Loan - Friend Is Looking For $6,000 - Where / How?

[DaVibe]

So I have a friend who's developing his credit (1 credit card, low limit, no line of credit with a bank b/c of a bad credit history as a kid) who's making payments towards a condo in development. He doesn't want to fall behind on another payment that's due so he's looking for $6,000 for some assistance, likely as soon as possible (this week).

As shady as this sounds already, it's actually fairly simple. He's a single guy, actually a TDSB teacher and he works another job (where I work) for extra income. He's purchased a condo that most families would attempt to purchase (a little over budget) so he's doing what he can to eventually live in it (being built).

He's looking for some place or someone to get the loan from. He suggested to me that he'd pay 25% interest on the entire $6,000, making $400 payments every 2 weeks and paying $60 (on top) as the interest payment (25%). (Works out to be 15-$400 payments).

With a payment plan in place, do you think there's any place or anyone that would help? Again, I know already it sounds nuts but I feel bad for the guy since he's a really great guy and HAS the money (obviously with 2 jobs) but just doesn't have that much RIGHT NOW.

Replies here or personal messages are fine if someone wants to step up and help this guy out (through me).

Thanks for the personal finance help, as always RFD. I love this section.

[adamtheman]

First of all, I don't think this post really belongs here... unless you can personally vouche for your friend (if he bails on the 6k, then you step up and cover him), which I don't think you can do since you would lend him the 6k yourself if you could, then I don't see how you can have the transaction "go through you".

Secondly, if he is willing to pay an absurd amount of interest, then why not a "payday loan" from Money Mart? 25% interest isn't that much, if he has it all paid back in 3 months, that's only a $375 profit. I can't see anyone willing to risk $6000 to someone with poor credit who is obviously strapped for cash, in order to possibly make $375.

I am sure you know this guy and he is sincere, but let's face it... he is broke, and he is trying to make payments on an over-priced condo, and from what you've told us, a bigger condo than he actually needs. Sounds like he didn't plan things out properly and if a bank won't give him a loan then I don't see why anyone on here would.

Plus, a bank should be able to give him a secured loan on a vehicle or something else. So assuming he can't get that, then I guess he has NO assets at all? So JUST TO GET THIS STRAIGHT, he's a young kid, poor credit history, NO assets, and he has gotten himself into a HUGE condo debt....... anyone who gives this guy money DESERVES to lose it. I learned a LONG TIME AGO that if a bank won't give a guy money, you shouldn't either. My guess is, even if he gets this $6000 loan, he will just need another $6000 loan in a few months, and eventually he will lose this condo and possibly end up bankrupt.

[Archanfel]

Just so you know, he is talking about close to 50% interest rather than 25%. If he is talking to a financial institution, he might want to correct that or they would think he had no intention of paying.

[DaVibe]

The only reason I'm not loaning him the money is I don't have $6,000 to toss around (as a student). We were talking about it at work (myself and another guy) and I told the 2 of them, I said I would NOT lend you (the other guy) the money while I WOULD lend the money to my friend ...

Again, I trust his character and he was more than willing to tell me how much he makes every 2 weeks ... again, he's working 2 jobs and one of them is an elementary school teacher here in Toronto, so his income is pretty regular.

I haven't dug into his financial past (but I could if I asked, he would tell) but I take it that he has bad credit. I just helped him get a credit card because his only option would be something secured. With some RFD suggestions, he was able to get a regular Capital One CC (low credit available).
He's in his late 20's, I think he's nearly 30 years of age, not exactly a "child" any longer.

And we've talked about someone (say me) actually vouching for him and co-signing on some sort of loan. Though I know nothing about co-signing and don't think it would have "No Effect" on me and MY credit score, therefore that's not a route I'm going to go down with my buddy.

I appreciate the questions though and the discussion thus far.

Edit: I'm not sure about Payday loans, my thoughts on them is the interest would be much higher than that, especially on a high amount. Plus, they advance you based on your cheque, not multiple cheques do they? I don't know, I'll ask him.

Edit2: My mistake, I think I've written it out wrong (because he was giving me dollar amounts, I was just trying to follow the whole thing). He was talking about paying 25% on the entire $6,000, regardless of when he pays it (less than 1 year ... talking 15 payments at $400 each).

[VivienM]

I haven't dug into his financial past (but I could if I asked, he would tell) but I take it that he has bad credit. I just helped him get a credit card because his only option would be something secured.
He's in his late 20's, I think he's nearly 30 years of age, not exactly a "child" any longer

How the hell did he get into that kind of mess?

And yes, I agree with the above posters: banks (at least Canadian ones - not so sure about U.S. ones these days) are professionals at assessing risks and lending money. If they won't lend money to somebody... beware.

[DaVibe]

How the hell did he get into that kind of mess?

