Career development loan v personal loan v credit card(?)

razzle7691

Hi
Apologies if this is in the wrong place as I'm new to the forum.

I need to come up with £5,000 to do a one-week training course in September. But, as I am buying a house in January, I also need to keep my deposit healthy until that time. So borrowing is my best option.

I would like to start paying the borrowed money back around this time next year, but would happily start paying sooner if the interest was low and/or repayments were small amounts.

I don't think I could get a career development loan as I have over £16,000 in my savings account which, as I said, is going towards a house deposit.

What might be the best way of doing this? I'm thinking a combination of credit card and (then moving to) personal loan, but I'm not certain. BTW - I have an excellent credit history, but no credit cards at the moment; would getting one, even two credit cards, affect my credit rating? (I need to keep an eye on my mortgage situation)

Thanks for any advice on this.

James

Candyapple

For low amount, see post #3
https://forums.moneysavingexpert.com/discussion/5674234

razzle7691

Thanks Candy Apple. A quick result (one of many) was from Virgin credit cards with an 80% likleiness of approval.

Here's the details:

Money transfer length & fee: 32 months 0%, 2.5% fee
Annual interest rate on money transfers after the 0%: 20.9%
Card issuer: Mastercard
Min income: N/A
Min repayment: Greater of 1% of balance plus interest or £25
Any restrictions? Must transfer within 60 days
A nonsense piece of regulation means we have to tell you if you were to spend £1,200 at an annual interest rate of 20.9% (variable) your Representative APR would be 20.9% (variable).

does this mean I could put £5,000 on this credit card and have nothing to pay back for 32 months? then if I did pay it back it would be 2.5% x £5,000 = £1,250. Obviously I would like to avoid paying any fees or interest...not sure how it works...(?)

Candyapple

Virgin along with MBNA are known for giving high credit limits so fingers crossed if you applied you would get more than enough to cover the £5k.

What it means is so lets assume you were given a £6k credit limit. The fee for withdrawing £5k would be £125. You would then have 32 months to clear £5125 at 0% interest. So if you treated it as a loan (advisable if you're not disciplined with money), your monthly repayments would be £160 per month.

£160 x 32 months = your total cost of the loan would be £125.

If however you were good with money, your monthly minimum repayments would be 2.5% of your balance (so in this case, £125 per month) which will obviously reduce when the balance reduces. You could make this monthly minimum payment and keep any remaining funds in a high interest account so when it comes to the end of the 32 months, the money earning interest would cover the deficit balance.

I think it's wise to pay the fixed sum of £160 per month, just make sure you set up a direct debit for that amount every month.

Let us know how you get on.

razzle7691

Hey thanks for your advice.

I'm pretty good with money - there is a chance that I could pay it all off earlier...If I pay offthe minimum 2.5% per month I would still be owing at the end of the 32 month period, no(?) £160 per month clears it completely in that time I guess..

Applying for the card will affect my credit rating(?) But then as long as I pay off the minimum every month at least, it will not adversely affect my credit rating...in fact it would boost it...(?)

So many questions...!

Candyapple

razzle7691 wrote: »

I'm pretty good with money - there is a chance that I could pay it all off earlier...If I pay offthe minimum 2.5% per month I would still be owing at the end of the 32 month period, no(?) £160 per month clears it completely in that time I guess..

If you paid the minimum payment (2.5% of your monthly balance) then yes you would have a small amount deficit to clear before the 32 months are up - hence if you read my examples I said you can do either/or depending on how savvy you are with money.

To be really basic: Pay £160 every month for 32 months and your balance will be zero, debt cleared.

Pay £125 per month (rough guideline of monthly repayment) for 32 months you would have cleared £4k and would need to find £1125 in the final month to clear the balance before the 32 months are up.

Or you could pay £160 per month / £125 per month until such point if you felt like it you wanted to pay a lump sum and clear the entire balance - as long as you did this before the 32 months you will not pay any interest.

In any of the examples above the total cost of having £5k for 32 months is £125. There is no interest payable AS LONG AS YOU CLEAR THE BALANCE BEFORE 32 MONTHS ARE UP!

razzle7691 wrote: »

Applying for the card will affect my credit rating(?) But then as long as I pay off the minimum every month at least, it will not adversely affect my credit rating...in fact it would boost it...(?)
!

Yes applying for anything will affect your credit history, but 1 or 2 applications is minor, especially if you haven't applied for anything else recently. The effects of a new credit application generally 'wear off' after 6 months.

Yes repaying a credit card / revolving card debt is good for your credit history because it shows you can use credit responsibly.

razzle7691

Thanks Candyapple - much obliged. I'll tell you how I get on!

jonesMUFCforever

OP if you want to apply for a mortgage next year a) if you use savings you will have less of a deposit (but no debt) and 6 months to put back some of those savings or b) if you take out a loan or card you will have a higher deposit but debt of £x which will be deducted from whatever mortgage offer you may get.

In other words and in my opinion if you have the funds to pay yourself then do it that way and avoid going into debt.

Sncjw

Can i ask what course charges 5k for a week. Is it a course your employer is requiring to take. If so I would ask them to stump up the costs

razzle7691

The cousre is in two parts - the fisrt bit is about £4,000 and the follow-up is around £750. It's a cousre on oragsnaitional design. As I run my own business it will be me that has to stump up the cost.

The balance between debt and deposit is a tricky one; I can pay for the course out of my own funds now, and see where I'm placed in January to see if I need extra funds then. I'm just aware that some lenders might look unfavourably at the sudden appearance of £5,000 on a credit card, to contribute to a mortgage deposit, at the eleventh hour. If I only have to pay £125 over three years for this money, then it would be worth having anyway... and sorting out over the next couple of months...

jonesMUFCforever

razzle7691 wrote: »

The cousre is in two parts - the fisrt bit is about £4,000 and the follow-up is around £750. It's a cousre on oragsnaitional design. As I run my own business it will be me that has to stump up the cost.

The balance between debt and deposit is a tricky one; I can pay for the course out of my own funds now, and see where I'm placed in January to see if I need extra funds then. I'm just aware that some lenders might look unfavourably at the sudden appearance of £5,000 on a credit card, to contribute to a mortgage deposit, at the eleventh hour. If I only have to pay £125 over three years for this money, then it would be worth having anyway... and sorting out over the next couple of months...

You cannot borrow a deposit!