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AIBU or are Nationwide? Why won't they lend DS 18 5k?

(72 Posts)
phonemelater Thu 06-Dec-12 20:04:54

DS is 18 and has been in his job for 3 months. He earns more than me £17k and his position is secure.

He lives at home with me and his only interest is sport. He wants to buy a very expensive piece of sports equipment and made a loan request to Nationwide.

He was declined as his credit check showed he didn't meet the criteria. He's 18 and has no credit history, which I presume is the problem. I'd like him to save for the equipment but he wants it now and I think fair enough, its his money. Loan sharks Money lending sites will lend him the money, but I've steered him away from these towards his bank, and now they've said 'no'. Are Nationwide BU? Who might lend to DS?

Sirzy Thu 06-Dec-12 20:06:37

If he is living at home and earning a decent wage then he should save for what he wants not get into debt for a hobby.

Filibear Thu 06-Dec-12 20:07:00

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Filibear Thu 06-Dec-12 20:07:44

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StickEmUp Thu 06-Dec-12 20:07:46

I don't think they are BU. Banks have stopped lending so much due to the shit its got the country in.
Thats not to say your son will default on payments, but i guess statistically he is high risk.

whattodoo Thu 06-Dec-12 20:08:55

That's a pretty hefty loan to take out having only earned about 4k in his whole working life. He hasn't yet built up enough (any) history to demonstrate he is a responsible borrower.

I certainly wouldn't be encouraging an 18 year with a 'secure' job that he has only been in for 3 months to take out a 5k loan

If he lives at home and earns 17k then it won't take him long to save up

What lesson are you teaching him by encouraging him to take a loan ?
What would happen in 12 months time if he is made redundant ?
Or he becomes ill and can't work ?

FamiliesShareGerms Thu 06-Dec-12 20:10:38

They won't lend DS £18k because it's more than his annual salary for a job that he has only been doing for 3 months. Lack of credit history also doesn't help, but they really aren't BU

What on earth is the expensive sporting kit?!

MsElleTow Thu 06-Dec-12 20:11:02

I wouldn't want my 18 y o DS to take out a loan TBH!

One of DS1's friends has taken out a £3.5k loan for a car. He took it out the day after his 18th birthday 3 months ago, he already regrets it.

If DS1 wants something, we encourage him to save for it.

ceeveebee Thu 06-Dec-12 20:11:30

So he wants a loan representing more than his annual income? They are NBU to refuse that. YABU to support him getting into debt.
And it's not his money, it's the banks.
If you feel he's a good credit risk, why don't you take a loan and he can pay you each month?

StickEmUp Thu 06-Dec-12 20:11:52

Redundancy and illness are what ppi is for.
Its not for sacking and stuff, but official redundancy and severe illness are usually covered.

LRDtheFeministDude Thu 06-Dec-12 20:12:01

5k?!

Fuck me.

I don't know anything about banks but my instinct is they'd have to have a bloody good reason to lend him that much on his salary - it'd take him ages to pay back!

If it makes him feel better they won't even give DH a credit card and he's on 22k with a perfectly good credit history, and they'll only lent me 750 quid off minimum wage. I don't get how you'd get 18k off his earnings. confused

mrscrimbobash Thu 06-Dec-12 20:12:04

Lol 18 yo's aren't exactly a sound risk. Sounds like Nationwide have their heads screwed on correctly in this case

Cozy9 Thu 06-Dec-12 20:12:25

What piece of sporting equipment costst 18k?

Gingerodgers Thu 06-Dec-12 20:12:50

I think you are being irresponsible encouraging to get into debt so early in his working life. 18.5k is a hell of a lot to spend on one item for a hobby, even for someone who has much more cash available, they wouldn't make a purchase like that without serious thought.

GordonsAlive Thu 06-Dec-12 20:14:13

He needs a credit history. He could get a credit card (and use it wisely, paying it off every month) this will start off a credit history.