And yes, I agree with the above posters: banks (at least Canadian ones - not so sure about U.S. ones these days) are professionals at assessing risks and lending money. If they won't lend money to somebody... beware.

His description is he bought a condo that a single person should not have bought. But, it's entirely sold out and the value has gone up already so he'd like to live in it for a short period of time and likely sell it.
However, as they're building, he has to make regular, several-thousand dollar payments.

And I believe he banks with TD and I'm not aware of any loan with them. My impression is because of the bad credit history. Not due to the lack of funds he has today.

[cmackie]

With these condo projects, you can expect delays after delays so he probably won't end up living in this place for quite some time. Get him to sell the place since it's in good demand, hope to break even or even make a modest profit and then buy a more reasonable place.

Or he can get serious with someone and get them to fork over the cash as an investment in 'their' future.

[DaVibe]

With these condo projects, you can expect delays after delays so he probably won't end up living in this place for quite some time. Get him to sell the place since it's in good demand, hope to break even or even make a modest profit and then buy a more reasonable place.

Or he can get serious with someone and get them to fork over the cash as an investment in 'their' future.

We were talking about that as well. It has to be up by a certain date or there's a rebate or some sort of compensation. Someone suggested that already but he was saying it's pretty much in the contract thus far.

Update: I asked him about the loan with the bank (if its possible). He said it's not possible because he basically has no credit history at this point.

[new_vr]

I think you don't loan friends/family money, you give it to them. If you wouldn't give them $6000, don't lend it to them. Trying to get it back could ruin your friendship. I mean, I would hope they pay it back if I lent someone money, but I wouldn't expect it.

[DaVibe]

Secondly, if he is willing to pay an absurd amount of interest, then why not a "payday loan" from Money Mart? 25% interest isn't that much, if he has it all paid back in 3 months, that's only a $375 profit. I can't see anyone willing to risk $6000 to someone with poor credit who is obviously strapped for cash, in order to possibly make $375.


He meant 25% of the entire $6,000, meaning a profit of $1,500.
Interest would be paid regularly, that's where the $400+$60 came from.
So he's willing to pay $7500 for $6000 basically.

[bilibulu]

I think you don't loan friends/family money, you give it to them. If you wouldn't give them $6000, don't lend it to them. Trying to get it back could ruin your friendship. I mean, I would hope they pay it back if I lent someone money, but I wouldn't expect it.

How can I become your friend? :razz:

Just kidding... But I totally agree with you.

This guy deserves it! He is just getting his deserved punishment for being a deadbeat. I for one won't sympathize. Why am I this uncompassionate? I was burnt by some clients who declared bankruptcy on me.

[spf1971]

He meant 25% of the entire $6,000, meaning a profit of $1,500.
Interest would be paid regularly, that's where the $400+$60 came from.
So he's willing to pay $7500 for $6000 basically.

You need to redo your math. 15 payments of $460 is $6900 not $7500.

[DaVibe]

How can I become your friend? :razz:

Just kidding... But I totally agree with you.

This guy deserves it! He is just getting his deserved punishment for being a deadbeat. I for one won't sympathize. Why am I this uncompassionate? I was burnt by some clients who declared bankruptcy on me.

So the fact that he's declaring $60-90 or more a year doesn't entitle him to ANYTHING? I mean, that's SOMETHING in his favour ...

Side Note: Just looked up "Payday Loans" ... they more less advance you based on one paycheque ... I don't see just simple advances/personal loans ...

[DaVibe]

You need to redo your math. 15 payments of $460 is $6900 not $7500.

That's fine. I imagine there would be a large payment in the end.
If anything, the amount would be adjusted if it needs to be.

The main thing here was a repayment of $400 a month, plus a little extra.

[spf1971]

That's fine. I imagine there would be a large payment in the end.
If anything, the amount would be adjusted if it needs to be.

The main thing here was a repayment of $400 a month, plus a little extra.

If you do lend your friend this money, get it all in writing. You said 25% but the numbers don't add up to 25%, in your first post it was a $460 every two weeks but now it's every month. These are the kinds of things that would cause problems. Have it all in writing so there is no doubt as to the terms of the loan.

[B0000rt]

Look, the bottom line is this:

If you don't want to be friends with him, lend him the money.

If you still want to be friends with him, make up an excuse that you don't have any money to lend him.

[DaVibe]

If you do lend your friend this money, get it all in writing. You said 25% but the numbers don't add up to 25%, in your first post it was a $460 every two weeks but now it's every month. These are the kinds of things that would cause problems. Have it all in writing so there is no doubt as to the terms of the loan.

Sorry, that's my fault. It's his writing (him telling me what he'd do) and me putting down what I remember. I screwed that up.
We get paid every 2 weeks, that's what a $400 payment is based on ...

