The right time or place to borrow?
Terence_Burrows
Posts: 20 Forumite
in Loans
Hey all,
So i've read a few reports, specifically talking about how almost half of the UK has less than £100 savings - and was just curious to the peoples thought process was in relation to:
1. When the right time to borrow is?
2. Loan vs Using Savings
3. First place to look for borrowing ( High Street Bank, Online, Forums etc )
4. Are the "bad" lenders actually all that bad or is it the individuals that misunderstand what they get in to - or a combination of both?
So i've read a few reports, specifically talking about how almost half of the UK has less than £100 savings - and was just curious to the peoples thought process was in relation to:
1. When the right time to borrow is?
2. Loan vs Using Savings
3. First place to look for borrowing ( High Street Bank, Online, Forums etc )
4. Are the "bad" lenders actually all that bad or is it the individuals that misunderstand what they get in to - or a combination of both?
0
Comments
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The right time to borrow is when you need the money. But if you have savings, use them and then rebuild.
The best place to borrow is the one that give your the best product based on your circumstances. That's different for everyone.
I certainly wouldn't suggest trying to borrow from someone on a forum though.
How are you defining 'bad' lenders?0 -
1. When the right time to borrow is? - when you need money and can afford to pay it back (assuming no savings)
2. Loan vs Using Savings - Depends, but best advice would probably be use savings first unless you can get a better savings rate than loan APR
3. First place to look for borrowing ( High Street Bank, Online, Forums etc ) - MSE loan tool
4. Are the "bad" lenders actually all that bad or is it the individuals that misunderstand what they get in to - or a combination of both? - yes they are very bad. Avoid"We act as though comfort and luxury are the chief requirements of life, when all that we need to make us happy is something to be enthusiastic about” – Albert Einstein0 -
Deleted_User wrote: »The right time to borrow is when you need the money. But if you have savings, use them and then rebuild.
The best place to borrow is the one that give your the best product based on your circumstances. That's different for everyone.
I certainly wouldn't suggest trying to borrow from someone on a forum though.
How are you defining 'bad' lenders?
Thanks for the quick reply.
For me bad lenders would be pay day lenders ( due to crazy APR ) and probably those that have a history of advertising a low rate and then having a higher approved rate.0 -
They're not bad lenders. They just deal in high risk customers. I don't like them, but they do what they say.
And all lenders are required to have a headline rate, for which they'll accept 51% or more at that rate. Other customers will be accepted at higher rates.
So that would make all lenders bad lenders.
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Deleted_User wrote: »They're not bad lenders. They just deal in high risk customers. I don't like them, but they do what they say.
And all lenders are required to have a headline rate, for which they'll accept 51% or more at that rate. Other customers will be accepted at higher rates.
So that would make all lenders bad lenders.
Hmmm fair enough. Guess that's something we have in common.
Is that 51% figure the average across all lenders ( High Street Banks, Pay Day Lenders, Retail Finance )?
hahaha more or less0 -
The 51% is the law.0
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Terence_Burrows wrote: »Hey all,
So i've read a few reports, specifically talking about how almost half of the UK has less than £100 savings - and was just curious to the peoples thought process was in relation to:
1. When the right time to borrow is?
2. Loan vs Using Savings
3. First place to look for borrowing ( High Street Bank, Online, Forums etc )
4. Are the "bad" lenders actually all that bad or is it the individuals that misunderstand what they get in to - or a combination of both?
We always considered it was ok to borrow for a tangible big asset like a car, a new kitchen, conservatory or windows. If we could though we used savings or waited until we had the savings built up as my Dad always used to say the cheapest way of borrowing is from yourself and then we placed the savings gradually. Sometimes we used interest free credit and only very occasionally a low rate unsecured loan.
The place we would have looked is online searching for the cheapest rate or longest deal with lowest MP fee. I think we only ever took a low rate personal loan out once and all the rest of the time we used interest free credit and of course a mortgage.
I think regulations these days ensure that most lenders are upfront but I guess bad lenders are those who charge extortionate interest but mostly it is because they lend to high risk borrowers. I would say it is a combination of irresponsible borrowing and expensive lending which leads to problems.I’m a Forum Ambassador and I support the Forum Team on the Debt free Wannabe, Budgeting and Banking and Savings and Investment boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.0 -
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enthusiasticsaver wrote: »We always considered it was ok to borrow for a tangible big asset like a car, a new kitchen, conservatory or windows. If we could though we used savings or waited until we had the savings built up as my Dad always used to say the cheapest way of borrowing is from yourself and then we placed the savings gradually. Sometimes we used interest free credit and only very occasionally a low rate unsecured loan.
That's a pretty fair piece of advice. With the ratio between saving / income did you always save more in regards to the average as a means of making sure that you had enough just incase e.g the fridge broke - as opposed to thinking about borrowing first?enthusiasticsaver wrote: »The place we would have looked is online searching for the cheapest rate or longest deal with lowest MP fee. I think we only ever took a low rate personal loan out once and all the rest of the time we used interest free credit and of course a mortgage.
With the interest free credit did you ever find yourself tempted to just roll the term over to another, or is this in regards to credit offered by appliance suppliers like currys?enthusiasticsaver wrote: »I think regulations these days ensure that most lenders are upfront but I guess bad lenders are those who charge extortionate interest but mostly it is because they lend to high risk borrowers. I would say it is a combination of irresponsible borrowing and expensive lending which leads to problems.
If lenders are properly vetting said applicants income, can't you argue that the scales start to lean to their side in terms of blame. As they're willingly lending to individuals who they can't properly vet?0 -
Terence_Burrows wrote: »That's a pretty fair piece of advice. With the ratio between saving / income did you always save more in regards to the average as a means of making sure that you had enough just incase e.g the fridge broke - as opposed to thinking about borrowing first?
We always saved a proportion of our income in short term (instant access) savings for white good replacement, annual holidays, car repairs or house repairs, medium term savings for car replacement, long haul holidays and larger home improvement projects and long term mainly in pensions, overpaying the mortgage and eventually investments. We prioritised with large expenditure items and if we needed the money before we managed to save it all we chose the cheapest way of borrowing.
With the interest free credit did you ever find yourself tempted to just roll the term over to another, or is this in regards to credit offered by appliance suppliers like currys?
No, we always cleared within the period and never took out more than one deal at a time. We bought a car on interest free credit once over 4 years and that meant anything else had to be paid for through savings.
If lenders are properly vetting said applicants income, can't you argue that the scales start to lean to their side in terms of blame. As they're willingly lending to individuals who they can't properly vet?
I have rarely been asked for proof of income and no loan application or credit card application can be 100% foolproof in ascertaining whether borrowers can afford to repay. Some people are careful with their money and others less so. Some are good budgeters and others tend to fritter and waste money. An application is only going to give a very basic view of the applicants financial attitude and position. Mainly though you see lenders tend to weight the interest rate according to the risk they will not see full repayment so the very riskiest borrowers will pay the most interest. Most have to be desperate or short sighted to accept borrowing on those terms but people still do.I’m a Forum Ambassador and I support the Forum Team on the Debt free Wannabe, Budgeting and Banking and Savings and Investment boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.0
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