How to borrow 20k for 6 months only and repay in full?

How to borrow 20k for 6 months only and repay in full?

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Discussion

Emeye

9,773 posts

222 months

Sunday 18th January 2015
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CzechItOut said:
My guess would be that banks don't offer this, as so few people would want it. Most people would just wait six months to get the money in their hands.
And what would happen if the £20k didn't turn up in 6 months time? Unless the bank could secure the loan against something?

Slagathore

5,808 posts

191 months

Sunday 18th January 2015
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Johnny G Pipe said:
Good morning! Its just repaying it all within 6 months (£3.3k monthly repayments, yikes) I can't do. However after 6 months (when a property transaction has gone through) I can pay it all back easily. Hence my frustration about the insistence on monthly repayments.

I can also afford smaller repayments spread over much longer and then pay it all off early. Which seems to be the answer..thanks PH friends!
I guess that's a house sale? Has the property exchanged yet?

I wouldn't be risking anything until that has happened. Houses fall through all the time, and if it did, it seems you'd be left with a debt you'd have no way of paying.

Driver101

14,376 posts

120 months

Sunday 18th January 2015
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Johnny G Pipe said:
Driver101 said:
Doesn't the bank have to do affordability checks these days before lending someone money?

Surely someone wanting to borrow £20,000 and not even have the means to pay one monthly instalment would trigger alarms for them?
Good morning! Its just repaying it all within 6 months (£3.3k monthly repayments, yikes) I can't do. However after 6 months (when a property transaction has gone through) I can pay it all back easily. Hence my frustration about the insistence on monthly repayments.

I can also afford smaller repayments spread over much longer and then pay it all off early. Which seems to be the answer..thanks PH friends!
What happens if the property sale falls through?

It's a dangerous game spending money that's on its way.

RichB

51,433 posts

283 months

Sunday 18th January 2015
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Why don't you just borrow the £20k from your bank to "buy a car" over say, 5 years, and pay it off early? confused

Johnny G Pipe

Original Poster:

267 posts

227 months

Tuesday 20th January 2015
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OK, thanks for the ideas, and for the advice suggesting caution! I am lucky in that there is a back up plan if the property falls through.

I have stumbled on credit cards with 0% interest for 23 months - who knew. This has to be part of the answer to my problem I think! There doesnt seem to be a catch particularly..or am I missing something?

http://www.moneysavingexpert.com/credit-cards/best...

Emeye

9,773 posts

222 months

Tuesday 20th January 2015
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Johnny G Pipe said:
OK, thanks for the ideas, and for the advice suggesting caution! I am lucky in that there is a back up plan if the property falls through.

I have stumbled on credit cards with 0% interest for 23 months - who knew. This has to be part of the answer to my problem I think! There doesnt seem to be a catch particularly..or am I missing something?

http://www.moneysavingexpert.com/credit-cards/best...
The catch is if you don't pay it back there is a lot of interest to pay - also, do you think you would get a credit card with a £20k limit?

Johnny G Pipe

Original Poster:

267 posts

227 months

Tuesday 20th January 2015
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I am a decent earner with a decent credit rating as far as I know..I don't know what limits people can get these days, but whatever limit I can get that is going to mean less borrowed with interest and therefore less monthly payments.

Emeye

9,773 posts

222 months

Tuesday 20th January 2015
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Sign up for a free trial of credit check monitoring service from Experian or Mycreditcheck etc - have a look at Moneysavingexpert for details. You can get a free 30 day trial just remember to cancel.

I think they will tell you how much you can borrow get on a card etc. If not then atleast you will know your credit rating.

Sheepshanks

32,530 posts

118 months

Tuesday 20th January 2015
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Emeye said:
The catch is if you don't pay it back there is a lot of interest to pay - also, do you think you would get a credit card with a £20k limit?
Plus you'll likely have to pay a surcharge of around 3% to be allowed to buy using a credit card.

Sheepshanks

32,530 posts

118 months

Tuesday 20th January 2015
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Johnny G Pipe said:
Hey thats a good idea -quite a few allow repayment early from memory.
All personal loans can be repaid early - it a legal requirement. Maximum interest penalty is 58 days, but firms often charge less than this - typically a month.

Emeye

9,773 posts

222 months

Tuesday 20th January 2015
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Some banks are offering a delayed repayment holiday - eg. Tesco and M&S you don't have to repay until 2 or 3 months after taking out the loan IIRC. Tesco will also do £20,000 over 10 years at 6.1% APR.

In theory you'd only have to pay 3 or 4 months of £223ish and then an early repayment charge of maybe 2 months interest.

If you were really desperate you could get a credit card that allows you to transfer money into your bank account to pay off those 3 or 4 months for a % fee.

Or you could buy a £2k LED TV from Brighthouse, sell it to a mate for £1k to pay off those 3/4 months, then pay £2.50 for 356 months to Brighthouse. smile

After all the recent credit problems we have seen, it's amazing how easy it is to still get into a nice credit pickle.

Edited by Emeye on Thursday 22 January 14:25

aquarianone

498 posts

176 months

Tuesday 20th January 2015
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Check out the MBNA credit cards..they let you "balance transfer" back into your normal account.

