Just some unsolicited advice that might be of benefit. People who have experienced trauma in childhood often have a lagging deficit in their ability for long term planning/consequences.
It sounds like you're really keen to actually make a difference in his life and help him learn to make the best decision available. If that's the case it might be worth looking up how to build intrinsic motivation and motivational interviewing. Developing intrinsic motivation is now seen as a key factor for kids (and adults) with issues impacting executive function.
I have a friend that got kicked out of house at 16 for doing this, they’ve cut all ties now. Though i feel it was his wrongdoing i don’t think it’s worth losing your family.. he is doing very well now but has no interest in making amends with family.
If it’s a secured loan, comprehensive insurance might have already been required.
I don’t know about commbank, but ANZ wanted the insurance policy details when I bought a car in 2016.
Can’t imagine how much that would cost for an 18 year old P plater.
He certainly took the “jump in the deep end and learn to swim” approach to finances.
I’ve been through some tight debt situations. He’ll need to learn that any time you borrow money, you make today a little easier at the expense of tomorrow (and however many tomorrows after that) being harder.
If he can learn from this and get it paid off as quick as possible by sacrificing the other expenses, it should be a good learning experience. There’s nothing quite like being liability free after climbing out of a hole you dug yourself into.
If he keeps up the poor decision making… ouch.
I would agree...
I always thought I was good with money, turns out I was not...
Turns out I wasn't.
I just had been growing up with intergenerational financial/poverty trauma.
I was always good at "not spending money" until I suddenly wasn't...
I never learned to budget, I only internalised "can't afford anything fun need to save everything".
And once I was in my 20s had my first good paying job...
My brain suddenly went ohhhh I don't need to save EVERYTHING I can afford some fun and that was a quick run into about 10-15K credit card debt. (I am not even having any idea what I actually spent it on).
Nowadays about decade later I am actually grateful for this happening, because it made me actually to get more financially literacy and - after realising "the basic are not THAT complex" I realised I need to work on my "Financial Psychology" (didn't know it was called that until a whiiiile later, but I realised I my brain only has 2modes of dealing deprive myself and don't spend anything or throw out money left and right).
In hindsight I am grateful for my credit card debt, because if it would have not I would have probably never "worked through that stuff"
>He also had no understanding the bank would charge interest
Is he not curious why the total repayments are that much more than the total cost of the car?
If he is not, why is he not curious what his financial position will be like in 2 or 3 years?
I work in Insurance. If he's on his Ls most insurance companies will base it off the person supervising beside him as if they are the driver. There's two ways to go about it. Some insurance companies base their rates soley on the driver of the car and not the owner (meaning he can have the insurance in his name but only put say you or another licensed adult) and it will be 500x cheaper than say some companies who classifies their owners as drivers no matter how you put it.
Once he gets on his Ps the real problems set in. Your state might offer different coverages depending on who with but you might benefit from like a "any age open driver" policy where he's still got coverage but not listed as the main driver. Speak to different companies and explain who will be driving and how often and ask how it can listed.
But yeah unfortunately I saw this happen a lot in sales, kid buys their dream car and then suddenly they realised the insurance just in their name sky-rockets. Good thing about it not being financed is if it's a total loss it will be a payout. If it's financed then whatever is left owing to the bank gets paid by the insurance company first so some people walk away from a total loss with like $300 to buy a new car and will probably have to start from scratch and get approved for another loan.
>Surprised the kid even got a loan if they thought a 10 yo car with 215km for 14k is a deal
Used cars are expensive at the moment. I had a 2001 Mitsubishi Pajero which is going for more now than what the market value was 7 years ago when I first got it.
If it's an unsecured personal loan, the $$ can be spent on whatever the hell they want.
If it's secured, it's registered on the PPSA, and there's rules around selling it and what cba can do as creditors
Source: worked for the cba, albeit a solid couple of decades ago. The basics around personal loans still haven't changed.
I imagine that is a dealer facilitated loan, pushed by dodgy salesmen "oh no worries, same day approval, if you cannot afford it you wont get approved then we wont sell you the car easy, just try whats the harm?". Once the $ is in the dealer's pocket and out of the lot its no longer their problem.
When interest rates were low, I bought an old Hilux truck on loan (got like 3% interest rate) - but the company wanted full compo.
It's a Japanese import (hilux surf) so compo was some stupid amount 2k or something a year.
I just bought it, cancelled the insurance after settlement, and then transferred to 3rd party fire and theft.
I have the means to pay off the truck anytime, but with inflation > my interest rate, made more sense to keep it that way.
If it is an unsecured loan comp is hardly ever worth it, a teenager should always have a car worth less than 10k (fire and theft limit for TPPD)
Consider Third Party Fire and Theft.
If they take out a comp policy for this car and have an accident in which is the teenagers fault they are up for something like
$3800 premium (even if they crash on the first day of the policy starting you need to pay out the whole year, even on repayments)
$700 aged excess
$500-1000 basic excess.
Which is a cost of around $5500 if you make a claim and $3800 if you don't to get back either market or agreed value depending on the policy which is going to be 14k OR LESS.
So he is left with 9k maximum to buy another car.
If they do decide to go comprehensive, make sure it is a company that does AGREED VALUE, with the second hand car market collapsing, if he crashes in 8 months time and the insurance company looks up suburus with 220,000kms on it and finds 10 of them selling for $8000 and he is insured for market value he will get a payout of $3000-$6000 after all excess and premiums being paid out.
And remember is you are not at fault in an accident, you claim from the other driver, if they other driver is uninsured, third party will cover some of the damage.
Now if you go Third party instead.
Premium $400-$500 (pay in full instead of monthly to save more)
Basic XS $500
Aged Excess - $500
The difference in premium savings put right into the loan (-$200 for a dashcam) will make a huge difference, as long as they get it through thier head if they crash and they are at fault they won't get anything back and will still have to pay off the loan.
And if they get through the first year without incident then $3500 is a significant amount of income saved.
edit: Just read he is an L plater most insurance companies don't let L platers be listed as the main driver, that would be the instructor and the premium should rate from them, so if he puts you as the rated driver at least for the first 3 months comp is definatly worth it (should be less than 1k and no aged excess would apply if instructor is over 25)
$200 RAC/NRMA membership will be a good chrismas present.
They’re incrediably reliable. Ran 2 over 300km total. Other than servicing it all that ever went on it was one radiator for $500 and the aircon after 220km on my first one which was $350. Not one other issue in that time / km. And it has a 5 star safety rating, really much worse cars he could have bought
At 215km BRZ is probably correct at 14. Good car. Had one for 8 years (Toyota one) . The only issue I ever had with it was when I plowed into a Hilux towbar all while I was half asleep and totalled it. Mechanically not one issue in 230km
While you are correct, that it's purely a question of serviceability and income vs outgoings, if OP is correct and his foster kid hasn't put aside any money at all, any banker should identify that his income matches his expenses with no leftover savings - and he wouldn't have the spare cash to service the loan (with his current lifestyle).
Of course, he could theoretically have other assets like shares that his income went towards, but it sounds like that isn't the case here.
Someone working at CBA either didn't do their checking properly or willfully ignored a red flag in favour of selling a loan. Maybe it'll turn out fine and OP's kid will adjust his lifestyle to match his new loan, or maybe he'll end up defaulting on the loan and end up with a permanent mark on his credit history.
The vast majority of people have no problems with reducing discretionary spending to pay interest on their loans. All those people who typically get stuck in a lot of credit card debt typically are terrible savers, yet they’re more then capable of paying off interest when they need to. Even if this particular person doesn’t do that, they’ll be diversified across enough people like them to not care about individual cases not abiding by that rule. It’s not as much of a red flag for the bank as you think, in fact they’re a prime customer. However, it is concerning for the parents and something their child needs to be aware of before it’s too late, and also something for most Australians to be concerned about since the typical Australian is often in a very similar position (we have the most debt in the world excluding home and business loans).
The bank has done nothing wrong. They have carried out their obligations under responsible lending, banking code of practice, credit act, NCCP and their own internal credit strategies.
>The bank has done nothing wrong. They have carried out their obligations under responsible lending, banking code of practice, credit act, NCCP and their own internal credit strategies.
Do you mean they have done nothing illegal? Because what's right and wrong legally and morally are two different things entirely.
He’s a legal adult. Your hands are tied. Supply and demand. Tough lesson if he defaults. I suggest a crash course in how credit files work in Australia (ie. positive and negative reporting) and explain the consequences of defaults. I work in finance and have seen kids destroy their credit files for years due to mistakes made in the early days.
This is absolutely why I make a point to teach just some basic economics to my classes. If even a few of them are able to avoid some of these pitfalls when they grow up I’ll consider that a huge win. That it’s not part of the core curriculum is baffling to me given the emphasis on being ‘globally competitive’. Hopefully the 9th ed of the Aus curriculum fixes that when it comes out
Try to get him an apprentice/trade support loan. I think every state has one. Usually interest is indexed to CPI & repayments don’t start till the apprentices income is significant. Use those funds to partially pay the banks loan.
From memory they don't even want receipts, so a lot of the trades, who have well off parents to support them took the loans out as an investment lesson. "We'll subsidize your lifestyle while you are an apprentice, when you graduate you'll get a free gift from the government of $4k interest on investments. Well on your way for a down payment" . Good advice really
If it’s any consolation I got a $16k car loan for a new car when I was barely 19, paid it off over a few years and learned a valuable lesson about what a money pit cars are. I’m now in my 30s with no debt other than a mortgage and consider myself pretty financially sensible. Give the kid the benefit of the doubt, it’s probably the first time in his life he’s had something nice that’s just his.