Lets just say $500 every 2 weeks, for 15 weeks (15 payments = $7500 ... the total repayment for $1600).

Yes I agree, a contract would obviously have to be made.

[DaVibe]

Look, the bottom line is this:

If you don't want to be friends with him, lend him the money.

If you still want to be friends with him, make up an excuse that you don't have any money to lend him.

If I don't want to lend him the money (or can't), any idea as how to come across it?

I think more than anything, we're hoping that some rich business-like person here on RFD might want to jump in ;)

But in reality, we're looking for ideas. I told him I'd post it up because I'm a known member and the fact that we talk about RFD all the time.

[bilibulu]

So the fact that he's declaring $60-90 or more a year doesn't entitle him to ANYTHING? I mean, that's SOMETHING in his favour ...


No. A deadbeat is not trustworthy. I, for one, won't believe him.

He could promise anything he want but if he doesn't deliver, what can the lender do? He is already a deadbeat, what else does he have to lose, or what else can he lose?

[bilibulu]

I think more than anything, we're hoping that some rich business-like person here on RFD might want to jump in ;)


I am a business-like person and $6K doesn't seem to be a big sum for me.

But as I said, I really have a beef against deadbeats who declared bankruptcy. So I won't jump in.

Whoever thinks that he could lose $6K would not pitch in because he wants to make $1.5K because $1.5K is really nothing to him.

[DaVibe]

No. A deadbeat is not trustworthy. I, for one, won't believe him.

He could promise anything he want but if he doesn't deliver, what can the lender do? He is already a deadbeat, what else does he have to lose, or what else can he lose?

So you're talking about the fact that the bank won't lend him the money ...
Alright, fair enough.

I can't really say much more to that, I just don't see the situation as white and black as that unfortunately. He's already put a significant amount into the condo thus far and has the 2 jobs to rely on, so I don't think its AS BAD as it could be. We're not talking about making payment #1. We're talking about the 5th or 6th payment here.

[DaVibe]

I am a business-like person and $6K doesn't seem to be a big sum for me.

But as I said, I really have a beef against deadbeats who declared bankruptcy. So I won't jump in.

Whoever thinks that he could lose $6K would not pitch in because he wants to make $1.5K because $1.5K is really nothing to him.

He also suggested direct deposit as the method of payment. So that the portion ($400 or so) of the paycheque would go directly to the lender, not him.
And would the correct contract in writing, not cover anyone?

I just don't really see it as a "Loss" if you cover yourself first.

And we're also talking about a 6 month loan, so $1.5 would seem significant to me (imo)

[DaVibe]

I've been texting my buddy all along (as this thread keeps going) ...
He's like "I'm not a dead beat! ... Don't these people know I'm a professional" (as in a working professional now) ... I'm like YES, they know that ...

He said he's more than willing to sign contracts too, that's not a problem.

He says he has bad credit because he has no credit history. So maybe that side of things is not as bad as I thought.

[B0000rt]

Clearly he is not at all financially competent if he is willing to pay you 25% interest.

Do not feed his bad habits/choices by lending him more money.

[adamtheman]

Look, the bottom line is, these "Rich business investor" type people you speak of are rich for a reason - they don't lend out 6k to people with poor credit history. It's too big of a risk.

I will ask you again - does your friend have any assets? Does he drive a car? If so, he can get a SECURED loan from the bank, against his car. What about selling stuff?

Seriously, the fact that he is willing to pay 25% interest makes him look even worse! The only people who will voluntarily agree to pay 25% interest for a year are DESPERATE people, and you will find that banks don't deal with desperate people, they are too dangerous, and no one on these forums should either.

You need to listen to all the advice on these forums and tell this guy, flat out, straight up: "Sorry man, I tried my hardest, looks like you will need to find another way to get the money. I can't help you". That's IT. If you co-sign a loan for this guy you will end up wearing it. The other thing is, his money he has put into the condo so far could be considered an asset as well. If he owns the condo assignment and owes say 200k on it, and it's appraised at $250k, then he should be able to get a bank to give him something similiar to an advance mortgage.

Good luck... last post I'm going to make here.

[DaVibe]

He's going to be reading the thread later ... we were just talking about it over the phone ...

He does drive a car but I'm not sure if he's the sole owner, that's why I didn't touch that with a response. (Edit: I just checked with him, he has a car but its not under his name).

I appreciate the response. I just keep asking every which way because I'm trying to help a friend, that's all.

And on a side note, I think it's too big of a risk if you don't know the guy (or know about the guy). I guess that's the unfortunate situation he's in, since he has a steady job and the income to boot. Just not that much of his income readily available RIGHT NOW. I understand the raised flags though.

[bilibulu]

I've been texting my buddy all along (as this thread keeps going) ...
He's like "I'm not a dead beat! ... Don't these people know I'm a professional" (as in a working professional now) ... I'm like YES, they know that ...

