Loan out - redundancy - head off?

empirix

Hi Lads/Lassies,

In a bit of a bother here(kinda), basically i have a loan out and i have just been made redundant and i am wondering what to do.
My redundancy package will just about clear my loan with about 2k to spare, i have payment protection and what i was thinking of doing was just headn off for a year or two to OZ and surrounding areas as i am totally pissed off here.

I am in my late twenties and i will be headn off on my own(probably), i was just wondering if any people have advice or experienced anything like this.

Should i just say to the bank listen i have payment protection so stick it - how will this effect me long term etc, and just go.
Or do i stay and let my dream of travelling go and die with regret.

also is your late twenties too old to head off for a couple of years.

good advice appreciated

empirix

no financial/travel gurus here then :rolleyes:

Akula

never too old to go travelling.

As regards the loan. I think it depends on the terms of your payment protection. You pay it for a reason. Basically what you need to find out is whether if you default you get reported to a credit ratings agency. If the individual bank just don't like you I'm guessing its not the end of the world.

If you get on a credit blacklist then you could be in trouble in terms of ever getting a mortgage or even a mobile phone. You may not want to walk in and ask yourself, so ask a mate to go in and inquire about a loan and ask about the terms and conditions of payment protection as an option.

jay567

I cant advise u on the finance side of things, but as a late 20s man myself wanting to travel. Id say go for it, the feeling aint going to leave u, and it will be hard to travel after 30, or harder anyway than late 20s.

look at this as a perfect opertunity to go for it

empirix

Yeah - the bad credit rating is what i'm worried about and travelling alone makes me uneasy although i done it before but not in countries like Thailand etc.

decisions decisions!

grumpytrousers

Akula wrote:

never too old to go travelling.

As regards the loan. I think it depends on the terms of your payment protection. You pay it for a reason. Basically what you need to find out is whether if you default you get reported to a credit ratings agency. If the individual bank just don't like you I'm guessing its not the end of the world.

If you get on a credit blacklist then you could be in trouble in terms of ever getting a mortgage or even a mobile phone. You may not want to walk in and ask yourself, so ask a mate to go in and inquire about a loan and ask about the terms and conditions of payment protection as an option.

aye - be v careful in telling the bank to get knotted regarding payback of the loan. AFAIK the idea of the payment protection *is* to guard you should redundancy befall you, but I'd think that the assumption the bank would make is that you would, presumably, continue to look for work and start re-paying as soon as you are able. If they think you're playing silly buggers and have a word with the credit referral agencies, you'll have one hell of a struggle on your hands once you get your sun-tanned ass back to these shores

The idea of getting a pal to find out is a good 'un...and also bear in mind, if you're the kind of person whose easily employable (and thus a 'good risk) the bank might be only too happy to string out the terms of your loan on the grounds that they'd keep your business. i.e. no mysterious disappearing act required!

Victor

The payment protection is likely to only cover the interest on the loan, not the principle.

Buggering off to Oz with an outstanding laon won't make the bank happy.

Sleipnir

You can't just run empirix, I know it's tempting but it's just not a good idea.

If you decide in ten years that you want to buy a house (and you probably will want to) you will find it nearly impossible to do so.

Akula

Grumpy is right. The payment protection usually doesn't allow you to write the loan off full stop. You could make the case to them that you want to take a payment holiday. Go to oz while the jobs market is poor here and then come back in a year or two when its picked up.

jayok

Just a note to throw a spanner in the works...

The Irish Credit Bureau can only keep records on you for 5 years! So if you are looking for a loan in 10 years.... :cool: Incidentally you can actually get your credit rating from them for €6.35. They don't like doing it, but have to under Data Protection Act.

It's never good to default on loans and you will have to pay the principal back, at some stage. Also most payment protection only lasts 6 months!

Check the T&C's

What would I do? Clear the loan, take the 2K and feck off for a while.

JayoK

shoegirl

jayok wrote:

The Irish Credit Bureau can only keep records on you for 5 years! So if you are looking for a loan in 10 years.... :cool:

WRONG!!! Bigtime!