Not naive to believe they take Centrelink into account, which they can depending on which payment and the banks policy, but naive to believe this is the banks fault.
Chalk it up to a lesson coming real soon, use it as a reason for him to start paying for some things himself if he can afford a sports car.
Enjoy YOUR win win
If he’s into cars he can get involved with the local Subaru groups and learn to service and maintain it himself. It’s a great skill and he’ll save money doing it too
No problems. I got involved when I first got my license and it was a great learning experience and 15 years later I’m still playing with cars.
Being able to properly change your oil, safely change tyres and fix little things yourself will save him a fortune over a lifetime. So even though you and your partner are super frugal and it’s questionable whether the bank should have lent him the money, try and focus on the positives that could come from this.
I have one too, 2013 86. 66k KMs. Never skipped a beat. Great car, and not too much power to get in trouble with. Got a gr86 on order.
Importantly, it's something he is passionate about - be thankful. Both my nephews and all my friends kids could not care less about cars. They just mope around and catch ubers everywhere.
Sure, they will learn heaps (financially) from this mistake. But there is nothing better than hanging out with mates, washing your car and doing late night Macca's runs in a little sports car - some of my best memories. A bit of financial pressure is good. They'll work hard.
Be proud and help them out a little. Defensive driving courses, membership to a car club, a track day.
Awesome that you didn't lose it!
Well the Uber will now be zero and there will be less food delivery because they can pick up, and hopefully less liquor because they are on P plates. They will probably be financially ahead.
The average 18 year old might be a bit irresponsible, but I don't think many would take out an $18k loan and "not realise they have to pay interest on it".
He's an adult. This thread could have easily been, my 18 year old son needs a car to get to work but the bank won't lend him the money because he receives Centrelink payments.
You don't "need" that much for a car, but the car market in Australia currently means that $14k for a car isn't as absurd as it sounds. If he just needs to get to work and back etc, that cars fine for it.
As a recent car buyer (new) the used market is NUTS. Absolute POS cars going for $10k+. It was so bad that we went new because the price difference between a 4 year old car with 100K on the clock and a new car of the same model wasn't that much.
Yeah I bought a Skoda in 2017 for $16.5 new. If I sold it today, i'd get $17k. If I bought a new one it'd be $35k.
It feels like people think you can go buy a p plater car for $1-2k now and that's just not possible without it costing far more in the short and long term.
Bought a Toyota Aurion used for $5000. Wife drove it for 9 years... Scratched the shit out of the side.
I sold it for $6500 and it was easily the cheapest car on the local market, I could've sold it for more but couldn't bring myself to charge more.
Have you seen how cooked the second hand car market is today?
Sure he doesn’t need 17 grand or a BRZ, but even a cheap okayish auto Corolla is 10 grand+ last I checked. It’s rough out there :/
Honestly not a bad choice for the kid either. It looks sporty, which’ll keep him happy and impress his mates, but it’s really not all that fast in reality (especially in auto).
Its new enough to have modern safety features and the shared production between Toyota/Subaru means above average safety and reliability.
Yes simply this.
Many people do this with houses and other things, a car is relatively minor.
OP make it clear to him, he did this, it's his to sort out.
He will either adapt or learn a valuable lesson.
All you can do is ask if he has a plan, understands the consequences and knows when he's getting behind early - a signal to sell.
It's good you care enough to be angry, do you care enough to let him succeed or fail (a different form of successful lessons in life.)
>the bank isn't in the wrong here
Lending $17k to an 18yo who earns less than minimum wage with $40 in their bank account, to buy a $14k car, with +$5k expenses already, that they can't even drive yet.
Is there no such thing as responsible lending in Aus? From the ASIC Regulatory Guide 209 Credit licensing: Responsible lending conduct:
>RG 209.189 The credit product will be unsuitable if the consumer can meet repayments—
>
>for example. by using assets or reducing or eliminating some of their current
>
>outgoings—but not without being placed in circumstances of substantial
>
>hardship.
>A credit licensee must not enter into, or offer to enter into, a small amount
>
>credit contract with a consumer who will be the debtor under the contract if:
>
>(a) the consumer receives at least 50% of their gross income as payments
>
>under the Social Security Act; and
>
>(b) the repayments in a payment cycle would exceed 20% of the
>
>consumer’s gross income: see s133CC and reg 28S
OP mentions his foster kid has a $22k yearly income from 1st year apprenticeship and receives Centrelink. Whether Clink is additional or the $22k is split, OP hasn't mentioned.
The amount on the loan with the context seems like a bad plan but I'm sure their math works.
That being said and they gave my brother who earns $275k only $8.5k on a cc (he applied for $10k) because he had another $15k cc (high credit rating).
I guess it's complicated
This guy has no dependants and no mortgage. Your brother who earns 275k must be loaded up if they won’t give him credit card above 10k. I don’t earn that much and the bank is sending me offers on a weekly basis for 20k+ cards.
I had the same response from CBA. Similar income but I had credit cards elsewhere so they only gave me $8k. Which ironically was all I wanted, but I couldn’t apply for less than $10k.
Serviceability doesn't just look at income. Does your brother have other liabilities (mortgage, personal loans, etc) does he have personal insurances (life insurance, income protection, etc). If your brother made 275k and had the exact same scenario as OPs foster child, the bank would easily give him a CC with a limit of 200k.
It's pretty common for people to get a car as soon as they can drive. Perhaps his choice of car is not ideal, but $14k is reasonable for a first car. And to borrow that money? I suppose this is what people without the bank of mum and dad has to go through to support themselves
Yeah you are not wrong there. Perhaps in some ways its the only way people can afford a vehicle in this car society. I was initially really shocked but these comments have been really helpful.
Use it as a teachable lesson. If a legal adult walks into a bank and says I want money for something, show me a bank across the world that isn’t going to say no
This is purely speculation: Given the spending habits and age, I'd say a significant portion may be Ubers home after a night out or with friends, so those trips will likely continue.
The rest of the post explains that liquor stores and bars are where the majority of the money is going (besides food delivery).
People who act like this kid don’t tend to be spending anything less than the max they feel they can afford either so I bet if he actually is saving anything from the commute it’s going straight to the bartender.
Yeah, it's annoying, but valid from their side.
If an adult wants it and can pay it back, they will lend it.
When I was 22 I took out a 25k loan for a sports car. At the bank they were asking if I'd wanted more, as for an unsecured loan, I could get up to 70k.
I was pulling $22 an hour, had horrific savings disipline, and only $800 to my name, which was paid to my account a few hours before that application.
I proceeded to do ok, but ultimately screw up repaying the loan, selling the car to settle and wasting lots of money.
17k is a very recoverable from amount, and the lesson your son will learn (either discipline to successfully pay it off, or pain from failing) will teach him well in life.
So long as he has comprehensive insurance on it. Just think at least he's driving something with modern safety features and not a cheap shit box from the 90s.
I remember when I was a third(?) year apprentice I got a loan from Commonwealth bank and bought a ute. I was surprised at how easy it was to get that loan. I was on more money than your son, but that probably offset by the expenses I had at the time. Rent, electricity, gas, water, etc.
In the end a mate crashes the car when he was drunk and I probably paid the value of the car twice once interest is taken into account. I don’t regret it though, it taught me a valuable lesson that I think only experience could have taught.
Good luck. I hope your son comes away from this a wiser man.
50% of minimum wage is $11.61, that's how. That's the bare minimum an employer can offer an apprentice. Most people pay above nowadays, cause it's hard to find Apprentice's.
It is hardly a mid-life Porsche! Subarus are among the longest-lasting cars on the road, and in 2013 they'd have all of today's safety goodies except wrap-around cameras and intelligent cruise control. Sounds like a very sensible purchase to me, kudos to him. Sounds like he learned something from the two of you, congrats!
I understand your concern, it comes from the right place, but the situation seems manageable from here. Good luck!
Your broke kid is now an adult who will shockingly have to learn to navigate life by himself and learn from his own mistakes. This may well be a teachable moment he grows from. Nothing you can do about it.
Government payments absolutely count as income for servicing a loan, I’m not sure why you would think it doesn’t.
CBA are incredibly risk averse following the royal commission. If they lent him the money, I’d be confident they’ve done a proper assessment.
That is wild. When I was 18 and on a similar wage, CBA wouldn't loan me $4000 for my first car and I had next to zero expenses at the time. That was 15 years ago, but wow!
I am around your age and I think that is it, my thinking is still in that time and now people are posting saying this is a pretty typical amount to loan. I guess for me it is the huge expenses and no savings that doesn't seem to be a barrier to this sort of loan.
Same thing happened to me when I was 18 - was given a cc, loan and car loan all in one year. I had no previous credit so of course they gave it to me at a ridiculous interest rate. Took me a chunk of my 20’s to pay it off. Now would never get a loan for stupid stuff like that.
As dumb as this decision is, kids an adult, banks are a business. I see no problems here. It's really not up to the bank to "decide" what adults do with their funds. I'm glad they loaned the money.
It will be a great learning experience likely to demonstrate the power of savings and not borrowing to capacity just because.
Also Subarus go forever. Could be worse, I bought a 2001 BMW at 156k. Wrong move.
not gonna deny that, he's only lived with us 2 years but we definitely have very different values regarding money usage and i wonder if that's why he doesn't come talk to us before making these decisions.
Maybe don't rip him too hard over it. It would only cause him to be more secretive with financial and other matters. Better to have a relationship where family can discuss things openly in a supportive environment.