He said he's more than willing to sign contracts too, that's not a problem.

He says he has bad credit because he has no credit history. So maybe that side of things is not as bad as I thought.

Sorry, having bad credit doesn't mean having no credit history.

If he simply has no credit history, that's easy. But if he has bad credit, then he IS a deadbeat. Signing a contract with a deadbeat means not signing any contract!

A professional can be a deadbeat too!

I think his "term" is borrowing $6K. Then he pays back $460 every two weeks for 15 payments, which is 30 weeks. Yes. This is roughly a 25% apr rate. But it is not $1.5K of interest, as you put it.

[Ziggy007]

I've been texting my buddy all along (as this thread keeps going) ...
He's like "I'm not a dead beat! ... Don't these people know I'm a professional" (as in a working professional now) ... I'm like YES, they know that ...

He said he's more than willing to sign contracts too, that's not a problem.

He says he has bad credit because he has no credit history. So maybe that side of things is not as bad as I thought.


It seems like his poor money management skills have been brought forward and he has learned nothing from his past.

He is already working at or near his maximum potential (teacher + whatever he does on the side with you) and still managed to overspend even those bounds.

How do you think he will be able to afford to pay any loan back once he has an overpriced mortage + monthly condo fees + property taxes?

If you think he is going to pay you back in this lifetime or ever, I am sure there is a bank somewhere in the states that could use a mortage risk analyst of your caliber :rolleyes:

Banks recognize his risk to default and declare bankruptcy because in Canada they are actually smart about this and don't just toss out money to people who make bad decisions. You can try to guide him but your friend has dug his own grave on this one

[NewBieDoobie]

Wow..."But if he has bad credit, then he IS a deadbeat"....Ouch!! Now that IS opening a can of worms right there...

[bembem]

What the heck is everyone arguing over?

OP doesn't have the money to lend.
Banks won't lend.
No stranger on the net would be stupid enough to lend.

Your friend bit off more than he could chew. It's time for him to cut his losses and grow up.

Tell your friend that even smart ppl make foolish financial decisions.

[DaVibe]

What the heck is everyone arguing over?

OP doesn't have the money to lend.
Banks won't lend.
No stranger on the net would be stupid enough to lend.

Your friend bit off more than he could chew. It's time for him to cut his losses and grow up.

Tell your friend that even smart ppl make foolish financial decisions.

Well, that's the point of this thread. To see if there IS someone or something somewhere that he can get this money from.

So I guess it's just unbelievable that someone might want to live in a brand new condominium and choose to make down payments ... one comes up that he's not ready for and he's looking for a loan to cover it while he makes up the money as quickly as possible.

Like that's not a possible scenario and he hasn't made "poor decisions"?

[jande9]

If your friend can't afford the condo right now, he can't. No shame in that. He should wait until he can afford it, like the rest of us do

But asking someone for a loan of $6G with absurd repayment terms, that is wierd.

Please don't fall for it.

And please stop hinting that you want someone here to lend the money.

[XShadowX]

Do not Do it...

If he's in the hole now, What makes you think when he spends the 6k that he will be out of the hole? Not to mention an EXTRA $800 bill on top of his Monthly budget?

If he can afford the extra $800 a month, Why would he need Lump sum of $6000?

Lending Money to anyone is a Big mistake, If you can afford to lose $6000, Be my guess.

Anyone that has Bad Credit= Dead beats

[advantage21]

Well, that's the point of this thread. To see if there IS someone or something somewhere that he can get this money from.

So I guess it's just unbelievable that someone might want to live in a brand new condominium and choose to make down payments ... one comes up that he's not ready for and he's looking for a loan to cover it while he makes up the money as quickly as possible.

Like that's not a possible scenario and he hasn't made "poor decisions"?

This is the scenario based on the facts as you presented:

You have someone with poor or no credit, over extending himself to buy real estate that is clearly out his price range. Now he is offering to pay an exorbitant rate of interest to secure a loan to try to keep up the payments with someone shilling this unscured "loan" as a good investment opportunity.

Sounds like a microcosm of what cause the worldwide recession we are seeing today. Have you learned your lesson? Do you still think you doing a good thing?

[jiepie]

So I have a friend who's developing his credit (1 credit card, low limit, no line of credit with a bank b/c of a bad credit history as a kid) who's making payments towards a condo in development. He doesn't want to fall behind on another payment that's due so he's looking for $6,000 for some assistance, likely as soon as possible (this week).

As shady as this sounds already, it's actually fairly simple. He's a single guy, actually a TDSB teacher and he works another job (where I work) for extra income. He's purchased a condo that most families would attempt to purchase (a little over budget) so he's doing what he can to eventually live in it (being built).

