Borrowing money – what would you do?

Just looking at taking out a small loan in order that I can treat my wife to something very special (10th wedding anniversary + 40th birthday coming up). I did have the funds in place until last autumn when we decided on the spur of the moment to do a kitchen modernisation (I couldn’t tell her then why I didn’t want her to touch the £5k I had put to one side).

So anyway – I just looked at HSBC and I can get a £5k loan and pay back £800 in fees (6.6%APR) or a £7k loan and only pay back £550 (3.3%APR) over the same term. (The 3.3%APR offer only kicks in at £7k)

The extra £2k would then come in useful to buy the log burner we want – thoughts please.

Not being especially good with finance, I have nothing else to add.

[Not my log burner, btw. I don’t have a picture of mine readily available.]

I’d get an interest free credit card and pay £0

If you can afford the repayments and are happy to borrow the cash then just do it – plenty on here will be happy to tell you otherwise tho.

Personally – I’d speak to the wife, not the crowds

Btw – she says get the 7k

I’d get an interest free credit card and pay £0

There is that, I am just worried that I would then be tempted to use it for other things (and we currently already have one 0% card used for the kitchen work – currently being paid off by DD to ensure it is at zero when the term expires).

Is that a cat in the log burner? Probably easier than actually burning logs!

It’s a Cat o lick it converter to deal with all the hot air

Taxi for Fasthaggis

In view of the disappointing valentines you had, I’d suggest a value anniversary card from Tesco and spunking the other £6999.50 on… (what else)

Make sure you look at other lenders too, I found much better rates with the peer to peer lenders like Zopla and RateSetter.

Take her into the kitchen and say…

“Happy cooker darling!”

Okay, just so I’m straight – you’re planning on spending £5k on something for your wife – that’s set in stone so to speak?

So thanks to a quirk in the way they peg their rates it’s technically cheaper to borrow more.

Reverse engineering your figures I assume you’ve gone for a 5 year term?

Rough figures?

So £5k at 6.6% APR is £98 a month and costs you £883 in interest?
£7k at 3.3% APR is £126.72 a month and costs you £602 in interest?

If the repayments are ‘no big thing’ why not borrow the £5k over 3.5 years? It will still cost you the lower figure of £600ish in interest and £133ish a month and you’ll be free of it 18 months sooner?

I’ve spent the last 5 years reducing my outgoings because I was totally fed up with paying out hundreds every month for stuff I either no longer had or cared about – I wouldn’t borrow money for the sake of it, however very ‘clever’ it seems.

If you want to go all MSE about it, borrow the extra £2000, leave in in an decent savings product for 3 years and use it to settle the loan early – save you more again.

“Happy cooker darling!”

Not a hope. The cooker is my domain!

Yup, interest-free credit card. Spend the money, cut the card up and then set up a standing order to get it all paid off before the due date. We’ve done it for cars twice and the new kitchen.

Thanks for the feedback P-Jay – certainly worth considering that.

However

If you want to go all MSE about it, borrow the extra £2000, leave in in an decent savings product for 3 years and use it to settle the loan early – save you more again.

If I replay early I won’t get the 10% cashback on the interest that I get as I am currently a HSBC Advance account holder.

But certainly your argument does have a valid point.

Bloody hell – It’s our 10th aniversary and wife’s 40th this year. Maybe I shoud re-assess my present ideas !

In view of the disappointing valentines you had, I’d suggest a value anniversary card from Tesco and spunking the other £6999.50 on… (what else)

Haha yes good point – however she *is* having a tough year so I wont dwell on that and would rather she gets something to make her smile – she does deserve it really.

Bloody hell – It’s our 10th aniversary and wife’s 40th this year. Maybe I shoud re-assess my present ideas !

To be honest, it is something I have wanted to do for a long, long time and she certainly won’t be expecting it, however I know she will love it so really want to spoil her.

(And I do, co-incidentally, have a bit of making up to do after leaving a browser window open of a certain MTB team sponsor open. Ahem).

Yup, interest-free credit card. Spend the money, cut the card up and then set up a standing order to get it all paid off before the due date. We’ve done it for cars twice and the new kitchen.

This. Just be disciplined, cut up the card, and don’t keep the details, you then can’t use it for anything else.

Borrow the £7k and immediately repay £2k of it. You end up with a £5k loan at the better rate. I did exactly this a few years ago when I needed £10k but it was a much lower rate to borrow £15k.

Haha yes good point – however she *is* having a tough year so I wont dwell on that and would rather she gets something to make her smile – she does deserve it really

Yes, I’m sure spending money you don’t have will cheer her up.

If I repay some early then I lose the 10% cashback on the interest – still a saving but not as much.

Perhaps a stupid question but would having two 0% credit cards negatively effect our credit rating more than one credit card and one loan?

