Finance taken out for someone else...

john.burn

Hi there,

To save this getting too confusing and to stop me talking about the third person or people, I'll assume I'm the person who received the equipment here - long story, two friends - one took finance out for the other who couldn't get finance almost 18 months ago. Now they have had a slight falling out and things are getting dirty!

Friend took out finance for me for some pc equipment and were happy to do so, we agreed to pay them the monthly fee when they started paying the finance company via standing order. The finance company have screwed up somewhere along the line and never ever requested any payment from them and thus we have never started any payments as the friend has never until this point requested anything.

The friend is now looking to take out a new mortgage but this finance is obviously showing up (I do not know if this would be showing as a default at this time, I'm assuming not as they have never had a reminder letter from the finance company). Any mortgage loan will obviously take this repayment into account - this is usual I presume. Now, the friend has told us to take a loan out to cover this finance agreement and go down the route of a secured loan - something i do not want to do and not something that I agreed to do from day one - the original agreement was to cover the monthly payments once they started themselves (which they have not).

So, would the finance really be stopping them from getting a mortgage or is it more likely that as she is effectively medically retired for chronic fatigue more likely to be the factor here?

*Back into 3rd party mode*

Going back to me now and knowing the two parties involved - I'm in agreement with the people who received the computer equipment - they've done nothing wrong, they agreed to pay once the payments commenced and have never been informed they have started because the payments have not. I don't like the way the friends who took out the loan for them are treating them. A lot more personal stuff involved here - the friends who received the computer equipment stood up for the other friend over something (loan taker was being stalked by an instructor) and got themselves ex-communicated from a martial arts club they were heavily involved with and then when they had to start out on their own the friend who took the loan out chose to stay put and not stand back up for them!


Hope this makes some sense, I think it's unfair they are changing the agreed rules on them particularly after how they've been treated.


John.

lynsayjane

that is a complicated one. perhaps the mortgage board would be the best place to ask as they have more details on this side of things.

As far as the friendship goes, I can see both sides of the argument. Did it never occur to either to contact the finance company regarding this? Surely it is in their best interests to get the whole thing paid and the slate wiped clean as soon as possible? By not contacting the company when the payments were due to start there could be a concern of fraud on the companies part.

chevalier

have the people that got the computer equipment actually seen any demands for payment? Did they do anything when they noticed that the standing order was not paying each month? I think the person that took out the loan is on a very sticky wicket, because the creditor won't give a stuff that they took it out for anyone else, they are liable and want paying. The people who got the equipment, maybe should have been more savvy about why it was not being paid, but on the other hand, they may have thought it was one of those buy now pay later schemes so not be worried.

The fact that the friend who took out the loan has outstanding credit on his credit score, may or may not affect a mortgage application. But as I would imagine it was for less than £1000 (unless it was really expensive kit), I can't thinkg that ON ITS OWN it would make that much difference -though this is just my gut feeling.

If the company that sold the kit are still willing to pay in installments, then surely the people that took out the loan, could still get the people with the equipment to pay as previously agreed? Or are the creditors now wanting the full money because of the screw up?

And why didn't the people who took out the loan, start querying why the balance wasn't going down?

For such a small amount it would be ludicrous to secure a loan on property for it.

hope this gives some insight. This kind of falling out is also why I will NEVER take out credit for anyone else.
chev

john.burn

the people that took out the credit have never had the monies taken from their bank account by the finance company, the last communication form the finance company was to state that they would write to them to let them know the direct debit date - they have never written back since. The friends who were the recipients of the equipment (apple stuff and around £3000, about £110 per month over 3 years) agreed to pay the monthly payments back to the friend who took out the loan but as they themselves were not paying the finance company then they never asked the friends to start paying.

To my knowledge, the finance company still have not realised they have never asked for the payments as yet, they have never requested or advised when the payments are due to start and it has been about 18 months now. It seems it's simply that the friend who took out the loan seems to think that the recipients of the equipment now owe them the full and final monies despite what was agreed when it was all taken out.


John.

