is credit to easy to obtain?

on the same line of thinking as my last rambly post (kids in bed, DH fishing, I'm bored..)

It seems remarkably easy for young people to rack up HUGE amounts of finance (for cars).. DH's 17 year old apprentice has so many court fines (from driving offences) he has an attatchment order on his wages, BUT this last week, just HP'd $4000 worth of mags and tires on a car he is paying off a new turbo he's just put in, and tools he has had to buy for work...

Also, it seems really easy for anyone at all to get credit, even with huge intrest rates, even gvmt regualtions just eing brought in won't really curb that...

Whats got me thinking about this is that loan my mum went Guarantour on for my brother and his GF, well, they are going bankrupt now as they owe so much money (easy credit) to finance companies and loan sharks, how is it that people are allowed to ge themselves in this kind of mess? Don't the companies have to say well, you already owe $x amount, so no, you can't have more? I know reputable ones must have to?

Thoughts, ladies..(and gents)

In some cases I agree. The loan sharks etc that are out there prey at times on those lower income earners who are desperate, but can't afford it, but need it. Also what I find is a lot of young people are "want it now" people - they'd rather put it on HP and pay a heck of a lot of interest instead of saving up, or they want to start at the top instead of working their way up. I have to admit, I'm similar to that, although only to a degree. I HP'd my fridge, washing machine, dryer with Mum as guarantor for the fridge, back when I was 17-19, but made sure that I paid over and above the payment required, and that it was interest free. I only ever HP if it's interest free. DF on the other hand, doesn't think about it, he just thinks "I want that" and goes to get it, without thinking of the financial consequences. Thankfully we've stopped that little bad habit!! We have just HP'd a chest freezer, which I've set up the AP for at a higher rate than the payments required, so it's paid off sooner, but we thought hard about new vs. used, and used chest freezers tend to be 15-20 years old and not last a huge length of time, whereas if our new one lasts 20 years, that works out a cost of $50 a year. Even if only 10 years, it's only $100 a year. And no interest. And we had to get one for necessity, as we get a half beast every 6 months, which is currently on the hook, and we have nowhere to put the meat at the moment.

Phew, what a ramble, and probably TMI. I think a lot of young people don't look at the big picture re. finance which is where they fall into strife. They also aren't prepared to start at the bottom and work their way up, they need the best straight away. Life doesn't work like that.

Yup far too easy!!

It is soooo easy.  My Step sons mother has had loan to pay a loan to pay a loan and it does on, she nevers seems to get ahead and always in debt. 

When you fill out an application it asks for wages, then what you spend.  Most time people do not give the correct readings, so it looks like you can afford a loan.....

Sad really is'nt it

It is incredibly easy - look at that girl who borrowed money at 18 or whatever she was to visit friends in the states and is now 10 years later paying off huge amounts of debt because she had overextended herself initially, so has borrowed from one source to pay the previous, over and over again. Even though she is on something over 50k, she lives on next to nothing a week.

The new finacne companies in particualr are bad at this as they suck people in and get them in over their heads. However I did read something recently that looks like new regulations will be introduced to help curb some of the problems.

Just after I had finished uni and was still flatting, I applied online for a BNZ credit card, and with what I earned from my retail job was only expecting something with a $1000 limit - but instead got a card a week later with $4000 limit !! I called them ASAP and had it changed though, that kind of "money" is dangerous !! We only use our credit card now if we know we have the $$ within the month to pay it off, so we don't get too far in over our heads. Definitely WAY to easy to get credit these days.

I think it is way too easy to get credit and I think people don't think about what they are doing. we looked up how much we could get for a mortgage and it was over $350,000! Hoewver, the payments would be almost 60% of our salary. OKay if everything is fine, but one car break-down and we would be screwed, so we made the decision based on how much we felt we could afofrd and still have a life...(no mortgage yet, need a good job first!). I think thats why NZers are such crap savers, after we pay the loan, then the loan we got to pay the first one, the mortgage, the 23 hps, we simply have no money left to save...and then feel stressed, so treat ourselves to a holiday - no money? no problem, get a loan for that too!

I think eftpos has a big play in this. I know my nephew struggles with the concpet of money - all hge knows is that mummy puts the card in the wall, and out comes cash. A lot of kids in his class are the same and I think it will have a huge impact - even more so whenv the next generation come through.

Yep it is far too easy. My BIL is a good example of this. Him in his 30's is not allowed to HP anything without a gaurenetor(sp?) as he had racked up so much on HP during his 20's he ws a baycorp as he couldn't make the repayments. The best thing about his story is the in laws did not bail him out and he has learnt the hard way.

I had a hard time when I was given a credit card when I was 15 to take to Singapore with me. It didn't get cancelled when i came back and once I was 18 and finished school I went a little crazy and racked up $2000 on next to nothing. I got rid of it when I was 22 (pregnant and wanting no debts once baby was here) and am so glad I did.

When we went to get our mortgage, they told us we could borrow $350000, far more than we would ever want. We took less than 1/2 that amount but every year the bank tell us we can borrow money to do stuff with. As much as we would like to we couldn't afford to borrow it yet they keep trying to push it. 

Willie has ended up paying $48,000 for a car with a window card price of $23,995 and a current valuation of around $10,000 if we're lucky. So yes, I think it is far too easy to get into debt, and I think loan companies prey on lower income/less educated people and hit them with crippling interest rates knowing they don't view things in the long term.

I don't do HP or credit cards. Period. Far too dangerous, I am far too much of a spender. That way if I don't have the cash, I don't get to buy.

Red wrote: We currently have some tenants who struggle to pay their rent at times, but yet have a new car, and of course could not get a loan through the bank, so are paying huge amounts of interest to a finance company!

ahhh but you see rent isnt as important either to some. If you dont pay your rent you cant get chucked out for quite some time...if the car gets repo'd then you just re finance, debts get on top of you then consolidate ... You'll find its the less reputable finance companies that will give credit to low income earners and those with bad credit already, and quite often no matter if the debt gets paid or not from the debtor they still get paid from their insurance company, so they win either way.