ElsieMc Thu 06-Dec-12 20:14:16

Times are hard. I was refused a £500 extension on my Nationwide Credit Card with no reason given. I was going to buy a new kitchen and wanted the protection they advertise to sell their own card! I only have 15% of my house value on mortgage (with them) and have reasonable savings. No doubt next week they will try and sell me some product or another, but obviously I am not in a position to afford it!

I have heard of others being turned down recently by them as well, not young people but middle income earners. They have always been a conservative lender and are now even more stringent in their approach.

uggmum Thu 06-Dec-12 20:14:36

Banks are more cautious these days. An unsecured loan of £5k for an 18 year old who has only been working for 3 months is high risk lending. That is why he has been declined.

AnyFuckerForAMincePie Thu 06-Dec-12 20:15:25

What happened to good ole fashioned "saving up" ?

YANBU

And teaching your dc to want what they cannot have hmm

if you said this was a car he needed to get to work, eg, then fair enough

an expensive bit of kit for a hobby?...it would be a poor bank manager that loaned an 18yo in his situation this kind of money

I bank with nationwide...and I agree with their decision

Narked Thu 06-Dec-12 20:15:26

He wants £5k earns £17k pa and is 18. For those who can't read hmm

Is there any scheme that would allow him to rent the equipment with an option to buy IYSWIM? Where he pays x amount a month and after eg 18 months can pay the outstanding amount and become full owner?

HECTheHallsWithRowsAndFolly Thu 06-Dec-12 20:15:45

I think he is 18 and wants to borrow 5 thousand.

That's the way I read it anyway grin

And he needs to build up his credit rating. Show lenders that he pays money back!

Get him a contract phone in his name. Have him have some bills in his name that he pays on time every month.

don't just throw him in at the deep end with a five grand loan!

And I want it now now now is a very immature attitude and precisely the reason people drown in unmanageable debt.

There is a lot to be said for living within your means and SAVING for things!

NotALondoner Thu 06-Dec-12 20:16:28

He wants 5k, NOT 18k.

Tell him to save up. I would not take a loan like that on that wage, it would be madness to allow an 18 yr old to do it.

I think the DS is 18 and the loan would be 5K.

"he wants it now and I think fair enough, its his money" - well no it isn't his money. That's the problem! Its the bank's money and they don't want to take a risk on lending it to someone who has only been earning for such a short time.

BackforGood Thu 06-Dec-12 20:17:57

I presume he is bringing home around £950 a month ?
Presumably you are not charging him hugely high rates for rent / housekeeping, so why not encourage him to be putting away a few hundred a month and save up for it ? Won't take that long, and will be a LOT cheaper for him in the long run than paying interest on a loan.... show him the difference in total cost.
It's the 'instant gratification / borrowing for things that are 'wants' rather than 'needs' that has got the major world economies into such trouble.

Gintonic Thu 06-Dec-12 20:18:30

YABU - your son could quit his job or be made redundant and the bank would have no way of getting the money back. If the loan was for a car to get to work I would've been on his side, but why take on debt like that for sports equipment?

AnyFuckerForAMincePie Thu 06-Dec-12 20:19:16

oops, I meant YABU in my post, hope it was clear

bamboostalks Thu 06-Dec-12 20:20:22

You were rude there narked
No reputable lender is going to lend your son £5k for a depreciating piece of kit for a hobby. Just tell him to save.

ceeveebee Thu 06-Dec-12 20:22:45

Ah. Thread title looks like £18.5k
Anyway he should still save up, won't take him too long

Whoknowswhocares Thu 06-Dec-12 20:22:56

Yab massively unreasonable and should be thanking Nationwide for their sense in saving your son from a stupid mistake

I'm sorry but the attitude that 'its his money' is more than a bit ironic isn't it? It isn't his, it's the banks and quite rightly they dont want to lend it to an untried teenager with no security! Can't say I blame them

mercibucket Thu 06-Dec-12 20:23:21

Nationwide have always been cautious lenders. Coincidentally they did not get caught up in banking fiasco!
He could approach another lender but I would not be encouraging my 18 year old to take out a loan that size
You could offer to be a guarantor?

mercibucket Thu 06-Dec-12 20:23:21

Nationwide have always been cautious lenders. Coincidentally they did not get caught up in banking fiasco!
He could approach another lender but I would not be encouraging my 18 year old to take out a loan that size
You could offer to be a guarantor?