You may not get 20K in one hit but you might get there with a combination, Zopa, MBNA, and Overdraft..


walm

10,609 posts

201 months

Tuesday 20th January 2015
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Just to answer one question OP.
You were frustrated that no one offers a "don't pay anything for 6 months" type loan.
I have done a little work with lenders.

The reason these loans don't really exist is because the bank needs to know very quickly if you are getting into financial strife and more likely to default.
A monthly payment is like them checking up on you on a regular basis and asking "how are the finances? can you spare a few hundred?" Answer: yes - you're golden.
Miss a payment? All hell breaks loose and they are going to start thinking about writing the loan down on their books very quickly - particularly if not secured on anything.

If banks started writing loans with no contact or payments for 6 months it would make their loan book one hell of a lot more risky.
Think how much could change in 6 months.

Imagine going to the board and saying, well 50% of the loans we gave out this year might already be in default - we just don't know!
8% (1/12) at risk is a lot more acceptable!

That's why the payday guys offer weekly payments. They trust their customers even less!

Eleven

26,271 posts

221 months

Tuesday 20th January 2015
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walm said:
Just to answer one question OP.
You were frustrated that no one offers a "don't pay anything for 6 months" type loan.
I have done a little work with lenders.

The reason these loans don't really exist is because the bank needs to know very quickly if you are getting into financial strife and more likely to default.
A monthly payment is like them checking up on you on a regular basis and asking "how are the finances? can you spare a few hundred?" Answer: yes - you're golden.
Miss a payment? All hell breaks loose and they are going to start thinking about writing the loan down on their books very quickly - particularly if not secured on anything.

If banks started writing loans with no contact or payments for 6 months it would make their loan book one hell of a lot more risky.
Think how much could change in 6 months.

Imagine going to the board and saying, well 50% of the loans we gave out this year might already be in default - we just don't know!
8% (1/12) at risk is a lot more acceptable!

That's why the payday guys offer weekly payments. They trust their customers even less!
Good explanation.

It's why most loans of the type - bridging loans - are secured, presumably.

FrankAbagnale

1,700 posts

111 months

Tuesday 20th January 2015
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Make sure to let us know what you buy!

Good Luck.

jeff m2

2,060 posts

150 months

Tuesday 20th January 2015
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line of credit.

Very flexible, you would need to "overborrow" to cover your six monthly payments (possibly seven) but the repayment requirements (on mine)are quite low.

I would advise to get more than you need and keep it open, it can be a great source of instant cash. Interest is only due of drawn amount.

I use mine as an alternative to keeping six months money in cash. There if I need it!!!!

3.75%

Eleven

26,271 posts

221 months

Tuesday 20th January 2015
quotequote all
jeff m2 said:
line of credit.

Very flexible, you would need to "overborrow" to cover your six monthly payments (possibly seven) but the repayment requirements (on mine)are quite low.

I would advise to get more than you need and keep it open, it can be a great source of instant cash. Interest is only due of drawn amount.

I use mine as an alternative to keeping six months money in cash. There if I need it!!!!

3.75%
Out of interest, how much is your facility and who provides it?

jeff m2

2,060 posts

150 months

Wednesday 21st January 2015
quotequote all
Eleven said:
jeff m2 said:
line of credit.

Very flexible, you would need to "overborrow" to cover your six monthly payments (possibly seven) but the repayment requirements (on mine)are quite low.

I would advise to get more than you need and keep it open, it can be a great source of instant cash. Interest is only due of drawn amount.

I use mine as an alternative to keeping six months money in cash. There if I need it!!!!

3.75%
Out of interest, how much is your facility and who provides it?
100K plus, TD Bank (Formally Toronto Dominion) I'm in the States, but I'm sure a UK bank may offer similar.
You could try Metro Bank (Vernon Hill) they have, I believe quite an aggressive attitude to new business.

Johnny G Pipe

Original Poster:

267 posts

227 months

Wednesday 21st January 2015
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Thanks for the tips, especially the tesco deal - I'm off to check if there is a repayment penalty.

Line of credit doesn't sound familiar in blighty..will have a google though.

walm said:
Just to answer one question OP.
The reason these loans don't really exist is because the bank needs to know very quickly if you are getting into financial strife and more likely to default etc.
Yes! I kind of ended up realising this. I might sound like I am taking big risks and unable to resist an 'unmissable' opportunity, but I am actually reasonably sensible and like I said have back up if I get in the sh*t. Like selling my 996 Turbo. But borrow-now-pay-back in 6 months is probably too tempting to many people's human nature, and would snag endless dreaming optimists who's big plans fall though. Not like me, no, really smile

Annoyingly the seller of the car won't take credit cards. I am liking the idea of a big long term tesco loan and then stoozing (get me, with the financial lingo) on an interest free credit card to overpay it in the short term, and then paying it off completely when my ship comes in, sorry I mean when the property sells. Hmm..

jimi

521 posts

262 months

Monday 26th January 2015
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If you *must* have the rare £20k classic, why not sell the 911 Turbo to pay for it clean and then in 6 months when you have the property cash in the bank go out and buy a replacement 911 Turbo!?

Zero risk option and no record of financial transactions to potentially damage your credit rating.