He's looking for some place or someone to get the loan from. He suggested to me that he'd pay 25% interest on the entire $6,000, making $400 payments every 2 weeks and paying $60 (on top) as the interest payment (25%). (Works out to be 15-$400 payments).

With a payment plan in place, do you think there's any place or anyone that would help? Again, I know already it sounds nuts but I feel bad for the guy since he's a really great guy and HAS the money (obviously with 2 jobs) but just doesn't have that much RIGHT NOW.

Replies here or personal messages are fine if someone wants to step up and help this guy out (through me).

Thanks for the personal finance help, as always RFD. I love this section.

dont lend him the money.

he is a teacher and he still doesn't have money? that tells me how badly he manages his money. good luck on trying to get the money back from him. he probably will spend his pay check on every thing else and repay you last.

paying you 25% interest just bring home the point he is an idiot financially. dont risk it man.

here is what he can do: borrow 1k from 6 family members. or 500$ from 12 family members and friends.
the amount is small so he does'nt have to pay interest! thats $1600 of saving for him.

if no one lend him 500$, then you as a friend shoudn't risk to lend him $6k

[tiger_handheld]

what is he willing to give up besides interest?

if he's willing to give me 25% , of his condo, and rights to sell if he defaults, in order to recoup my time, money and other related costs. i could see this happening.


the Deal:

6000 @ 25% , paid within 8 months.
+ power of attorney over his house.

If he defaults on the loan, house will be sold.
Proceeds (-) any cost directly related to selling of the house ,and recouping my money, and my time (=) his left over profits.



how many rfd'ers would take that deal.




if the guy is serious about making payments, he needs a better offer- like somethin above ...

[adamtheman]

I know I said I wouldn't post again, but one other thing to mention.... this guy obviously doesn't have ANY family or ANY friends to ask for the loan. That says a lot about his character. Sure, his parents could be broke (or gone), and he might not have any family, etc., but I am willing to bet the reason he doesn't have any friends/family willing to lend him money is because he has previously screwed up.

And don't fall for the "no credit" thing. Anyone with "no credit" and a decent job can get a simple credit card. Otherwise, how would anyone ever get a credit card? Use your brain. Here's an idea, have him go online and pay the $30 to get a credit report and let him show it to you... or do it together on the computer... then you can see what his credit history is all about.

You obviously fell for his tactics already by co-signing for a credit card. When I was a student I applied, with no credit, and got a CC. I know the guy isn't a bad guy, just had trouble managing money. I am sure right now he is thinking "If I can just pay for this condo, everything in my life will be perfect, I'll have lots of money". Poor guy is probably trying to prove everyone wrong.

Why can't he sell the condo assignment

[rommelrommel]

what is he willing to give up besides interest?

if he's willing to give me 25% , of his condo, and rights to sell if he defaults, in order to recoup my time, money and other related costs. i could see this happening.


the Deal:

6000 @ 25% , paid within 8 months.
+ power of attorney over his house.

If he defaults on the loan, house will be sold.
Proceeds (-) any cost directly related to selling of the house ,and recouping my money, and my time (=) his left over profits.



how many rfd'ers would take that deal.




if the guy is serious about making payments, he needs a better offer- like somethin above ...

I would do that, assuming the place actually has some equity in it.

[questrader]

It's not about whether you can recoup your money from him, or not. The real issue is... Will this guy still be your friend when things will have gone sour? Or rather, will you still view him as a friend after the Apocalypse, and will he you?

I overheard an elderly couple say to the cashier once that they have separate bank accounts b/c "money is no friend".

[stealth]

This isnt that unusual.
Short of charity from a friend or family, he has one other option...getting a mortgage broker to arrange a 2nd mortgage through a private lender. I've been on both sides of this arrangement...once a a borrower, and another time as a lender to a guy who needed some short term cash to float him through re-financing his gas station.
interest rates for a high risk guy like him, will be high...about 15-18%...and if he defaults, he'll lose his place by power of sale or foreclosure. no messing around.
But your friend has to smarten up. Nobody with self respect goes begging for a relatively small amount like 6k, other than kids, deadbeats, gamblers or junkies.

Income is irrelevant if his debt/spending/expenses exceeds it. You can be a millionairre and still be a deadbeat. Ask Jose Canseco. http://www.huffingtonpost.com/2008/05/02/joe-canseco-loses-home-to_n_99811.html

[squid]

A few points:

You start your first post claiming he made mistakes as a kid, thus a poor credit history, yet later say it's a case of having no history.

I believe you and this guy belong together as you plainly are dishonest too. Just state the facts and stick to them. Don't try and dupe us.

Yes I am saying he is, or was in the past, dishonest. Otherwise banks would be lining up to give him credit. No biggie. Everyone makes mistakes and can learn from them, but...