The 5 year rule only applies to loans or credit that is cleared in full. The records on the credit is deleted 5 years after the last payment on the loan. This means that if you do not clear it, technically the record can remain on your record for all eternity - which may stymie your chances of ever getting simple credit terms - like hire purchases or car finance.

Firstly don't even think of not paying the loan, unless you can live without the following:
1. Credit card
2. Overdraft
3. Mortgage
4. bank loans
5. Car finances - in other words you will have to pay for the full amount of any car you purchase yourself, which for most people, will mean getting the bus for a long, long time
6. Hire purchase or credit deals
7. Any kind of bill that requires credit, i.e. mobile phones, opening a new current account (or possibly any kind of account)

Also you may be refused credit on utilities and may have to pay a substantial deposit of up to 200 euro to get connected to Gas or ESB - thats if they will accept you as a customer. Some landlords who use agencies may also check your credit rating, so you might even find it preventing you from getting a flat to rent. With security becoming more important in the future it might even prevent you from certain jobs (in the UK for example you cannot get security clearance if you have a bad credit rating).

If all this is ok for you to live with - fine, go ahead and default on the loan. But take it from somebody with a poor credit history - it has an ENORMOUS impact on your life and can make things that were simple problematic (for example, being unable to get a mobile phone on a bill or living without credit facilities). This might sound trite, but a foolish decision like this right now can have horrific repercussions on your life. Its simply awful when normal channels of credit are closed to you altogether. You really have to think this over carefully and work out the best course of action.

As for your payment protection insurance you need to read the details carefully. If your redundancy was compulsory you should have no problems.

However, if you took a voltuntary redundancy forget PPI because in most cases you must be made involuntarily redundant in order to claim it.

If thats not possible I'd suggest to put a small bit extra off your loan for the next few months while you have the cash, and work out a system for transferring cash for payments to your Irish bank account. 2k is pretty small, and an extra 50 a month should make it easier later on.

jayok

WRONG!!! Bigtime!

So that's why I can't get a loan???!!!

Cuauhtemoc

You could always just refinance the loan over a much longer period(without payment protection - which as far as i can see is worth sweet fa to you and not having it reduces your loan repayments)
Once thats done just leave enough in your a/c to cover the repayments for a year. 2 could be stretching it leaving you short for your trip.

Also if you planned to work over in oz or wherever you could send money back for the loan as well.

Payment protection mainly seems to be a money spinner for the banks/credit card companies.

Can anyone confirm that if you end up having to use payment protection it can affect your credit rating anyway???

I was told that by someone but not sure if it's true or not.

shoegirl

jayok wrote:

So that's why I can't get a loan???!!!

Possibly!

But they also only keep the details on the last 24 payments, so if you default before the last 24, then the details are not displayed, only that you didn't keep fully within the terms, but ended up clearing in full. Basically this means that your last 2 years payments are kept for 5 years - which can mean up to 7 years before your record is "clean." They also "rate" your payments - for example "1" means you kept fully within the terms and so on.

If you simply stop paying a loan it will count every payment missed as a default. So if you stop paying 6 months before the end but pay a lump sum you'll be counted as having missed 5 months - which is kept on your record.

Credit cards are slightly different - an extra 30 days is given before defaults are recorded. They used to only be marked on your record when they were revoked. Credit Unions are expected to join the list of institutions giving info to the agencies soon.

There is no such thing as a blacklist by the way, however missing payments or defaulting altogether lowers your chances of getting a loan in future. However lenders take other things into account such as income, job security, home ownership and existing commitments. With risk pricing coming in, it will get easier to get loans if you have a history of late/missed payments, but at a higher rate.

jay567

In relation to ur travels, best mate is just back from Cambodia/thailand, he went solo. Not the international man of mystery kinda dude, was v nervous going. Came back and said he would do it again without a thought, no worries at all and found traveling alone to be a bonus, u can go/do what u want when u want. Loads of ppl to hang with at night, and ur a mystery cause ur traveling alone.

empirix

thanks for the info lads - still not sure what to do, really itching to go - kinda want somebody to go with, all my mates cant at the moment due to genuine various reasons(what luck i'm having), think i'll probably go for it at the end of september - i'll make a deal with the bank man regarding the loan etc.
Anyways thanks again

hey if anybody here is lookn to head off soon, give us a shout