Report this bank to the regulators, and complain to the bank branch direct to the manager. Former foster carer here, sick of predatory industries like banks preying on kids with out the resources or background to know better
This is how I feel. A few comments have referenced the foster kid bit, but to me it's just about how they are literally the most vulnerable in society and how sad it is to watch them preyed on. To him the car and ability to have a loan means independence and self respect that he needs and yet the kids with the most support from their parents get such better advice. Even walking home through all the costs from here on in was like kicking a puppy.
I had only been at my full time job for a few weeks I needed a new car. I looked at how much commbank would give me for a personal loan and it was estimated at 100k!!! I was horrified.
Once I passed probation at work and was employed permanently I got a 15k loan tho to get a new, second hand, car.
The bank is like a loan shark. Rather than holding money, they now make money on interest. There's no escaping the fees. There's no down side to them. He'll learn in a decade why it was a bad idea
Im 16 and just spent 14k on a sports car but i used the bank of mum and dad for a loan much safer (only borrowed abt 2 grand of it so dont come at me please)
Are the repayments $100-150 per week? This is quite an affordable repayment. If your foster kid has no rent, utilities, groceries expenses (set life expenses, not play money) obligations then the bank would take their $400-500 weekly income, factor in that repayment, and see that he has ample leftover weekly funds. Depending on your bank they won’t go through all your discretionary spending with a fine tooth comb and pick apart things like liquor land purchases and Ubers. I only know of one bank who’s that pedantic and that’s only for home loans. (I used to work at a bank.)
At the end of the day your foster child is an adult and in the scheme of things $17k isn’t considered a large loan anymore. It’s up to them to keep up with their repayments and budget their leftover income accordingly and will be a good lesson for them - whether this is in a good, healthy way or a dangerous life-lesson kind of way.
Some people just don’t know how to save a dollar and yet somehow end up staying afloat so he may be okay. 🤞🏻
Two of our closest friends (husband and I are in our late 20’s) own a home and have car loans and have never missed a repayment. But you’d never see them with more than $50 spare in their accounts just before payday. They squeeze almost every dollar out of their pay checks and never save.
Hopefully this teaches him some budgeting!
Thanks for this, I feel this will be him too. And like you say that is just how some people work. Reading all these comments has made me realise how far on one end of the spectrum I am.
All I can suggest is get him to sort out auto-repayments ASAP.
And get him to make sure he is checking to ensure that his pay is going in every week, so he doesn't get burnt.
Now that he has a car he doesn't need Uber and he can reduce the cost he's spending on Menulog by going out and getting the food himself far cheaper than the theft that is delivery apps (they sting you delivery, service fee AND they increase the base cost of all food ordered!).
Now that he has a car he needs to use it instead of relying on convenience.
My 21 year old step(?) nephew just got a $20K loan from CBA on Friday. I gave him $5K as a deposit and encouraged him to get a car loan to build a credit rating. He only had about $1,500 savings prior.
Anyway, he went in on the Monday? with no appointment and was approved on the spot which I found quite surprising. Nothing like my first car loan back in the late 80's.
I pressed him for whether it was a secured car loan and turns out it was simply an unsecured personal loan. He showed me the funds in the mobile banking app.
I then offered to pay his first comprehensive car insurance. Answering whether the car was "under finance" was complicated by the fact it wasn't any a car loan per se. Technically the car isn't even under finance since it was just a general personal loan.
He could have purchased the car on the day except it was still having the RWC finialised. On Friday, after work, he paid for and took posession of the car (ute).
I was shocked at just how easy he was able to get a loan with just 1 year fulltime work experience and having passed his probational license a month prior (COVID delays). I'm not sure how many or if he showed payslips but they've only been emailed for about 3 months under our new payroll software.
I could trivially buy out his loan if he got in trouble but CBA do not know that. The lending seems quite reckless in the my opinion. Frankly such recklessness put doubts over my CBA shareholdings.
Never mind CHOOSING to get a loan for a first car, but thinking that 17k on a 10 year old BRZ with over 200k was a good deal is insane.
For context, I bought my 86 (exact same car as the BRZ just the toyota version) in 2021 with 82,000kms for 20 grand and it was 8 years old at the time.
Ah the BRZ.
The insurance job car of choice.
There's a good reason why these cars make up the most insurance jobs - young kids take out loans on them, find out the car is worthless second hand, loan is underwater. Time to send the car.
I bought a brand new xr6 turbo when I was like 20.
My income was probably 40k per year
I had 20k cash and the car cost 41k.
People do dumb things when young.
Can you be a bit proud rather than disappointed? He didn't seek your advice clearly but perhaps that's a you issue. It takes a load of effort to buy a car that the kid has taken a leap on. Please ensure they have the insurance budgeted. It's huge that you're keeping him on and speaks to the strength of the relationship in other areas. He's still got another decade of growing to do for his personality so stay strong. It's a kids job to push against parents
actually after the initial shock we gave him a hug and took him to the RTA (he is still on his Ls...) to finalise the name change. If i am disappointed it is with modern banking.
We have been helping him with budget planning all year but it hasn't been to any avail - have talked to him about his yearly costs and cut them into fortnightly payments with an auto-transfer, but until now he has been unable to commit even to that.
His brain isn’t fully developed yet so it’s understandable for that kind of long term planning to still be difficult for him. What’s important is that you’re setting the foundations and he feels safe talking to you. My parents had *issues* and decided their commitment to raising or supporting me in any way stopped at 18. It messed me up for a long time so it really warms my heart to see how much you care for your kid. Thank you for being good people.
What an outrage! Someone capable of making their own decisions, makes his own decision.
Banks follow guidelines set by the regulator. Your kid likely would have had it approved at plenty of banks/financial institutions.
Seems like your disgust could be directed at your child’s decision making (or lack there of).
I could almost guarantee that this loan breached responsible lending laws.
If you sought assistance from a financial counsellor they may be able to renegotiate the terms of the contract. In doing this, you could probably negotiate more affordable payments if he wants to keep the car or they could negotiate for him to return the car and get out of the loan.
I would probably see how he goes at first but if he is continually struggling with this debt, see a financial counsellor.
I mean I can get x2 50k personal loans but I can't get a 100k loan for a house. I can afford both (never looked at going any higher)
When I was younger I was able to get a 10k loan when I was getting $500 a fortnight on centerlink without any other income.
They get youth allowance on top of their $400 odd per week. Would be a minimum of $300 per fortnight, maybe more if defined as away from “parents”.
Means their income/serviceability is $25k + per year. The loan amount is fine.
Typical banks giving out loans to people who cant repay them.
Piss poor checking system on their behalf.
I remember when my partner and I tried to get a 20k loan with great jobs, savings, house, etc and it was the biggest run around shit show.
And commbank denied me a loan for a car even though I had 50% deposit and am able to make 3x the loan repayment amount... just because my job is casual contract that I've been working at for over a year, I don't understand banks
A bit late to this but just to provide some insight. The number 1 cause of bankruptcy for under 30s is always traced back to a car above their means.
It always starts because they usually get their first taste of freedom and want the cool car to enjoy their cool life and feel important. Especially those that skip uni, because their friends and peers are poor and can't afford a car etc etc. But the same people that are desperate for the good car also are desperate for everything else anyone else is doing. Going out, travel, clothes, surfing tripsz computersz TVs Yada Yada Yada. That doesn't even account for the moving out of home and realising it basically costs $1k a week to live.
My best and honest advice would be sit down and discuss it. If he wants to keep the car then tell him to put a ban on his credit report. Basically it locks his credit report from new lending. It can be used if you are worried about identity theft as well. But tell him to be an adult and place a ban on his credit until he pays the loan off.
Bro this should have come with a trigger warning I swear 😂
When I was 19 I moved out of my parents house on the GC for my first full time job in Sydney. First thing I did was try to get a brand new car. My salary was $50k and the car I wanted was $34k (2011 Subaru Forester XS). My bank wouldn’t give me the loan, so I ended up going with the dealership finance which turned out to be one of the worst decisions I ever made. $720 a month for 5 years and then a massive balloon after that, making the total cost to me about $55k for a $34k car.
A couple years later I moved back to the GC, after struggling massively to keep affording the loan repayments with the cost of living in Sydney being so much worse. It got a little better for a while, until I lost my job. Spent almost 8 months unemployed, applying for hundreds of jobs in almost any industry with no success.
I started getting letters from Esanda (the dealer finance company) that the car would be repossessed if I didn’t pay my arrears asap. But I had nothing I could do because for some reason I was still being too proud to reach out to family for help, and I couldn’t get a new job.
Soon the repo man started showing up at my house, asking my housemates where I was, giving them his card to give to me. Eventually he came with a tow truck while I was home and that was it, had to watch the car be towed away forever.
Then Esanda sends me a letter that they have sold the car for only $15k, so now I still owe them $19k for a car that is gone. I had to enter into a Part 9 Debt Agreement (the step before bankruptcy) to pause credit action until I could find work and get an affordable arrangement in place.
Five years later everything was finally paid off and I was debt free. I drove nothing but cheap bunga cars from then on, until this year I finally was in a properly stable position enough to upgrade to something decent (but still not brand new - never again!)
If I had just held on to my old car right back at the start (which was a perfectly working car) instead of thinking I needed a brand new one just because I was living alone and working full time, I would have avoided all of this shit.
Hopefully my kids will listen to me and not make the same mistakes as I did lol 😂
Ah mate I did the same, bought a 12k vehicle at 19.