Finally, a down payment is money you save to build the collateral for a purchase. It is shameful that someone with such income should have such trouble coming up with a small sum. This clearly demonstrates that he has not learnt from his past mistakes. He is a spendthrift at best, and an addict (gambling, drugs) at worst. Keep away, at least financially.

OK, I know I am harsh, but I speak the truth.

[spf1971]

One big thing to consider. If the loan is to be paid out over roughly 4 months (15 bi-weekly payments) and the interest paid over the term is 25%, then the APR is up around 75%. Should anything go wrong, your contract is unenforceable because the interest rate is illegal.

[bembem]

Well, that's the point of this thread. To see if there IS someone or something somewhere that he can get this money from.

So I guess it's just unbelievable that someone might want to live in a brand new condominium and choose to make down payments ... one comes up that he's not ready for and he's looking for a loan to cover it while he makes up the money as quickly as possible.

Like that's not a possible scenario and he hasn't made "poor decisions"?
Yes, he can get money from banks, credit unions, family and close friends.

He should not be begging from coworkers or strangers on the net. This post is a thinly veiled attempt at begging.

Is it unbelievable you ask? Who cares.

He is trying to buy a condo with money that he doesn't have. Like when did he realize that he was short $6k? Because in 6 months, anyone could moonlight and save $250 per week.

Oh wait. He already has 2 jobs and can't pay a simple deposit.

Oh what's that? How did someone with no bad credit... Wait, the story changed? Someone with no credit get a mortgage? You can't.

What's that? No problem getting a mortgage but can't even get a credit card?

[danfromwaterloo]

This situation is not unlike the exact same situation played out thousands of times in the states. He spent right up to his limit for this condo without thinking of emergency costs that may come up. This is why prudent people always have a "contigency" fund - just in case shiet happens, you're not left out in the cold.

Now, your buddy has invested in this condo that is likely now worth less than he bought it for. My guess is this guy has a 0 down mortgage (or very very near it). As a result, he has no equity - in fact, he is likely underwater from it (the value of the condo minus the mortgage is a negative amount).

Your friend is so deeply in debt that no qualified lender will do so. As a result, he's looking to friends for help. He's a lost cause - if you lend him money, expect that you won't see it again.

A bigger question is that if he can't handle a lump sum now that he didn't plan for - what if there's another "lump sum" in the near future? He has no outs.

Recommend to him to go to one of the many debt councillors in the city. They're typically not-for-profit, and will help him out.

Smart people sometimes make dumb decisions - sounds like your buddy had champagne dreams on a beer budget.

[big tuna]

So I guess it's just unbelievable that someone might want to live in a brand new condominium and choose to make down payments ... one comes up that he's not ready for and he's looking for a loan to cover it while he makes up the money as quickly as possible.
it's not at all unbelievable but it is irresponsible. lots of people would love to buy new but due to budget constraints, they buy smaller/older so that they don't have to push the limits on their financial situation. sounds like your friend did exactly that and rather than look at the situation objectively, you're hoping that good thoughts and intentions will make the problem go away. anybody who can barely keep his head above water while working two jobs is just asking for trouble. if he's in a position to break even or take a small loss on the condo then he absolutely should be selling at this point unless he loves flirting with the idea that any sickness or leave of absence from work puts him even further into the red.

i've seen friends lend money to each other and a year down the road, the money hasn't been repaid in full and they're no longer on speaking terms. not worth the risk if you ask me... now if you're hell bent on lending him the money then do so without the intention of profiting off the interest and risking the chance of not getting your money back but not at the expense of losing your friendship over the money. to be reasonable, charge him what you might be making off the money in the first place (ie: 4% gic) and not an inflated number that only makes the situation even tougher for him

[VivienM]

Now, your buddy has invested in this condo that is likely now worth less than he bought it for. My guess is this guy has a 0 down mortgage (or very very near it). As a result, he has no equity - in fact, he is likely underwater from it (the value of the condo minus the mortgage is a negative amount).

The OP's friend doesn't HAVE a mortgage. He doesn't have a condo.

He got caught in a more insidious trap. If you're buying a NEW condo that hasn't been built yet, the builder will ask for deposits. I remember looking at one place once, they wanted around 25%. It was something along the lines of
- on signing, $3K
- 30 days later, 5%
- 60 days later, 5%
- 120 days later, 5%
- 180 days later, 5%
... and the place would be built 1.5 years later or something?

So, basically, you need access to a big pile of cash. Much bigger than the 5-10% you'd need for a down payment. And you're paying this money, and interest on it if it's borrowed, while you're living somewhere else and paying for that too.

I suspect that if the OP's friend's condo was built, he got a mortgage with 5-10% down, and moved out of his current place, he COULD actually afford that condo reasonably well. But putting up 25%, financed through unsecured loans? Not easy...

