Helped a friend....

Muddybum

Hi,
some advise desperately needed....

Shortened version of the story in bullet points..

• Very long term and good friend asked for help
  Agreed to go guarantor on an Amigo loan
  Was supposed to be short term to get a completed loan on his credit file with a view to a future mortgage
  Friend is making payments but only just
  Friend has a poor credit rating
  Interest (I see each month) is 49.9%
  I can't see this being payed off any time soon!

The upshot is that this goes against my credit, I am liable if he fails to pay (which I understood from the outset) and it pains me to see him paying a ridiculous amount of interest each month.

I'm wondering the best approach to help him get a better deal?

Any ideas or suggestions would be most welcome.

Cheers
Simon

[Deleted User]

Take out a cheaper loan and pay the Amigo loan off with it.

Then get him to pay you back.

Arleen

Deleted_User wrote: »

Take out a cheaper loan and pay the Amigo loan off with it.

Then get him to pay you back.

... which is what you should've done in the first place.

It's not worth to take a loan for the sake of getting a loan on your file. Instead clean up existing mess, get some cards that you will use and pay off in full and wait as everyone else.

Dobbibill

Muddybum wrote: »

Hi,
some advise desperately needed....

Shortened version of the story in bullet points..

• Very long term and good friend asked for help
  Agreed to go guarantor on an Amigo loan
  Was supposed to be short term to get a completed loan on his credit file with a view to a future mortgage - How short is short term? Has the term of the loan changed?
  Friend is making payments but only just - 'Only just' is a concern...one curve ball could cause the payments to stop...what is your plan then.
  Friend has a poor credit rating - you have to ask yourself why?
  Interest (I see each month) is 49.9%
  I can't see this being payed off any time soon! - see above - you said it was short term?

The upshot is that this goes against my credit, I am liable if he fails to pay (which I understood from the outset) and it pains me to see him paying a ridiculous amount of interest each month.

I'm wondering the best approach to help him get a better deal?

Any ideas or suggestions would be most welcome.

Cheers
Simon

You can do as suggested by zx81, there are plenty of horror stories all over the forum of 'friends' not meeting their obligations on loans such as these.

I've added some concerns above in red - you don't need to answer the questions on here but they may serve as food for thought.

Your obviously aware of your obligations as the guarantor but it's not your interest to pay until/unless your friend fails to pay.

Pixie5740

An Amigo loan on your friend's credit file will not help him get a mortgage in the future. Quite the opposite in fact as several lenders automatically reject any applications from people with short term loans (like Amigo) in their recent credit history.

If your friend wants to improve his credit files then he should get one of the credit repair cards and pay it off in full each month. Never pay to improve your credit files.

If your friend's only intended purpose was to get a loan on his credit file then surely he still has the money he borrowed from Amigo sitting in an account somewhere so he should repay it immediately to reduce the amount of interest owed and then works towards clearing the rest of the loan completely.

Muddybum

Thanks for the replies guys...

Part of me wants him to stand on his own two feet and take responsibility and part of me feels like helping and very old an dear friend, hence the dilemma.

I did consider getting him a loan, I did in fact loan him money previously to this and he did in fairness pay it back, eventually.

Right now, I am not in a position to get another loan out, although I've not ruled this out completely, I can foresee a situation where he misses payments with me which he might feel is an easy out compared to the constant chasing he will get from Amigo. I guess it is a risk I might have to take in the long run, I can't in good unconscious let him carry on paying these extortionate interest rates.

It's a mess for sure, hindsight is a wonderful thing and I've learned a valuable lesson.

Cheers
Simon

Pixie5740

If you were so worried about the rates why did you agree to be a guarantor for him? What has he spent the money he borrowed on?

Muddybum

I didn't look closely enough at the rates and didn't fully understand the amount it would accrue in interest each month. He used the money to pay off debts largely.

Not good...

rhcp

Muddybum wrote: »

I can foresee a situation where he misses payments with me which he might feel is an easy out compared to the constant chasing he will get from Amigo.

I think you will be the one amigo will be chasing if he misses a payment, not him.

Bogalot

Muddybum wrote: »

I didn't look closely enough at the rates and didn't fully understand the amount it would accrue in interest each month. He used the money to pay off debts largely.

Not good...

If the debts had an ever greater APR then he's well into the sub prime market. Even when they are all paid off he won't be getting a mortgage for several years.

If you can then take out a loan in your name to pay off the Amigo one. They're going to come after you if he stops paying, so better for that to be at a more realistic interest rate.

With all the goodwill in the world, lending to friends is just not worth it.

Pixie5740

Muddybum wrote: »

I didn't look closely enough at the rates and didn't fully understand the amount it would accrue in interest each month. He used the money to pay off debts largely.

Not good...

No it's not good at all. Financially speaking your friend sounds, at best, like an eejit. Consolidating debt using a guarantor loan with a representative APR of 49.9% :eek: Believing that having this kind of loan on his credit files will improve his chances of getting a mortgage. :eek: The sooner you can untangle yourself from him financially the better. You can't help him, he need to learn how to manage his finances himself. My parents have been bailing my brother out for years so he has learned nothing. I know mum worries about what will happen when her and my father are no longer here but am I f**k bailing him out.