KrisMoose Thu 06-Dec-12 20:24:23

YABU

3 months is a fart on a shitting contest

You should be teaching him to save, not splurge

Nationwide would be vilified if they loaned a chunk of money to a teenager with 3months work experience.

AnyFuckerForAMincePie Thu 06-Dec-12 20:24:28

merci...ffs, can you stop your phone from double posting ? grin

phonemelater Thu 06-Dec-12 20:25:53

Hang on, hang on.

DS is 18. He wants to borrow 5k.

Apologies for the confusion blush

LRDtheFeministDude Thu 06-Dec-12 20:26:35

Sorry, narked, but 5k is still a heck of a lot. It is more than he's earned in the 3 months he's been working.

PickledInAPearTree Thu 06-Dec-12 20:27:57

I think he really should save for it. Only been in job three months, only 18.

He should be able to have it within a year.

I have debts hanging around my head which all started at that age. They snowball and loans get extended and added to and jobs get lost.

If he wants a credit rating he can get a credit card and use it once a month and always repay in full, contract phone etc.

KrisMoose Thu 06-Dec-12 20:28:15

My reply was for the correct sums, fwiw. Not confused here (for once)

Pooka Thu 06-Dec-12 20:29:47

He has only been working for 3 months.

Not even got past a year - could be dismissed summarily and have no recourse.

No credit rating.

I think you should be thanking the bank for their caution.

Pooka Thu 06-Dec-12 20:31:35

It's a hell of a debt to have at 18. Does be have any plans to move out in future? Would be much more financially viable if he didn't have debt repayments hanging over him.

Boggler Thu 06-Dec-12 20:33:22

Yabu No jobs secure after 3 months, he's still in his probationary period and can be sacked if he doesn't come up to scratch. I think taking out a loan at current interest rates would be foolhardy and something he would probably regret in a few months once the novelty of the new thing has worn off. If he's earning £17k he could save the £5k he needs in a few months as presumably living at home is saving him loads.

Fairylea Thu 06-Dec-12 20:34:18

Is any position secure these days?!?! Hmmm.

I don't think getting 5k into debt at 18 is a good idea at all. Could be a recipe for disaster .... and for a hobby!! Not even a house deposit!

If he is very very desperate he could look into a 0% credit card and apply for a higher credit limit... but I feel in 5 years time he might be looking at paying back 15k and not 5k if he carries on spending like this.

Spoken as someone who was once 26k in debt on accumulated crap. It's not good. At all.

lovestotravel Thu 06-Dec-12 20:35:36

I think the bank are right - he's not been working long and he's on a low wage. Getting into debt so young isn't a great idea, especially for something non- essential. I.e. if he 'needed' a car to get to work then I could maybe understand him wanting to bu now rather than save.

FredFredGeorge Thu 06-Dec-12 20:35:41

If you're so confident in his ability to repay - take out the loan yourself.

IfYouCanMoveItItsNotBroken Thu 06-Dec-12 20:36:20

How secure is his position? If you begin a job and are sacked in the first 2 years you can't bring an employer to tribunal unlessthey have been discriminatory - they can effectively sack you for nothing, so jobs aren't necessarily "secure". Maybe the bank are wary of this and the short amount of time he's been working. Having no credit means he has never proved that he can repay his debts so, again, get his credit rating going by taking phone contract etc. Maybe a credit union would lend him?

It's a slippery slope if he's only 3 months into a job, 18 and looking for a £5k loan? And they wonder why the economy is on its knees! What happens if it gets stolen or damaged and he's left paying 8k back for nothing! Debt is a horrible situation to be in, how can you guarantee it won't affect him? Only recently a boy killed himself because of an overdraft and I know I'm been in some pretty dark places because of our debt. Nationwide are actually being realistic. Teach him to save!