[DaVibe]

It was something along the lines of
- on signing, $3K
- 30 days later, 5%
- 60 days later, 5%
- 120 days later, 5%
- 180 days later, 5%
... and the place would be built 1.5 years later or something?

So, basically, you need access to a big pile of cash. Much bigger than the 5-10% you'd need for a down payment. And you're paying this money, and interest on it if it's borrowed, while you're living somewhere else and paying for that too.



That's correct, it's something along the lines of this.
The condo is being built, he's not living in the condo today. He's making payments based on a schedule from the condo developer (such as described above).
The condo is worth more than what he's purchased, not less. He's been lucky that way, great neighbourhood.

An update would be that he's read through this thread, said there was a "lot of good advice" and that he's going to try a few things mentioned ... in particular, go back to the bank to see if something can be arranged there.

And to clarify, I'm not looking into lending my friend $6,000. That wasn't really the point of this thread. It was more along the lines of WHERE could he get someone to lend him $6k or how.

[tng11]

And to clarify, I'm not looking into lending my friend $6,000. That wasn't really the point of this thread. It was more along the lines of WHERE could he get someone to lend him $6k or how.

And this is the part I don't get. Are you implicitly trying to get someone from this forum to do it? Banks have already pretty much said no. The interest rate he's trying to offer is borderline loan sharking too!

Also, if he cannot get a credit card then that is really bad news. The bank will approve anyone for a CC as long as their credit is "average" and they have an acceptable income. New credit does not equal bad credit. If you have new credit, but a decent job you are still guaranteed a CC. If he has an income and the bank still denied him for an unsecured CC it would mean he's a gigantic credit risk.

My final tip, don't even think about co-signing a loan with this guy if he can't find the 6K! Getting involved in your friend's money matters is asking for trouble.

[bembem]

That's correct, it's something along the lines of this.
The condo is being built, he's not living in the condo today. He's making payments based on a schedule from the condo developer (such as described above).
The condo is worth more than what he's purchased, not less. He's been lucky that way, great neighbourhood.

An update would be that he's read through this thread, said there was a "lot of good advice" and that he's going to try a few things mentioned ... in particular, go back to the bank to see if something can be arranged there.

And to clarify, I'm not looking into lending my friend $6,000. That wasn't really the point of this thread. It was more along the lines of WHERE could he get someone to lend him $6k or how.
tng11, yes he is trying to get someone on the forum to bail him/his friend out.

My friend had to lay down 5% deposir immediately, 5% in 30 days, and finally 5% in 90 days. That's about $14k every 30 days. The difference is that he had that PLUS the necessary downpayment. Smart ppl have the deposit and downpayment before jumping in.

If your friend doesn't even have the deposit, then he doesn't have the downpayment, and therefore won't realistically qualify for a mortgage.

[VivienM]

tng11, yes he is trying to get someone on the forum to bail him/his friend out.

My friend had to lay down 5% deposir immediately, 5% in 30 days, and finally 5% in 90 days. That's about $14k every 30 days. The difference is that he had that PLUS the necessary downpayment. Smart ppl have the deposit and downpayment before jumping in.

If your friend doesn't even have the deposit, then he doesn't have the downpayment, and therefore won't realistically qualify for a mortgage.

Huh? You need 5% for a down payment. Some builders require 15%-25% deposit.

So, presumably, you could have 7% of the price of the condo sitting in your bank account, and that's enough for a down payment, but not enough to meet the builder's deposit schedule. Am I missing something?

[bembem]

Huh? You need 5% for a down payment. Some builders require 15%-25% deposit.

So, presumably, you could have 7% of the price of the condo sitting in your bank account, and that's enough for a down payment, but not enough to meet the builder's deposit schedule. Am I missing something?
Each builder will have a different requirement, and each province/municipality will have a guideline for how much of a deposit a builder can take.

Read my post again, my friend paid three deposits of 5% to the builder as per the municipal guidelines. That was about $43k and was JUST the deposit...

You will THEN need to secure the mortgage with a bank... and THEN deal with the down payment.

Anyone that doesn't have the deposits, down payments, closing costs, and then some extra money left over should NOT purchase a brand new condo. Smart people would rent and save up...

[DaVibe]

tng11, yes he is trying to get someone on the forum to bail him/his friend out.

My friend had to lay down 5% deposir immediately, 5% in 30 days, and finally 5% in 90 days. That's about $14k every 30 days. The difference is that he had that PLUS the necessary downpayment. Smart ppl have the deposit and downpayment before jumping in.

If your friend doesn't even have the deposit, then he doesn't have the downpayment, and therefore won't realistically qualify for a mortgage.

Just to answer your question, he's several payments in, so this isn't the first payment.

I'll have to check in with him this week to see if anything on here raised a bell or if he had some success with anything that was suggested here.