CLAPTON

Whats needed here is some facts rather a lot of speculation.

a. the person who actually borrowed the money should check their credit files to see if the creditor has marked their record in any way.
Until that is known then speculation about whether they will be affected for a mortgage is pointless. The difference between simply showing as a debt and a default is HUGE.

b. Presumably the person who got the PC equipment has been saving up their monthly payments so there should be no problem if the finance company demand the back payments?

c. If the person who wanted the PC can't get credit to pay the full amount off then they can't get credit so in reality there's not a lot they can do.
Is it certain they can't get credit.. like did they apply and were rejected or did they just assume?

robotgirl_2

What the borrowers need first and foremost is a copy of their credit report. This will tell them if the finance company has recorded the debt (which shouldn't really be a problem unless it's for a LARGE amount, ie over £1k) or a default.

If there is a recorded default then they need to contact the finance company first and foremost - if they really haven't had any paperwork or payments set up then I believe they can probably work out some way of removing the default (hoping someone with more experience can help here..?).

It could be any number of other things preventing them getting a mortgage, and the credit report will show that. Tell them not to go around messing up their friendships even more without a few solid facts

Free credit reports are available from http://www.joincreditexpert.com/freecreditreport . If they haven't a credit/debit card to register, you can write to them with a cheque for £2 and they'll supply the same info.

Hope your friends get this sorted out! They really should have had some sort of legal document drawn up at the start of the agreement, to prevent this from happening...

pinkshoes

john.burn wrote: »

The friends who were the recipients of the equipment (apple stuff and around £3000, about £110 per month over 3 years)

Ok, firstly, both of them were muppets for not questioning why the loan payments had not started!

Rule number 1 - never lend friends money!

Rule number 2 - NEVER NEVER take out debt for a friend!

Given that the person with the computer equipment knew the repayments were £110 a month over 3 years, and it's been 18 months since their friend took the loan, they SHOULD have been able to put aside £1980 (£were they planning to repay it would they ever have repayed it?!?!

The person who took the loan agreed this over 3 years, so the friend should give them £1980 straight away, then the rest should be paid at £110 for the next 18 months as agreed.

john.burn

From talking to them both again, it seems neither gave the thing much thought and it simply never occurred to them that nothing had started up in terms of either paying anything. The one who took the loan out is really getting shirty with the others at the moment and threatening all sorts of things if they don't suddenly give her the money. I would imagine she's in a sticky situation here as without any written contract between the two the ones who have the equipment can probably tell her to go whistle. The latest I just heard was that she'd had a go at them for simply going to see some friends last night and having a meal (home cooked & no money involved, lol) with them when they should be thinking about her situation!

Aaaargh!

Snaggles

Hiya, I'm an underwriter so I can answer the mortgage part of the question.

Will the default be stopping them getting a mortgage? Yes, almost definitely - if you have an unsatisfied default you are unlikely to be able to get a mortgage with a mainstream lender.

Could it be down to the fact that she is medically retired for chronic fatigue? The fact that she is medically retired doesn't really matter IF she is still receiving sufficient income (pension?) to support a mortgage (or if she has a partner, perhaps he may have sufficient income to have the mortgage agreed in joint names but based on his sole income).

Not really sure about the rest, it sounds like a horrible situation to be in and I'm sorry you're the one taking the flack from both sides. Hope they manage to come to some sort of agreement.

john.burn

Hiya Snaggles,

Quick question - Is it likely that the finance company would have lodged this as a default bearing in mind that they have never written or contacted anyone to start the payments and have never sent this to a collection agency or anything. I can't get a straight answer out of her as to IF this is showing as a default.

John.

Snaggles

It's really difficult to say - most of it will have very little 'human' involvement, so if the computer thinks your friend is late making payments, then a late payment will be reported that month to the Credit Reference Agency (CRA). A human doesn't check it and say 'oooh, actually, we forgot to send a letter, let's let her off'.

After a few months of not paying, a default letter would be issued, which would also be registered with the CRA. Then, in time, if there was no response to the default letter, it would potentially be sold on to a debt collection company.

But this wouldn't usually happen without numerous warning letters having been issued first.

Even if it was just late payments though, they would still affect her credit rating.

If no default/late payment has been registered, the other possibility is that the mortgage is being refused because she has too much borrowing/her monthly outgoings are too high because of the borrowing. If she appears to be overcommitted because of the finance, that could be a reason for declining the mortgage.

What sort of amount are we talking about though? I'd assumed that for computer equipment, it was probably a few hundred, which normally wouldn't have a huge impact on whether a mortgage was agreed or not. But if it's a large amount, or she was borderline anyway, then it could do.

If any of what I'm saying isn't clear, please feel free to say so, because I'm not great at explaining things...lol.