Alibabaandthe40nappies Thu 06-Dec-12 20:36:54

YABU

As others have said, it isn't his money!

It will take him 8-9 months to save up if he is careful.

KatzGold Thu 06-Dec-12 20:38:04

Nope, i think Nationwide have done the right thing, at 18 £5K of debt for a hobby item is crazy, plus how much on top would he end up paying in interest? He's best saving like stink for 18months and then buying it.

Dawndonna Thu 06-Dec-12 20:39:26

As the Mum of a bank manager, said bank manager says no way until he's been in the same employment for at least two years. He quite reasonably pointed out that there are not that many reliable jobs or 18 year olds.
He has suggested that he save and perhaps take a smaller loan when he has worked for a bit longer and saved for a bit longer.

StickEmWithThePointyEnd Thu 06-Dec-12 20:39:30

He has no credit history so they won't lend him anything. It's as simple as that really.

He needs a contract phone and a basic credit card to put normal spends on (with a direct debit to pay the full balance each month so no interest) to build his credit history up.

And while he is doing that he can save the 5k so no need for a loan anyway.

NumericalMum Thu 06-Dec-12 20:40:35

YABU! Could he buy it second hand, loan it or just save for a few months!
I hope I teach my DD to save before she is 18 and working...

Viviennemary Thu 06-Dec-12 20:40:50

I think Nationwide are absolutely right to refuse this amount of credit to an 18 year old. And if I was his mother I'd be discouraging him from taking out this huge amount as a loan. I see it's £5,000 and not £18,500. I still think he's too young for this loan and should save up half the amount and then apply again.

noblegiraffe Thu 06-Dec-12 20:50:14

Getting credit for trivial reasons (like a piece of sports equipment) has got an awful lot of people in this country into trouble.

If he wants it, he'll find a way to pay for it. Regularly saving some of his hard earned cash will be a good habit to get into.

Taking out credit the minute he wants something he can't afford would be a bad habit to get into.

McChristmasPants2012 Thu 06-Dec-12 20:53:02

hang on many students get themselves in this sort of debt with high hopes of getting a career at the end, but nobody would say to an 18 year If you want to go to uni then start saving.

i had a loan at that age, wish i didn't start loans ect but not every one is as reckless with money as i am

whois Thu 06-Dec-12 20:57:10

Living at home he can save that up in 6 months.

The bank are not being U

NatashaBee Thu 06-Dec-12 20:59:26

YABU. It would be the start of a slippery slope... he needs to learn to manage and save for things without credit. I speak from experience, I wish I had never been allowed a credit card.

If an 18 year old came to you with similar circumstances and asked to borrow that amount, would you lend it to them? thought not.

FamiliesShareGerms Thu 06-Dec-12 20:59:42

Misleading title, I see now it's £5k for the loan

The fact that it's a large amount of money for an 18 year old to borrow for something non-essential hasn't changed, though. If he wants it, he needs to save for it

noblegiraffe Thu 06-Dec-12 20:59:43

Student loans are financially a very different kettle of fish. Also, a university education is seen as an investment. A piece of sports kit, not so much.

OutragedAtThePriceOfFreddos Thu 06-Dec-12 21:06:18

Why on earth would you encourage your 18yo to borrow that much money for something frivolous?

Is this a sport that he could eventually make money out of as an instructor? Is it a sport he has been doing for a while using club kit? Is he actually any good at it?

I don't think Nationwide are being unreasonable, but without the answers to those questions I can't tell if you are.

Several people have said "If he wanted it for a car to get to work that might be different" - I'd say a car or a student loan are an investment, which a leisure activity is not.

He'd really be better off saving towards it, as the money will then be earning interest in his savings account instead of costing him interest on a loan - so it will be completely his much sooner that way round. I know that requires patience, but learning that is an important part of growing up.

If he wants to have the option of taking out loans, then as others have said getting a good credit history is something he can work at, with regularly-paid bills in his name, and perhaps a credit card with a low limit which he pays off every month. Once they see he can be sensible with money, there will be more options on credit. but he should still think seriously about whether it's the best choice, not just because he wants everything now.