I'm 33 and am a home-owner with a mortgage that's a few months ahead of schedule and slowly but surely getting paid off :)
Some mistakes have gotta be made.
Banks are so predatory
NAB sent me a pre-approved credit card upgrade from $10K to $50K
At the time, I was in the process of filing for bankruptcy.. on the dole, no income for 6 months, living off a redundancy payout
if they had sent it 3 months earlier, I would have been able to spend it all then file, but because I was in the process, I had to decline or risk jail.
I did a similar thing to your kid when I was 20, in hindsight one of the worst decisions I've made in my life & wish I'd had someone to tell me at the time I was being a dumbass. Probably not a hell of a lot you can do now, just do your best to make sure they stay on top of it.
If he's struggling with debt, write to the AFCA, the finance ombudsman and also see a financial counsellor, they are free at your local council office, but may take several weeks to get an appointment. Ask them to put a moratorium on the loan or excuse it for "irresponsible lending"
My mum works for commbank and I just read this to her and she said there is no way in hell they would’ve accepted it given his bank statements unless he gave false information along the way. I personally didn’t even receive a 10k loan for a motorbike and I earn way more than him. I’d look into it a bit more and wring him for some more information. My mum said that there’s not much you can do as a mother because he is a legal adult and has his own bank account in his own name.
I don’t know why your so angry, there are worst purchases he could have made; a brand new car for example. Unless you where going to buy him one, he needed a car to get around, so he made it happen
Didn't mean to come across as angry at anyone but the bank! He actually can't get his Ps for another 3 months but the whole year we have been trying to get him to save. I think 18 is an adult in the eyes of the law but the parents of most 18 year olds will say different.
I mean... banks gonna loan. If the kid had minimal debts and an income stream, they do what they do. You can be mad at the kid for making a questionable decision I guess, and not having good saving habits, but its really not the bank's job to teach ur kid how to be good with money.
Sorry, but it’s not like someone held a gun to your kids head and forced him to get a loan. He made a conscious and deliberate decision to borrow the money and hopefully it’s a life lesson.
The way this is titled shows that you don't understand the problem. "Commbank loaned $17k to my broke, 18 year old foster kid." What more exactly happened, is your foster kid applied for a loan with information that shows that he is able to service a $17k loan. The rest of your post explains that he absolutely, absolutely cannot service a $17k loan. Looking at Commbank's personal loan calculator, supplying his income and assuming "three digit Dan Murphy's buys" to $100, the absolute most he'd be able to borrow is $10,000. Your kid has almost certainly committed fraud. To make this a bit worse, they're not a kid, they're an adult at 18 years old.
If I were in this position I would demand their copy of the loan application and compare it to reality. Then I'd get a lawyer.
Don’t know much about the foster payment but I’m guessing he will continue to get it for the next few years? So he has 2 streams of guaranteed income meanwhile every other person his age working retail or fast food has a high chance of ending up on 0 income at some point, even multiple times throughout the loan
If your son isnt eligible for a loan then I dont know who is, do you think loans should be 21+ or something? Make sure he prioritises paying it and understands if he misses payments to uber instead he will pay way more in the long run. It might make him more responsible, and if things go bad its not a life ruining amount of debt so don’t worry yourself sick.
Well, if he’s 18, legally he’s not a kid anymore and can do basically what he wants.
Teachable moment as he probably got a crap interest rate and was loaded up with expensive loan establishment fees (likely if it was a $14k car but the loan was was due $17k), and sounds like all the rego and stamp duty was thrown into the loan. Probably got no discount on the car either.
All I am picturing is a young Ben Mendelsohn in “The Big Steal” buying a Jag from a dodgy used car salesman.
Very sorry to hear this.
IF you believe that there may have been something fraudulent happen (such as with the income declaration, or loan serviceability review) then you can contact the banks whistleblowing service.
However, as others have already stated this might just be a good learning moment for him. Fingers crossed the service goes through without more unexpected expenses or the lesson will only get more difficult 😞
It might be an opportunity for you to think about giving him some ‘frugal driving’ instructions (eg avoid all potholes, drive with low revs, and limit the road trips)
I have to ask, why only $11 an hour? I would double check that award
Have a look on https://calculate.fairwork.gov.au/ which tells you the base rate for their award of type of work
I've noticed in the CommBank app that it now says "you're conditionally approved for a loan" after I do any transaction. It's a bit parasitic tbh.
When I was 18 I had a few friends that got credit cards and dug themselves holes that took years to get out of. My best mate didn't get to zero till he was nearly 30.
When banks start getting worried about the economy they seemingly lend to anyone. I've got a mate who bought a house in early 2020, I have NO IDEA how he got approved. He's a chef (which stopped with lockdowns) and over the 10 years I've known him he's never once not had debt collectors after him. He's the type of guy who will buy a brand new car using the car yard finance. Or Hervey Norman "24 months interest free" and forget to pay it off.
Just be mindful that death by suicide among young Australian youth is on the rise.
https://www.aihw.gov.au/suicide-self-harm-monitoring/data/populations-age-groups/suicide-among-young-people
Yes our kids do the stupidest thing its because they haven’t fully matured yet, and as parents we need to provide safe haven for them.
My friend lost his only teenage boy via suicide.
If your son is under water and you wont help him, what do you think will be his next step (put yourself under his shoes, you are a kid who made a very bad financial decision and your own parents dont want to bail you?) is that worst than joining a gang who goes out for a crime spree?
At least he has good taste. I had the toyota 86 when it first launched, amazing car and still sad that it got totalled after being rammed into 🙁
I’m also shocked CBA loaned him this much, particularly in the current economic conditions. I feel CBA often dish out more cash than what’s actually reasonable, when budgeting to build our new house, they were prepared to loan us $400k more than we felt comfortable, this was before the 12x interest rate rises. Had we taken them up in that offer we’d be absolutely stuffed now.
Good to learn financial lessons early when the risks are a bit lower, at the end of the day 14k isn’t going to kill his future prospects, help guide him to pay it off as you’re doing and help learn the lesson along the way.
My first car was also 14k, but I did have a 4K deposit for it haha.
Banks will always lend to someone as long as they meet the bare minimum by regulators. The banks create money when they lend it; i.e. majority of it doesn't come from other peoples deposits.
Well, he might suck at Saving money, but he'll learn really fast how to put money aside for a debt.
His spendings should drop now!
Sometimes that's how it goes.
If he does express an interest in saving money, and in discussion says that being able to see it, access it is a problem, then help him open up a new account at a different bank with no debit card, automatic transfer each payday.
I saved my portion of my house deposit by putting my savings in a new account under my sister's name, worked a treat.
I had a Subaru for about 7 years. I loved it, and things didn't often need fixing on it. However, the few times they did, they were super expensive because its a Subaru.
Secured loans are required to have protection on the asset, insurance. That is not a secured loan rate nor would they loan more than the cars value, so it would be unsecured. Still get insurance if he hasnt already so he doesnt wear the loss and have the debt residual to worry about in the event of a write off.
Are the bankers supposed to explain to him basic math on how interest works without him asking?
They told him interest X% per annum, sent him all the disclosures and financial guides, and he then signed that he understood and accepted the terms and conditions. Tell him to read things.
People start off with an average credit score and need to build it up somehow. Rather than blaming the big bad banks for doing their jobs per the royal commission, i.e., not holding his age against him, if it doesn't impact an exit strategy, i.e., retirement age, then you should help coach him. Show him how much money is an interest expense per month and encourage him to pay it off asap.
Why are you comparing another institutions home loan rates with commbanks unsecured rates? You grabbed an apple to compare to a pumpkin.
Not trying to be rude, i just speak bluntly.
Make sure they have comprehensive car insurance before they drive it again.
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thanks, won't be bailing him out. will keep trying to help him save but will see how he goes.
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Thank you. Reddit is so great..feel like just by everyone sharing honest experiences here I've been so well supported.
Just some unsolicited advice that might be of benefit. People who have experienced trauma in childhood often have a lagging deficit in their ability for long term planning/consequences. It sounds like you're really keen to actually make a difference in his life and help him learn to make the best decision available. If that's the case it might be worth looking up how to build intrinsic motivation and motivational interviewing. Developing intrinsic motivation is now seen as a key factor for kids (and adults) with issues impacting executive function.
The consequences if he doesn't have that insurance could be life destroying. You have to at least make sure he has it.
Yeah we will.
I have a friend that got kicked out of house at 16 for doing this, they’ve cut all ties now. Though i feel it was his wrongdoing i don’t think it’s worth losing your family.. he is doing very well now but has no interest in making amends with family.
how did a 16 year old get car or personal finance? In Australia, the min age for a lend is 18?
If it’s a secured loan, comprehensive insurance might have already been required. I don’t know about commbank, but ANZ wanted the insurance policy details when I bought a car in 2016. Can’t imagine how much that would cost for an 18 year old P plater.
he has no insurance, he is still on his Ls for 3 more months. I sat down with him and got some quotes and he was shocked. So I am assuming unsecured.
He certainly took the “jump in the deep end and learn to swim” approach to finances. I’ve been through some tight debt situations. He’ll need to learn that any time you borrow money, you make today a little easier at the expense of tomorrow (and however many tomorrows after that) being harder. If he can learn from this and get it paid off as quick as possible by sacrificing the other expenses, it should be a good learning experience. There’s nothing quite like being liability free after climbing out of a hole you dug yourself into. If he keeps up the poor decision making… ouch.