(We currently have two credit cards – one is always paid in full at the end of the month, the other was used for home improvements and is being paid off, plus a mortgage – no other debts).

Yes, I’m sure spending money you don’t have will cheer her up.

I was wondering how long. As I said in the OP, I had the money but it somehow got diverted into home improvements and at the time I wanted to keep my exact plans for it a secret.

It’s my wife’s 50th and our 20th anniversary this year. I was going to offer to drive when we go for a meal at our favourite Beefeater. I will NOT be showing her this thread.

johndoh – Member

Perhaps a stupid question but would having two 0% credit cards negatively effect our credit rating more than one credit card and one loan?

(We currently have two credit cards – one is always paid in full at the end of the month, the other was used for home improvements and is being paid off, plus a mortgage – no other debts).

Yes/No/Maybe

Each credit provider calculates their own ‘score’ from raw data supplied by Credit Reference Agencies, their own data (which can include other companies within their group you may not know are linked History Your current level of income and expenditure Affordability and if it’s a secured lend asset value and future resale valueAsset Security .

How much of an onus is put in each bit of data is a closely guarded secret and they spend a huge amount of time and money creating their algorithmic underwriting systems.

So there is no real answer to your question, or at least not one answer and there’s no chance in hell any of the credit providers would tell you – and you’ll never, ever speak to anyone senior enough to know anyway.

If I were to make a guess though, I would say the loan has a slightly better effect on your creditworthiness – only because it’s a fixed amount – with a CC you may be given a limit in excess of your requirement – an underwriter will have to make an allowance that you might go mad one day, throw a middy and stick a new Ducati on your CC which will have an effect on your affordability score – more real world, when it comes to mortgages for a house move – people invariably end up with a few grand of extra debt post-move for furniture, DIY crap etc.

Cheers P-Jay.

Nice to get some constructive and helpful responses for once 🙂

And what you say kinda reflects what I was thinking – a relatively cheap loan felt like it might be the better option, especially as we’ll be looking to replace our current car in the next year or two (owned since new 9 years ago, beginning to show its age) and will probably need to borrow something against it.

Is that a cat in that log burner? 😯

You didn’t say there was a cashback incentive !

Anyway, I’ll change my answer, if you can put the £5k pressie on a card doing 0% on purchases for 2 years then that wins quite easily.

My wife and I both turned 50 in Feb and March 2015 we treated ourselves, me to a 3.5K bike my wife to a family trip to Berlin. We put most of it on a 0% CC and it’s now paid off so that was an approximate £6k spend (I bought some nice jewelry and a few UK trips as it is a big birthday). Borrowing is OK if you’re sure you can pay it back without it stressing you out IMHO.

😀 Well played Lefty.. looks like you spent £5k on your 50th and the other half got £1k 😆

Borrowing is OK if you’re sure you can pay it back without it stressing you out IMHO

I wouldn’t be stressing about paying it back and we also have a debt to HMRC about to be fully repaid soon (which is more than the monthly payment on this) so I will still be ‘up’ if you like.

There was one sensible, responsible post on this thread from a poster known to be clued up when it comes to money matters, where did it go?

Borrowing is OK if you’re sure you can pay it back without it stressing you out IMHO.

Fairly obviously but that is the main thing

I’ve spent the last 5 years reducing my outgoings because I was totally fed up with paying out hundreds every month for stuff I either no longer had or cared about – I wouldn’t borrow money for the sake of it, however very ‘clever’ it seems.

If you borrow money over 5 years then IMHO what you are saying is “this is important enough that in 5 years I’ll still be paying for it”. It may also mean that unless you income increases or these repayments are very minor to you the “its 5 years until I splurge again.”

I think you are saying its that’s important so then go ahead.

Oh and I assume you are confident that this present will make her smile. I can’t think of any present costing that much I would dare by my wife as a surprise

*havent read the above replies so may be going over old ground*

If it were me, I’d get a 0% credit card, buy the present, then cut up the card, removing temptation. Then pay off what I could each month.

Assuming there is no 0% finance offer on the thing that you are buying for her?

I have nothing to add other than Mrs Breadcrumb would not be happy if I took out a £5k loan to treat her.

How about Centre Parcs?

Yup I thought it was a cat too Rocketdog 😯 & yeah if my bloke thought taking out a loan to treat me was a good idea I’d be having words. The great stuff doesn’t cost mega bucks.

My wife would flip if I borrowed money to spend on something like this. Just seems crazy to me as well. What happens when the next thing comes along that you both deserve but can’t afford or the next unexpected bill comes in?

If the missus found out I’d spent £5k I didn’t have to buy her a present I’d be out on my arse.
Firstly because I’d spent £5k I didn’t have on mere fripperies,
and secondly because I must have done something…

She’s probably going to do her tits anyhow when she realises what you’ve spent.

Just make a heart out of balsa wood and give her a sex-free massage (whatever one of them is).