Whoknowswhocares Thu 06-Dec-12 21:11:55

My motto is simple. You should never take credit for something you 'want'. If you 'need' it and can afford it then maybe, but only over the shortest time possible and not if you can make do until you have saved the money

Ergo him 'wanting' the thingy for a (obv non essential) hobby = no!
Open him a savings account.

Fairylea Thu 06-Dec-12 21:16:41

Also has he looked at second hand versions of what he wants??? EBay !

Viviennemary Thu 06-Dec-12 21:19:23

Agree that student loans are entirely different. For a start the repayments are taken directly from your salary after you earn a certain amount. So quite difficult to defect on them.

MrsHoarder Thu 06-Dec-12 21:20:27

Have you never discussed good and bad debt with him? So loans which are an investment in your future career, save on living expenses compared to the alternative etc are good debt. Still to be entered into with caution, but good debt.

Holidays, spending sprees, weddings, hobbies are bad debt: they cause you to have less money in the long run and getting into debt because you want something is how people end up in trouble.

If you aren't charging him much for housekeeping he could save £5k in under a year if he cuts leisure spending right down.

ErikNorseman Thu 06-Dec-12 21:20:58

That's a debt he'll be repaying for at least 5 years. Even if he could borrow it he would be mad to. The bank won't lend £5k to an 18yo with no credit history and quite rightly. FFS.

mercibucket Thu 06-Dec-12 21:23:19

Sorry to annoy, anyfucker. There's a thread about it somewhere on mumsnet. Some kind of incompatability between some blackberrys and the mumsnet app. It's the same thro the http as well. Don't worry tho, santa is bringing me a samsung tablet. The most annoying thing is the randomness. Sometimes it works and only posts once.

AnyFuckerForAMincePie Thu 06-Dec-12 21:23:40

where have you gone, OP ?

Fakebook Thu 06-Dec-12 21:26:21

If he's on 17k and lives at home, it will take him more or less 4-5 months to save up for what he wants if it costs 5k. He should already have about 3k saved up. What else is he spending his pay on?

DontmindifIdo Thu 06-Dec-12 21:28:52

OP- your DS has probably only just completed his probationary period, he wants to borrow a large sum as his first borrowing for something that they can't repossess and expect to get the bulk of the value back (as a car loan would).

Tell him to do 2 things, 1) save for it, and 2) get a credit card, but clear it every month - this will slowly build up a reliable credit history.

But in the short term,it's exciting when you first start working, make it clear he needs to save and be sensible with money, taking out a loan for a hobby thing so early on isn't being sensible. He needs to learn some money management fast.

OutragedAtThePriceOfFreddos Thu 06-Dec-12 21:31:15

I really want to know what this hobby is! OP please come back smile

There is a chance it could be a piece of sports equipment that may help increase future earning potential. I can imagine that being a reasonable possibility in the hobby that I have on £5k.

HoratiaLovesBabyJesus Thu 06-Dec-12 21:33:08

DH borrowed a similar sum from Nationwide for sports equipment (is he a rower, OP?) and deeply regrets it still. He was paying it off for what felt like a hundred years, and had sold the equipment less than halfway through the loan, at a loss. He was 23, was earning more like £24k, and had a solid credit history, so was a rather better bet.

I think Nationwide have been sensible. There must be some other way DS can practise his sport; and if there isn't, he can't afford that sport just at the moment.

fluffypillow Thu 06-Dec-12 21:35:17

I wouldn't be encouraging an 18 yr old to get into this sort of debt for something he really could wait and save for. There is an important life lesson to be learned here by your Son.
Take the opportunity to make him understand the importance of earning his money BEFORE spending it. All you are doing is encouraging him to get into financial trouble in the future, why would you do that?

YABVU to complain about the bank, you should be praising them for doing your Son a favour.

Credit union seem to be the only people lending here. He may have to save with them for a few months first though.

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