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janiefet
janiefet Posts: 94 Forumite
Part of the Furniture 10 Posts Combo Breaker
I am writing on behalf of a friend who got made redundant and consequently got behind with bills etc. Because of this his credit rating has dropped considerably. He has a car on a 3 year contract which has a balloon payment at the end of it, or he can walk away with no car. The car payment although late was always paid. The question is - where is best he applies for a loan to continue paying for the car as without it he cannot get to his new place of work. (He was unemployed for 6 months - but now slowly paying everyone back).
It is unlikely we think that he could get another brand new car - plus this car has only done a small amount of mileage. Sorry if these questions have been dealt with previously but all this is new to him and me. Thank you.
September £30 cash-back £13 63 shares dividend!
August £93 car boot!
July £11

June £73/£100
May £29.71/£100
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Comments

  • [Deleted User]
    [Deleted User] Posts: 35,242 Forumite
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    He'll need to try an eligibility checker.

    But with a poor credit history and existing finance, his chances will be very slim.

    Better to walk away and buy a cheap car for cash.
  • janiefet
    janiefet Posts: 94 Forumite
    Part of the Furniture 10 Posts Combo Breaker
    Oh no - not what he would want to hear - where is best to look at an eligibility checker? What if he got a guarantor? I am not sure how these things work - neither is he. Sorry of ot sounds so vague.
    September £30 cash-back £13 63 shares dividend!
    August £93 car boot!
    July £11

    June £73/£100
    May £29.71/£100
  • [Deleted User]
    [Deleted User] Posts: 35,242 Forumite
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    He'll find eligibility checkers on most lenders sites.

    Guarantor loans are around 50%. It's not a route he should go down and it's not fair on the guarantor who's left picking up the pieces.

    How much does he have saved? How much does he put away each month?
  • janiefet
    janiefet Posts: 94 Forumite
    Part of the Furniture 10 Posts Combo Breaker
    "Guarantor loans are around 50%" - forgive me I dont know what that means - and I will ask those questions. Just helping by getting together some information at present.
    September £30 cash-back £13 63 shares dividend!
    August £93 car boot!
    July £11

    June £73/£100
    May £29.71/£100
  • [Deleted User]
    [Deleted User] Posts: 35,242 Forumite
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    edited 2 April 2019 at 2:33PM
    50% annual percentage rate...
  • MEM62
    MEM62 Posts: 5,351 Forumite
    Part of the Furniture 1,000 Posts Photogenic Name Dropper
    janiefet wrote: »
    What if he got a guarantor? I am not sure how these things work - neither is he.

    If he managed to find anyone foolish enough to be a guarantor he would end up with a loan attracting extortionate interest rates. His guarantor will then have to pick up the payments if, sorry when, your friend defaults. Guarantor loans are the last resort of the desperate and should be avoided at all costs.

    As already advised, he should hand back the car and buy something cheap to run around in until his circumstances have improved.
  • System
    System Posts: 178,365 Community Admin
    10,000 Posts Photogenic Name Dropper
    "Guarantor loans are around 50%" - forgive me I dont know what that means
    It means interest rates will be 50%.

    It means if you borrow £10000 over 5 years at 50% APR you'll repay just over £27,300 in total as opposed to if you had good credit and could qualify for a loan at 3% you'd repay just over £10,700 over the same 5 years.
    This is a system account and does not represent a real person. To contact the Forum Team email forumteam@moneysavingexpert.com
  • janiefet
    janiefet Posts: 94 Forumite
    Part of the Furniture 10 Posts Combo Breaker
    I would hope he would never be in a position to default again. No one can predict the future though I suppose.
    September £30 cash-back £13 63 shares dividend!
    August £93 car boot!
    July £11

    June £73/£100
    May £29.71/£100
  • dresdendave
    dresdendave Posts: 890 Forumite
    Part of the Furniture 500 Posts Photogenic
    janiefet wrote: »
    I would hope he would never be in a position to default again. No one can predict the future though I suppose.

    Read the numerous post on here regarding Guarantor loans and you won't need a crystal ball to predict the future.
  • Brock_and_Roll
    Brock_and_Roll Posts: 1,207 Forumite
    Part of the Furniture 1,000 Posts
    Best bet would be to return the car after 3 years and buy a 2nd hand car for cash.

    However, any nice/naive person kind enough to stand as guarantor would be much better advised to take a loan in their own name (say at 6%) and pass on the cash rather than a guarantor loan at (50%).

    The risk for the borrow would be the same either way.
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