His 1 job covers the condo, this second job is the "extra" to make these condo payments (at least the way I see it).
In his defence, this isn't something he's asking or even talking about with every member on the floor. It's something that came up between a 1 on 1 ... "Hey Rob, I'm making these payments for my condo (as you know) but I'm a little short this month, what do you think I could do?"

My answer is always: RedFlagDeals :)

[XShadowX]

Just to answer your question, he's several payments in, so this isn't the first payment.

I'll have to check in with him this week to see if anything on here raised a bell or if he had some success with anything that was suggested here.

His 1 job covers the condo, this second job is the "extra" to make these condo payments (at least the way I see it).
In his defence, this isn't something he's asking or even talking about with every member on the floor. It's something that came up between a 1 on 1 ... "Hey Rob, I'm making these payments for my condo (as you know) but I'm a little short this month, what do you think I could do?"

My answer is always: RedFlagDeals :)

And where is he getting the $800 month to cover the $6000?

Would he actually get ahead by 15 months only with $6000? So he would have room to pay the extra $800 month for 15 Months?


Replies here or personal messages are fine if someone wants to step up and help this guy out (through me).

Why did you edit your Post? Now your asking RFD to Help a Stranger?

First you said you wanted to give $6000, When RFD was against it, Now your asking them too do it:lol:

My answer is always: RedFlagDeals

You answer wrong, RFD members are Smarter than the average bear & won't hand out free money.:cheesygri

[jackwest]

Replies here or personal messages are fine if someone wants to step up and help this guy out (through me).


Sorry I don't have 6k to hand over to you. Can I have your permission to post here anyways ?:cheesygri:cheesygri:cheesygri:cheesygri:cheesygr i

[VivienM]

Each builder will have a different requirement, and each province/municipality will have a guideline for how much of a deposit a builder can take.

Read my post again, my friend paid three deposits of 5% to the builder as per the municipal guidelines. That was about $43k and was JUST the deposit...

You will THEN need to secure the mortgage with a bank... and THEN deal with the down payment.

Anyone that doesn't have the deposits, down payments, closing costs, and then some extra money left over should NOT purchase a brand new condo. Smart people would rent and save up...

Huh?

I think you're double counting. Let me demonstrate with a small example.

Let's say you pay $60K in deposit, total sale price is $300K.

When you go to get your mortgage, they'll count $60K as down payment, $240K borrowed. You have 20% equity, so you should be able to avoid CMHC, too.

Hell, my understanding is that, on those numbers, you could ask for a mortgage for $285K, pay the CMHC fees for 5% down, and on closing, your lawyer will GIVE YOU a cheque for $45K (and presumably, you can use that money to pay back however you borrowed those $45K).

[DaVibe]

And where is he getting the $800 month to cover the $6000?

Would he actually get ahead by 15 months only with $6000? So he would have room to pay the extra $800 month for 15 Months?

Why did you edit your Post? Now your asking RFD to Help a Stranger?

First you said you wanted to give $6000, When RFD was against it, Now your asking them too do it:lol:

You answer wrong, RFD members are Smarter than the average bear & won't hand out free money.:cheesygri

Why do I have to explain EVERYTHING ...
I clarified the post, I didn't actually change the body of the text. From the beginning its been the same. I'm wondering how to get $6,000 for him.
I never mentioned that I was the one that wanted to lend him the money ... right from the beginning I said that wouldn't be possible for me.

RFD members have a lot of different experiences and opinions (vast group of people) which is why I turn to my favourite website when I have a complicated question, such as this.

Everyone jumped on the post however they wanted to ... the information itself hasn't changed. I never flat out said yes, I'd like to lend him $6,000.
There's not even a mention as to WHERE it would come from (life savings, credit card?)

Please add some information instead of questioning me to death with nonsense.

Edit: To answer your question, he's getting the money from his 2 full-time jobs.

[squid]

OK, to be less harsh...

Sell some stuff. I am assuming he has lots of consumer goods he has spent his money on...

Tax return? Do his taxes and see if the government might chip in. If he had planned earlier he could have got an RSP loan (easier than most) and increased his tax return that way (6000 return on 15000 RSP contribution perhaps).

Hmmm... maybe get store credit somewhere. Buy staples (Wiis, etc.) on sale, and hawk them on Craigslist? Dept store cards are at 25% or so, but he's OK with that, right? And I think these guys used to be easier than banks.

Any employer RSPs he can redeem?

Get a 3rd job.

[partytime2009]

This post is EXTREMELY fishy,

I read the entire thread and I have sneaking suspicion that the OP is the one who needs a loan and has totally made up the store about his "friend". The story seems to change to suit where the thread is headed, and nothing appears to stay the same.

For anyone dumb enough to consider lending this guy money, think again. I hate to call a 7000 post RFD member a liar but who knows if someone even hacked into his account. Either way, this story sounds very very fishy and no one should even think about lending a penny.