If the loan is secured on the car, when she defaults on the payments the finance company will ask for the car back. As she has sold the car I would expect that the finance company will not be particularly happy as the car was not hers to sell. They may attempt to recover the car from whoever is currently in possession of it.

Murphy_1989

No it was a personal loan rather than finance on the car . I think the only option is for her to speak to Santander themselves and ask what she can do they may be able to reduce the payments per month but extend the loan, yea she may more interest in the long run but she wont be crippling her credit score.

DCFC79

Murphy_1989 wrote: »

No it was a personal loan rather than finance on the car . I think the only option is for her to speak to Santander themselves and ask what she can do they may be able to reduce the payments per month but extend the loan, yea she may more interest in the long run but she wont be crippling her credit score.

Funny thing is it wont cripple her credit score as lenders don't see it.

Herzlos

Murphy_1989 wrote: »

I think the only option is for her to speak to Santander themselves and ask what she can do they may be able to reduce the payments per month but extend the loan

Agreed; that's the only real option.