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Loan for home improvement?
I am trying to help a friend of mine who finds herself financially stuck (again). The beginning of the story is here.
Summary of the affairs. Income £1700-£2000 per month after tax (e.g. this is what lends into her bank account). She works for a private building company and the amount depends on the number of projects/clients.
Credit history:
1. Current account with of £1000 arranged overdraft, none of which is used at the moment but is used occasionally for not more than 4 days.
2. Loan A (£16000) taken in 2012 and paid dutifully till 2013, when the life got hard and then a sequence of late payments for a year. This account was closed in 2014. The balance a month before closure was about £9000.
3. Loan B (£8000) taken the same day the loan A was closed. Current balance approximately £1660, APR 18%, settlement offered by the bank £1600. Current monthly repayments £250.
4.Barclaycard Initial credit builder card, always paid in full. Limit £1200, spend around £750.
5.Car finance from Hitachi taken in June last year, CRA (Experian) shows a total repayment of approximately £7200, immediate settlement from Hitachi is £5450; APR 10%, I think. Current monthly repayments £130.
She says that she wants to get a further loan for a home refurbishment - to fix the consequences of the burst pipes and to replace the windows, approximately £7500 for 5 years, with the idea of selling the house subsequently. The house is not in UK, but in EU.
We took a look at MSE club for loans available. John Lewis Finance shows 2.9% but comes with 6.9% once the application is submitted. Admiral shows 2.9% but offers 12.7%, and Tesco shows 3% but says that they can't offer anything because they don't think she can manage to repay.
I am happy to lend her, say, £2000, with 3% APR. To pay off old Loan B completely.
But my concern is that I don't quite understand where all her money go
The rent is £380, including all bills. She does have a son who lives with his father in Germany and she is paying some modest sum towards his upbringing, and she also has him around during the holidays. Her daily commute is about 50 miles both ways...
Questions:
1. Should she take a further loan or go to DFW board instead?
2. Does it worth looking for consolidating loan? In theory, borrowing £7500 to pay old loans with 3%APR would save a few thousands.
3. In my current accounts I have more than enough to pay all her debts. But I am not sure this is such a brilliant thing to do. I feel that with such a salary one should be able to pay more towards the existing debts?.. Or am I too optimistic?
Summary of the affairs. Income £1700-£2000 per month after tax (e.g. this is what lends into her bank account). She works for a private building company and the amount depends on the number of projects/clients.
Credit history:
1. Current account with of £1000 arranged overdraft, none of which is used at the moment but is used occasionally for not more than 4 days.
2. Loan A (£16000) taken in 2012 and paid dutifully till 2013, when the life got hard and then a sequence of late payments for a year. This account was closed in 2014. The balance a month before closure was about £9000.
3. Loan B (£8000) taken the same day the loan A was closed. Current balance approximately £1660, APR 18%, settlement offered by the bank £1600. Current monthly repayments £250.
4.Barclaycard Initial credit builder card, always paid in full. Limit £1200, spend around £750.
5.Car finance from Hitachi taken in June last year, CRA (Experian) shows a total repayment of approximately £7200, immediate settlement from Hitachi is £5450; APR 10%, I think. Current monthly repayments £130.
She says that she wants to get a further loan for a home refurbishment - to fix the consequences of the burst pipes and to replace the windows, approximately £7500 for 5 years, with the idea of selling the house subsequently. The house is not in UK, but in EU.
We took a look at MSE club for loans available. John Lewis Finance shows 2.9% but comes with 6.9% once the application is submitted. Admiral shows 2.9% but offers 12.7%, and Tesco shows 3% but says that they can't offer anything because they don't think she can manage to repay.
I am happy to lend her, say, £2000, with 3% APR. To pay off old Loan B completely.
But my concern is that I don't quite understand where all her money go
The rent is £380, including all bills. She does have a son who lives with his father in Germany and she is paying some modest sum towards his upbringing, and she also has him around during the holidays. Her daily commute is about 50 miles both ways...
Questions:
1. Should she take a further loan or go to DFW board instead?
2. Does it worth looking for consolidating loan? In theory, borrowing £7500 to pay old loans with 3%APR would save a few thousands.
3. In my current accounts I have more than enough to pay all her debts. But I am not sure this is such a brilliant thing to do. I feel that with such a salary one should be able to pay more towards the existing debts?.. Or am I too optimistic?
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Comments
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1. dont lend her anything.
2. dont lend her anything.
3. dont lend her anything....
You get the idea
Get her to take out the 6.9% loan - not a bad rate considering her past.....oh AND DONT LEND HER ANYTHING !!!!0 -
She needs to stop borrowing - she's not great at it.
Once she's cleared her existing debt, she can practice saving for a bit and she'll build up the fund she needs.0 -
You sound definitefoxy-stoat wrote: »1. dont lend her anything.
2. dont lend her anything.
3. dont lend her anything....
You get the idea
Get her to take out the 6.9% loan - not a bad rate considering her past.....oh AND DON'T LEND HER ANYTHING !!!!
I was almost convinced that she might actually be more enthusiastic about repaying me because of our friendship.
That's my way... but she considers loans as a way forward. She doesn't like the idea of saving money, because (she says) then "the project" will be delayed, while taking a loan appears to be an instant solution.Deleted_User wrote: »She needs to stop borrowing - she's not great at it.
Once she's cleared her existing debt, she can practice saving for a bit and she'll build up the fund she needs.0 -
Is there a way to repay the loans faster? i.e. can monthly repayments be increased?...Deleted_User wrote: »Once she's cleared her existing debt, she can practice saving for a bit and she'll build up the fund she needs.0 -
Yes - she can overpay, which will also save her interest.0
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Your friend is foolish, and you should tell her you're not willing to help her, and end the matter.That's my way... but she considers loans as a way forward. She doesn't like the idea of saving money, because (she says) then "the project" will be delayed, while taking a loan appears to be an instant solution."Facism arrives as your friend. It will restore your honour, make you feel proud, protect your house, give you a job, clean up the neighbourhood, remind you of how great you once were, clear out the venal and the corrupt, remove anything you feel is unlike you... [it] doesn't walk in saying, "our programme means militias, mass imprisonments, transportations, war and persecution."0 -
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Well, I myself and many other stoozers are not in a big rush to pay off 0% purchases cards, as I prefer the money to sit in my accounts earning 5% interest instead. But when I needed a friend to rescue me, I paid him back the next day.foxy-stoat wrote: »That's what many have thought in the past....and many wished they hadn't.0 -
If you want to help her save some money, tell her to get a balance transfer card, to reduce the barclaycard 18% interest - she NEEDS to overpay that though as she wont clear it before the 0% interest rate runs out.
As for the 10% car loan - leave it where it is and hopes that she doesnt have a total loss in the next 4 years. Only way to save here would be to sell the car, clear the loan and buy a cheaper runaround.
She wont get a 3% interest rate, whether you give her a couple of grand or not. 6.9% loan isn't bad.0
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