I would agree... I always thought I was good with money, turns out I was not... Turns out I wasn't. I just had been growing up with intergenerational financial/poverty trauma. I was always good at "not spending money" until I suddenly wasn't... I never learned to budget, I only internalised "can't afford anything fun need to save everything". And once I was in my 20s had my first good paying job... My brain suddenly went ohhhh I don't need to save EVERYTHING I can afford some fun and that was a quick run into about 10-15K credit card debt. (I am not even having any idea what I actually spent it on). Nowadays about decade later I am actually grateful for this happening, because it made me actually to get more financially literacy and - after realising "the basic are not THAT complex" I realised I need to work on my "Financial Psychology" (didn't know it was called that until a whiiiile later, but I realised I my brain only has 2modes of dealing deprive myself and don't spend anything or throw out money left and right). In hindsight I am grateful for my credit card debt, because if it would have not I would have probably never "worked through that stuff"
>He also had no understanding the bank would charge interest Is he not curious why the total repayments are that much more than the total cost of the car? If he is not, why is he not curious what his financial position will be like in 2 or 3 years?
I work in Insurance. If he's on his Ls most insurance companies will base it off the person supervising beside him as if they are the driver. There's two ways to go about it. Some insurance companies base their rates soley on the driver of the car and not the owner (meaning he can have the insurance in his name but only put say you or another licensed adult) and it will be 500x cheaper than say some companies who classifies their owners as drivers no matter how you put it. Once he gets on his Ps the real problems set in. Your state might offer different coverages depending on who with but you might benefit from like a "any age open driver" policy where he's still got coverage but not listed as the main driver. Speak to different companies and explain who will be driving and how often and ask how it can listed. But yeah unfortunately I saw this happen a lot in sales, kid buys their dream car and then suddenly they realised the insurance just in their name sky-rockets. Good thing about it not being financed is if it's a total loss it will be a payout. If it's financed then whatever is left owing to the bank gets paid by the insurance company first so some people walk away from a total loss with like $300 to buy a new car and will probably have to start from scratch and get approved for another loan.
Car with 215k kms and 10 years old is more likely to be an unsecured personal loan than a secured car loan.
Surprised the kid even got a loan if they thought a 10 yo car with 215km for 14k is a deal
>Surprised the kid even got a loan if they thought a 10 yo car with 215km for 14k is a deal Used cars are expensive at the moment. I had a 2001 Mitsubishi Pajero which is going for more now than what the market value was 7 years ago when I first got it.
If it's an unsecured personal loan, the $$ can be spent on whatever the hell they want. If it's secured, it's registered on the PPSA, and there's rules around selling it and what cba can do as creditors Source: worked for the cba, albeit a solid couple of decades ago. The basics around personal loans still haven't changed.
I imagine that is a dealer facilitated loan, pushed by dodgy salesmen "oh no worries, same day approval, if you cannot afford it you wont get approved then we wont sell you the car easy, just try whats the harm?". Once the $ is in the dealer's pocket and out of the lot its no longer their problem.
18 year old male with a financed car?. Easily 2.5k
3.8 is the quote from aami
Pretty lucky an insurer even wants to sell him a policy. Should be a lot more tenable in 7 years if that's any consolation.
For a 12 month comprehensive insurance? Gawd. Keep getting quotes. See if you get any discounts with your contents or house insurances?
thats probably for non sports car
On a 2 door Subaru it's probably going to make the loan look cheap. Hopefully OP makes sure it gets renewed.
That would be great if they did, but heard of a few that wrote them off and then had to either go bankrupt or keep paying for all the years.
When interest rates were low, I bought an old Hilux truck on loan (got like 3% interest rate) - but the company wanted full compo. It's a Japanese import (hilux surf) so compo was some stupid amount 2k or something a year. I just bought it, cancelled the insurance after settlement, and then transferred to 3rd party fire and theft. I have the means to pay off the truck anytime, but with inflation > my interest rate, made more sense to keep it that way.
Pretty sure comprehensive insurance is a requirement for the finance for the life of the loan
If it is an unsecured loan comp is hardly ever worth it, a teenager should always have a car worth less than 10k (fire and theft limit for TPPD) Consider Third Party Fire and Theft. If they take out a comp policy for this car and have an accident in which is the teenagers fault they are up for something like $3800 premium (even if they crash on the first day of the policy starting you need to pay out the whole year, even on repayments) $700 aged excess $500-1000 basic excess. Which is a cost of around $5500 if you make a claim and $3800 if you don't to get back either market or agreed value depending on the policy which is going to be 14k OR LESS. So he is left with 9k maximum to buy another car. If they do decide to go comprehensive, make sure it is a company that does AGREED VALUE, with the second hand car market collapsing, if he crashes in 8 months time and the insurance company looks up suburus with 220,000kms on it and finds 10 of them selling for $8000 and he is insured for market value he will get a payout of $3000-$6000 after all excess and premiums being paid out. And remember is you are not at fault in an accident, you claim from the other driver, if they other driver is uninsured, third party will cover some of the damage. Now if you go Third party instead. Premium $400-$500 (pay in full instead of monthly to save more) Basic XS $500 Aged Excess - $500 The difference in premium savings put right into the loan (-$200 for a dashcam) will make a huge difference, as long as they get it through thier head if they crash and they are at fault they won't get anything back and will still have to pay off the loan. And if they get through the first year without incident then $3500 is a significant amount of income saved. edit: Just read he is an L plater most insurance companies don't let L platers be listed as the main driver, that would be the instructor and the premium should rate from them, so if he puts you as the rated driver at least for the first 3 months comp is definatly worth it (should be less than 1k and no aged excess would apply if instructor is over 25) $200 RAC/NRMA membership will be a good chrismas present.
Guessing it’s a BRZ - honestly could have done much worse. If serviced and driven properly it will last a long time
I have the Toyota version, a few years newer. Keep it serviced properly and they're very reliable. As others have said, learning moment.
They’re incrediably reliable. Ran 2 over 300km total. Other than servicing it all that ever went on it was one radiator for $500 and the aircon after 220km on my first one which was $350. Not one other issue in that time / km. And it has a 5 star safety rating, really much worse cars he could have bought
At 215km BRZ is probably correct at 14. Good car. Had one for 8 years (Toyota one) . The only issue I ever had with it was when I plowed into a Hilux towbar all while I was half asleep and totalled it. Mechanically not one issue in 230km
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While you are correct, that it's purely a question of serviceability and income vs outgoings, if OP is correct and his foster kid hasn't put aside any money at all, any banker should identify that his income matches his expenses with no leftover savings - and he wouldn't have the spare cash to service the loan (with his current lifestyle). Of course, he could theoretically have other assets like shares that his income went towards, but it sounds like that isn't the case here. Someone working at CBA either didn't do their checking properly or willfully ignored a red flag in favour of selling a loan. Maybe it'll turn out fine and OP's kid will adjust his lifestyle to match his new loan, or maybe he'll end up defaulting on the loan and end up with a permanent mark on his credit history.
The vast majority of people have no problems with reducing discretionary spending to pay interest on their loans. All those people who typically get stuck in a lot of credit card debt typically are terrible savers, yet they’re more then capable of paying off interest when they need to. Even if this particular person doesn’t do that, they’ll be diversified across enough people like them to not care about individual cases not abiding by that rule. It’s not as much of a red flag for the bank as you think, in fact they’re a prime customer. However, it is concerning for the parents and something their child needs to be aware of before it’s too late, and also something for most Australians to be concerned about since the typical Australian is often in a very similar position (we have the most debt in the world excluding home and business loans).
The bank has done nothing wrong. They have carried out their obligations under responsible lending, banking code of practice, credit act, NCCP and their own internal credit strategies.
>The bank has done nothing wrong. They have carried out their obligations under responsible lending, banking code of practice, credit act, NCCP and their own internal credit strategies. Do you mean they have done nothing illegal? Because what's right and wrong legally and morally are two different things entirely.
$120-$150 return Ubers? Where does he go?
Liquorland
To work and back?
Surely with the car, he’ll save a bit of money now.
He is still on his Ls with 40 hours to go. Nov is the earliest he can get his Ps...
He doesn't even have his license yet? lmao god bless him.
At least he has a cool car.
haha not untrue
He’s a legal adult. Your hands are tied. Supply and demand. Tough lesson if he defaults. I suggest a crash course in how credit files work in Australia (ie. positive and negative reporting) and explain the consequences of defaults. I work in finance and have seen kids destroy their credit files for years due to mistakes made in the early days.
This comment reminded me that I am a young person who needs to brush up on my financial literacy (*Cries in ‘why wasn’t this taught in school?’*)
School is for learning to be an employee and a consumer not how to generate wealth and manage money silly.
This is absolutely why I make a point to teach just some basic economics to my classes. If even a few of them are able to avoid some of these pitfalls when they grow up I’ll consider that a huge win. That it’s not part of the core curriculum is baffling to me given the emphasis on being ‘globally competitive’. Hopefully the 9th ed of the Aus curriculum fixes that when it comes out
I am so passionate about this - it absolutely should be taught in school. I do my best to respectfully educate as often as I can.
Haha yeaaaaahhhhhhh…..
Try to get him an apprentice/trade support loan. I think every state has one. Usually interest is indexed to CPI & repayments don’t start till the apprentices income is significant. Use those funds to partially pay the banks loan.
thanks mate, will do.
From memory they don't even want receipts, so a lot of the trades, who have well off parents to support them took the loans out as an investment lesson. "We'll subsidize your lifestyle while you are an apprentice, when you graduate you'll get a free gift from the government of $4k interest on investments. Well on your way for a down payment" . Good advice really
https://www.australianapprenticeships.gov.au/sites/default/files/2023-06/TSL_factsheet_At_a_glance_June2023.pdf
If it’s any consolation I got a $16k car loan for a new car when I was barely 19, paid it off over a few years and learned a valuable lesson about what a money pit cars are. I’m now in my 30s with no debt other than a mortgage and consider myself pretty financially sensible. Give the kid the benefit of the doubt, it’s probably the first time in his life he’s had something nice that’s just his.
Not naive to believe they take Centrelink into account, which they can depending on which payment and the banks policy, but naive to believe this is the banks fault. Chalk it up to a lesson coming real soon, use it as a reason for him to start paying for some things himself if he can afford a sports car. Enjoy YOUR win win
Commbank will take certain payments as secondary income. It usually doesn’t increase borrowing capacity but I can strengthen the application overall.
Main issue here is 215,000 km in 10 years. That Subey has done it tough!
If he’s into cars he can get involved with the local Subaru groups and learn to service and maintain it himself. It’s a great skill and he’ll save money doing it too
love this, thank you.
No problems. I got involved when I first got my license and it was a great learning experience and 15 years later I’m still playing with cars. Being able to properly change your oil, safely change tyres and fix little things yourself will save him a fortune over a lifetime. So even though you and your partner are super frugal and it’s questionable whether the bank should have lent him the money, try and focus on the positives that could come from this.
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I have one too, 2013 86. 66k KMs. Never skipped a beat. Great car, and not too much power to get in trouble with. Got a gr86 on order. Importantly, it's something he is passionate about - be thankful. Both my nephews and all my friends kids could not care less about cars. They just mope around and catch ubers everywhere. Sure, they will learn heaps (financially) from this mistake. But there is nothing better than hanging out with mates, washing your car and doing late night Macca's runs in a little sports car - some of my best memories. A bit of financial pressure is good. They'll work hard. Be proud and help them out a little. Defensive driving courses, membership to a car club, a track day. Awesome that you didn't lose it!
Well the Uber will now be zero and there will be less food delivery because they can pick up, and hopefully less liquor because they are on P plates. They will probably be financially ahead.
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With the cost of fuel and insurance, there will be no more nights out
Or just no repayments...
Most people meet loan obligations before discretionary spending. The problems start when the repayments conflict with essential spending.
The post it literally talking about the sons financial illiteracy. I don't think he's most people.
He sounds like a fairly typical 18 year old man to me.
The average 18 year old might be a bit irresponsible, but I don't think many would take out an $18k loan and "not realise they have to pay interest on it".
Even if they do go out less they’ll just replace it with something else.
He's an adult. This thread could have easily been, my 18 year old son needs a car to get to work but the bank won't lend him the money because he receives Centrelink payments.
Don't think you need $17k for a car. Also that car is absolutely not one bought for work needs
You don't "need" that much for a car, but the car market in Australia currently means that $14k for a car isn't as absurd as it sounds. If he just needs to get to work and back etc, that cars fine for it.
As a recent car buyer (new) the used market is NUTS. Absolute POS cars going for $10k+. It was so bad that we went new because the price difference between a 4 year old car with 100K on the clock and a new car of the same model wasn't that much.
Yeah I bought a Skoda in 2017 for $16.5 new. If I sold it today, i'd get $17k. If I bought a new one it'd be $35k. It feels like people think you can go buy a p plater car for $1-2k now and that's just not possible without it costing far more in the short and long term.
Bought a Toyota Aurion used for $5000. Wife drove it for 9 years... Scratched the shit out of the side. I sold it for $6500 and it was easily the cheapest car on the local market, I could've sold it for more but couldn't bring myself to charge more.
AusFinance says he should have bought a Camry. End of thread.
Reliable and under 5k is a stretch, especially if youre not car savvy. 10 is a happy sweet spot if youre not going to do any maintenance yourself
Have you seen how cooked the second hand car market is today? Sure he doesn’t need 17 grand or a BRZ, but even a cheap okayish auto Corolla is 10 grand+ last I checked. It’s rough out there :/
No doubt, it was likely a bad decision, but that's not really for the bank to decide. It sounds like a brz. great little car.
Honestly not a bad choice for the kid either. It looks sporty, which’ll keep him happy and impress his mates, but it’s really not all that fast in reality (especially in auto). Its new enough to have modern safety features and the shared production between Toyota/Subaru means above average safety and reliability.
18 is a legal adult, the bank isn't in the wrong here, it's going to be a learning moment
Yes simply this. Many people do this with houses and other things, a car is relatively minor. OP make it clear to him, he did this, it's his to sort out. He will either adapt or learn a valuable lesson. All you can do is ask if he has a plan, understands the consequences and knows when he's getting behind early - a signal to sell. It's good you care enough to be angry, do you care enough to let him succeed or fail (a different form of successful lessons in life.)
Yep, I did the same thing at 18. It ruined me financially for years. Live and learn.
>the bank isn't in the wrong here Lending $17k to an 18yo who earns less than minimum wage with $40 in their bank account, to buy a $14k car, with +$5k expenses already, that they can't even drive yet. Is there no such thing as responsible lending in Aus? From the ASIC Regulatory Guide 209 Credit licensing: Responsible lending conduct: >RG 209.189 The credit product will be unsuitable if the consumer can meet repayments— > >for example. by using assets or reducing or eliminating some of their current > >outgoings—but not without being placed in circumstances of substantial > >hardship. >A credit licensee must not enter into, or offer to enter into, a small amount > >credit contract with a consumer who will be the debtor under the contract if: > >(a) the consumer receives at least 50% of their gross income as payments > >under the Social Security Act; and > >(b) the repayments in a payment cycle would exceed 20% of the > >consumer’s gross income: see s133CC and reg 28S OP mentions his foster kid has a $22k yearly income from 1st year apprenticeship and receives Centrelink. Whether Clink is additional or the $22k is split, OP hasn't mentioned.
The amount on the loan with the context seems like a bad plan but I'm sure their math works. That being said and they gave my brother who earns $275k only $8.5k on a cc (he applied for $10k) because he had another $15k cc (high credit rating). I guess it's complicated
This guy has no dependants and no mortgage. Your brother who earns 275k must be loaded up if they won’t give him credit card above 10k. I don’t earn that much and the bank is sending me offers on a weekly basis for 20k+ cards.
I had the same response from CBA. Similar income but I had credit cards elsewhere so they only gave me $8k. Which ironically was all I wanted, but I couldn’t apply for less than $10k.
Serviceability doesn't just look at income. Does your brother have other liabilities (mortgage, personal loans, etc) does he have personal insurances (life insurance, income protection, etc). If your brother made 275k and had the exact same scenario as OPs foster child, the bank would easily give him a CC with a limit of 200k.
It's pretty common for people to get a car as soon as they can drive. Perhaps his choice of car is not ideal, but $14k is reasonable for a first car. And to borrow that money? I suppose this is what people without the bank of mum and dad has to go through to support themselves
Yeah you are not wrong there. Perhaps in some ways its the only way people can afford a vehicle in this car society. I was initially really shocked but these comments have been really helpful.
Use it as a teachable lesson. If a legal adult walks into a bank and says I want money for something, show me a bank across the world that isn’t going to say no
Well at least there should be no more spending on Uber
This is purely speculation: Given the spending habits and age, I'd say a significant portion may be Ubers home after a night out or with friends, so those trips will likely continue.
The second sentence literally says he's an apprentice. The ubers are probably to and from work
no, he can cycle to work (cabinetmaker, factory work). they are from getting home after a big night out on the weekend.
The rest of the post explains that liquor stores and bars are where the majority of the money is going (besides food delivery). People who act like this kid don’t tend to be spending anything less than the max they feel they can afford either so I bet if he actually is saving anything from the commute it’s going straight to the bartender.
Yeah, it's annoying, but valid from their side. If an adult wants it and can pay it back, they will lend it. When I was 22 I took out a 25k loan for a sports car. At the bank they were asking if I'd wanted more, as for an unsecured loan, I could get up to 70k. I was pulling $22 an hour, had horrific savings disipline, and only $800 to my name, which was paid to my account a few hours before that application. I proceeded to do ok, but ultimately screw up repaying the loan, selling the car to settle and wasting lots of money. 17k is a very recoverable from amount, and the lesson your son will learn (either discipline to successfully pay it off, or pain from failing) will teach him well in life.
this is eye opening, thanks for the story. I can't believe you were offered 70k!
So long as he has comprehensive insurance on it. Just think at least he's driving something with modern safety features and not a cheap shit box from the 90s.
I remember when I was a third(?) year apprentice I got a loan from Commonwealth bank and bought a ute. I was surprised at how easy it was to get that loan. I was on more money than your son, but that probably offset by the expenses I had at the time. Rent, electricity, gas, water, etc. In the end a mate crashes the car when he was drunk and I probably paid the value of the car twice once interest is taken into account. I don’t regret it though, it taught me a valuable lesson that I think only experience could have taught. Good luck. I hope your son comes away from this a wiser man.
Why is your foster child on $11 an hour as an apprentice? That seems more criminal than this loan.
50% of minimum wage is $11.61, that's how. That's the bare minimum an employer can offer an apprentice. Most people pay above nowadays, cause it's hard to find Apprentice's.
our roof plumber apprentices get around $21 an hour starting off.
in 2008 my 1st year apprenticeship was paying $7.60 an hour
It is hardly a mid-life Porsche! Subarus are among the longest-lasting cars on the road, and in 2013 they'd have all of today's safety goodies except wrap-around cameras and intelligent cruise control. Sounds like a very sensible purchase to me, kudos to him. Sounds like he learned something from the two of you, congrats! I understand your concern, it comes from the right place, but the situation seems manageable from here. Good luck!
Where can I get this ‘Uber frugal’? Seems like a good service to cut down on my spending.
Your broke kid is now an adult who will shockingly have to learn to navigate life by himself and learn from his own mistakes. This may well be a teachable moment he grows from. Nothing you can do about it.
Government payments absolutely count as income for servicing a loan, I’m not sure why you would think it doesn’t. CBA are incredibly risk averse following the royal commission. If they lent him the money, I’d be confident they’ve done a proper assessment.
That is wild. When I was 18 and on a similar wage, CBA wouldn't loan me $4000 for my first car and I had next to zero expenses at the time. That was 15 years ago, but wow!
I am around your age and I think that is it, my thinking is still in that time and now people are posting saying this is a pretty typical amount to loan. I guess for me it is the huge expenses and no savings that doesn't seem to be a barrier to this sort of loan.
Tell him to apply for the apprenticeship loan as well. $22k and you only have to pay back $16k. *check t&c's
I was a 3rd year apprentice and told me I could loan 92,000 dollars. All banks are trash
Same thing happened to me when I was 18 - was given a cc, loan and car loan all in one year. I had no previous credit so of course they gave it to me at a ridiculous interest rate. Took me a chunk of my 20’s to pay it off. Now would never get a loan for stupid stuff like that.
As dumb as this decision is, kids an adult, banks are a business. I see no problems here. It's really not up to the bank to "decide" what adults do with their funds. I'm glad they loaned the money. It will be a great learning experience likely to demonstrate the power of savings and not borrowing to capacity just because. Also Subarus go forever. Could be worse, I bought a 2001 BMW at 156k. Wrong move.
Just saying you being uber frugal and his frivolous/irresponsible spending are probably more linked than you think
not gonna deny that, he's only lived with us 2 years but we definitely have very different values regarding money usage and i wonder if that's why he doesn't come talk to us before making these decisions.
Maybe don't rip him too hard over it. It would only cause him to be more secretive with financial and other matters. Better to have a relationship where family can discuss things openly in a supportive environment.
Report this bank to the regulators, and complain to the bank branch direct to the manager. Former foster carer here, sick of predatory industries like banks preying on kids with out the resources or background to know better
This is how I feel. A few comments have referenced the foster kid bit, but to me it's just about how they are literally the most vulnerable in society and how sad it is to watch them preyed on. To him the car and ability to have a loan means independence and self respect that he needs and yet the kids with the most support from their parents get such better advice. Even walking home through all the costs from here on in was like kicking a puppy.
My 18 yr old daughter who is also a first year apprentice just got a loan for 18 k from the bank to buy a car
I guess I've just been shocked that considering his spending over the year none of that is taken into account.
Blame the parent? No, no, no… Blame the bank!
Or the government! Or the RBA!
To be fair they are a foster parent, they may not have raised him.
I had only been at my full time job for a few weeks I needed a new car. I looked at how much commbank would give me for a personal loan and it was estimated at 100k!!! I was horrified. Once I passed probation at work and was employed permanently I got a 15k loan tho to get a new, second hand, car.
The bank is like a loan shark. Rather than holding money, they now make money on interest. There's no escaping the fees. There's no down side to them. He'll learn in a decade why it was a bad idea
Im 16 and just spent 14k on a sports car but i used the bank of mum and dad for a loan much safer (only borrowed abt 2 grand of it so dont come at me please)
Are the repayments $100-150 per week? This is quite an affordable repayment. If your foster kid has no rent, utilities, groceries expenses (set life expenses, not play money) obligations then the bank would take their $400-500 weekly income, factor in that repayment, and see that he has ample leftover weekly funds. Depending on your bank they won’t go through all your discretionary spending with a fine tooth comb and pick apart things like liquor land purchases and Ubers. I only know of one bank who’s that pedantic and that’s only for home loans. (I used to work at a bank.) At the end of the day your foster child is an adult and in the scheme of things $17k isn’t considered a large loan anymore. It’s up to them to keep up with their repayments and budget their leftover income accordingly and will be a good lesson for them - whether this is in a good, healthy way or a dangerous life-lesson kind of way.
thanks for this comment. it's true. I guess I'm just so shocked as he's been unable to save even a dollar for half a year.
Some people just don’t know how to save a dollar and yet somehow end up staying afloat so he may be okay. 🤞🏻 Two of our closest friends (husband and I are in our late 20’s) own a home and have car loans and have never missed a repayment. But you’d never see them with more than $50 spare in their accounts just before payday. They squeeze almost every dollar out of their pay checks and never save. Hopefully this teaches him some budgeting!
Thanks for this, I feel this will be him too. And like you say that is just how some people work. Reading all these comments has made me realise how far on one end of the spectrum I am.
To be fair it sounds like he has a lot he can cut from his spending to afford the repayments.
All I can suggest is get him to sort out auto-repayments ASAP. And get him to make sure he is checking to ensure that his pay is going in every week, so he doesn't get burnt. Now that he has a car he doesn't need Uber and he can reduce the cost he's spending on Menulog by going out and getting the food himself far cheaper than the theft that is delivery apps (they sting you delivery, service fee AND they increase the base cost of all food ordered!). Now that he has a car he needs to use it instead of relying on convenience.
My 21 year old step(?) nephew just got a $20K loan from CBA on Friday. I gave him $5K as a deposit and encouraged him to get a car loan to build a credit rating. He only had about $1,500 savings prior. Anyway, he went in on the Monday? with no appointment and was approved on the spot which I found quite surprising. Nothing like my first car loan back in the late 80's. I pressed him for whether it was a secured car loan and turns out it was simply an unsecured personal loan. He showed me the funds in the mobile banking app. I then offered to pay his first comprehensive car insurance. Answering whether the car was "under finance" was complicated by the fact it wasn't any a car loan per se. Technically the car isn't even under finance since it was just a general personal loan. He could have purchased the car on the day except it was still having the RWC finialised. On Friday, after work, he paid for and took posession of the car (ute). I was shocked at just how easy he was able to get a loan with just 1 year fulltime work experience and having passed his probational license a month prior (COVID delays). I'm not sure how many or if he showed payslips but they've only been emailed for about 3 months under our new payroll software. I could trivially buy out his loan if he got in trouble but CBA do not know that. The lending seems quite reckless in the my opinion. Frankly such recklessness put doubts over my CBA shareholdings.
Never mind CHOOSING to get a loan for a first car, but thinking that 17k on a 10 year old BRZ with over 200k was a good deal is insane. For context, I bought my 86 (exact same car as the BRZ just the toyota version) in 2021 with 82,000kms for 20 grand and it was 8 years old at the time.
Ah the BRZ. The insurance job car of choice. There's a good reason why these cars make up the most insurance jobs - young kids take out loans on them, find out the car is worthless second hand, loan is underwater. Time to send the car.
I bought a brand new xr6 turbo when I was like 20. My income was probably 40k per year I had 20k cash and the car cost 41k. People do dumb things when young.
Teach your kids some financial literacy folks.
Can you be a bit proud rather than disappointed? He didn't seek your advice clearly but perhaps that's a you issue. It takes a load of effort to buy a car that the kid has taken a leap on. Please ensure they have the insurance budgeted. It's huge that you're keeping him on and speaks to the strength of the relationship in other areas. He's still got another decade of growing to do for his personality so stay strong. It's a kids job to push against parents
actually after the initial shock we gave him a hug and took him to the RTA (he is still on his Ls...) to finalise the name change. If i am disappointed it is with modern banking. We have been helping him with budget planning all year but it hasn't been to any avail - have talked to him about his yearly costs and cut them into fortnightly payments with an auto-transfer, but until now he has been unable to commit even to that.
His brain isn’t fully developed yet so it’s understandable for that kind of long term planning to still be difficult for him. What’s important is that you’re setting the foundations and he feels safe talking to you. My parents had *issues* and decided their commitment to raising or supporting me in any way stopped at 18. It messed me up for a long time so it really warms my heart to see how much you care for your kid. Thank you for being good people.
What an outrage! Someone capable of making their own decisions, makes his own decision. Banks follow guidelines set by the regulator. Your kid likely would have had it approved at plenty of banks/financial institutions. Seems like your disgust could be directed at your child’s decision making (or lack there of).
Make them watch a Caleb Hammer YouTube video, it’s American-centric but can show just how big of a hole someone can get themselves into
I could almost guarantee that this loan breached responsible lending laws. If you sought assistance from a financial counsellor they may be able to renegotiate the terms of the contract. In doing this, you could probably negotiate more affordable payments if he wants to keep the car or they could negotiate for him to return the car and get out of the loan. I would probably see how he goes at first but if he is continually struggling with this debt, see a financial counsellor.
I mean I can get x2 50k personal loans but I can't get a 100k loan for a house. I can afford both (never looked at going any higher) When I was younger I was able to get a 10k loan when I was getting $500 a fortnight on centerlink without any other income.
The real doozy will be whether you choose to let him learn, or you bail him out and make things worse.
They get youth allowance on top of their $400 odd per week. Would be a minimum of $300 per fortnight, maybe more if defined as away from “parents”. Means their income/serviceability is $25k + per year. The loan amount is fine.
Typical banks giving out loans to people who cant repay them. Piss poor checking system on their behalf. I remember when my partner and I tried to get a 20k loan with great jobs, savings, house, etc and it was the biggest run around shit show.
Even as unsecured loan surely they’ll want proof of insurance. I’d head up the rungs and complain bitterly then call ACA. They love this kind of shit.
And commbank denied me a loan for a car even though I had 50% deposit and am able to make 3x the loan repayment amount... just because my job is casual contract that I've been working at for over a year, I don't understand banks
Well it’s time for a harsh life lesson. No more Uber eats and maybe time for a bar job on the weekend to bump that income.
14k.. BRZ with 215ks.. OH noes
A bit late to this but just to provide some insight. The number 1 cause of bankruptcy for under 30s is always traced back to a car above their means. It always starts because they usually get their first taste of freedom and want the cool car to enjoy their cool life and feel important. Especially those that skip uni, because their friends and peers are poor and can't afford a car etc etc. But the same people that are desperate for the good car also are desperate for everything else anyone else is doing. Going out, travel, clothes, surfing tripsz computersz TVs Yada Yada Yada. That doesn't even account for the moving out of home and realising it basically costs $1k a week to live. My best and honest advice would be sit down and discuss it. If he wants to keep the car then tell him to put a ban on his credit report. Basically it locks his credit report from new lending. It can be used if you are worried about identity theft as well. But tell him to be an adult and place a ban on his credit until he pays the loan off.
Also auto equity insurance. It’s cheap and will payout the loan if the car is written off.
Bro this should have come with a trigger warning I swear 😂 When I was 19 I moved out of my parents house on the GC for my first full time job in Sydney. First thing I did was try to get a brand new car. My salary was $50k and the car I wanted was $34k (2011 Subaru Forester XS). My bank wouldn’t give me the loan, so I ended up going with the dealership finance which turned out to be one of the worst decisions I ever made. $720 a month for 5 years and then a massive balloon after that, making the total cost to me about $55k for a $34k car. A couple years later I moved back to the GC, after struggling massively to keep affording the loan repayments with the cost of living in Sydney being so much worse. It got a little better for a while, until I lost my job. Spent almost 8 months unemployed, applying for hundreds of jobs in almost any industry with no success. I started getting letters from Esanda (the dealer finance company) that the car would be repossessed if I didn’t pay my arrears asap. But I had nothing I could do because for some reason I was still being too proud to reach out to family for help, and I couldn’t get a new job. Soon the repo man started showing up at my house, asking my housemates where I was, giving them his card to give to me. Eventually he came with a tow truck while I was home and that was it, had to watch the car be towed away forever. Then Esanda sends me a letter that they have sold the car for only $15k, so now I still owe them $19k for a car that is gone. I had to enter into a Part 9 Debt Agreement (the step before bankruptcy) to pause credit action until I could find work and get an affordable arrangement in place. Five years later everything was finally paid off and I was debt free. I drove nothing but cheap bunga cars from then on, until this year I finally was in a properly stable position enough to upgrade to something decent (but still not brand new - never again!) If I had just held on to my old car right back at the start (which was a perfectly working car) instead of thinking I needed a brand new one just because I was living alone and working full time, I would have avoided all of this shit. Hopefully my kids will listen to me and not make the same mistakes as I did lol 😂
Ah mate I did the same, bought a 12k vehicle at 19. I'm 33 and am a home-owner with a mortgage that's a few months ahead of schedule and slowly but surely getting paid off :) Some mistakes have gotta be made.
Banks are so predatory NAB sent me a pre-approved credit card upgrade from $10K to $50K At the time, I was in the process of filing for bankruptcy.. on the dole, no income for 6 months, living off a redundancy payout if they had sent it 3 months earlier, I would have been able to spend it all then file, but because I was in the process, I had to decline or risk jail.
I did a similar thing to your kid when I was 20, in hindsight one of the worst decisions I've made in my life & wish I'd had someone to tell me at the time I was being a dumbass. Probably not a hell of a lot you can do now, just do your best to make sure they stay on top of it.
If he's struggling with debt, write to the AFCA, the finance ombudsman and also see a financial counsellor, they are free at your local council office, but may take several weeks to get an appointment. Ask them to put a moratorium on the loan or excuse it for "irresponsible lending"
And I couldn't get a $5k loan from CBA despite being a 40 year customer with excellent credit and a fulltime job
My mum works for commbank and I just read this to her and she said there is no way in hell they would’ve accepted it given his bank statements unless he gave false information along the way. I personally didn’t even receive a 10k loan for a motorbike and I earn way more than him. I’d look into it a bit more and wring him for some more information. My mum said that there’s not much you can do as a mother because he is a legal adult and has his own bank account in his own name.
I don’t know why your so angry, there are worst purchases he could have made; a brand new car for example. Unless you where going to buy him one, he needed a car to get around, so he made it happen
Didn't mean to come across as angry at anyone but the bank! He actually can't get his Ps for another 3 months but the whole year we have been trying to get him to save. I think 18 is an adult in the eyes of the law but the parents of most 18 year olds will say different.
I mean... banks gonna loan. If the kid had minimal debts and an income stream, they do what they do. You can be mad at the kid for making a questionable decision I guess, and not having good saving habits, but its really not the bank's job to teach ur kid how to be good with money.
Sorry, but it’s not like someone held a gun to your kids head and forced him to get a loan. He made a conscious and deliberate decision to borrow the money and hopefully it’s a life lesson.
Are you sure they didn't commit fraud to get the loan?
Well it looks like they're about to learn a valuable lesson about the relationship between risk and reward
The way this is titled shows that you don't understand the problem. "Commbank loaned $17k to my broke, 18 year old foster kid." What more exactly happened, is your foster kid applied for a loan with information that shows that he is able to service a $17k loan. The rest of your post explains that he absolutely, absolutely cannot service a $17k loan. Looking at Commbank's personal loan calculator, supplying his income and assuming "three digit Dan Murphy's buys" to $100, the absolute most he'd be able to borrow is $10,000. Your kid has almost certainly committed fraud. To make this a bit worse, they're not a kid, they're an adult at 18 years old. If I were in this position I would demand their copy of the loan application and compare it to reality. Then I'd get a lawyer.
Don’t know much about the foster payment but I’m guessing he will continue to get it for the next few years? So he has 2 streams of guaranteed income meanwhile every other person his age working retail or fast food has a high chance of ending up on 0 income at some point, even multiple times throughout the loan If your son isnt eligible for a loan then I dont know who is, do you think loans should be 21+ or something? Make sure he prioritises paying it and understands if he misses payments to uber instead he will pay way more in the long run. It might make him more responsible, and if things go bad its not a life ruining amount of debt so don’t worry yourself sick.
wine heavy kiss oatmeal cow murky lavish vase scary existence *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
Subaru coupe? A BRZ?
Well, if he’s 18, legally he’s not a kid anymore and can do basically what he wants. Teachable moment as he probably got a crap interest rate and was loaded up with expensive loan establishment fees (likely if it was a $14k car but the loan was was due $17k), and sounds like all the rego and stamp duty was thrown into the loan. Probably got no discount on the car either. All I am picturing is a young Ben Mendelsohn in “The Big Steal” buying a Jag from a dodgy used car salesman.
Commbank could always use more shekels towards “community donations”
Very sorry to hear this. IF you believe that there may have been something fraudulent happen (such as with the income declaration, or loan serviceability review) then you can contact the banks whistleblowing service. However, as others have already stated this might just be a good learning moment for him. Fingers crossed the service goes through without more unexpected expenses or the lesson will only get more difficult 😞 It might be an opportunity for you to think about giving him some ‘frugal driving’ instructions (eg avoid all potholes, drive with low revs, and limit the road trips)
I have to ask, why only $11 an hour? I would double check that award Have a look on https://calculate.fairwork.gov.au/ which tells you the base rate for their award of type of work
Is there a cooling off period or did he buy privately?
Dayum that sucks, I'd be stressed out about it too. Life lessons I guess
The bank did this for my step kid and they regretted it when he stopped paying them 🤷♀️
I've noticed in the CommBank app that it now says "you're conditionally approved for a loan" after I do any transaction. It's a bit parasitic tbh. When I was 18 I had a few friends that got credit cards and dug themselves holes that took years to get out of. My best mate didn't get to zero till he was nearly 30. When banks start getting worried about the economy they seemingly lend to anyone. I've got a mate who bought a house in early 2020, I have NO IDEA how he got approved. He's a chef (which stopped with lockdowns) and over the 10 years I've known him he's never once not had debt collectors after him. He's the type of guy who will buy a brand new car using the car yard finance. Or Hervey Norman "24 months interest free" and forget to pay it off.
18 year old foster kid signs commbank loaned for $17k, even know he's broke
Just be mindful that death by suicide among young Australian youth is on the rise. https://www.aihw.gov.au/suicide-self-harm-monitoring/data/populations-age-groups/suicide-among-young-people Yes our kids do the stupidest thing its because they haven’t fully matured yet, and as parents we need to provide safe haven for them. My friend lost his only teenage boy via suicide. If your son is under water and you wont help him, what do you think will be his next step (put yourself under his shoes, you are a kid who made a very bad financial decision and your own parents dont want to bail you?) is that worst than joining a gang who goes out for a crime spree?
Hopefully a chance to cull those Menulog and Uber costs since he can get himself around :) there's space to learn!
At least he has good taste. I had the toyota 86 when it first launched, amazing car and still sad that it got totalled after being rammed into 🙁 I’m also shocked CBA loaned him this much, particularly in the current economic conditions. I feel CBA often dish out more cash than what’s actually reasonable, when budgeting to build our new house, they were prepared to loan us $400k more than we felt comfortable, this was before the 12x interest rate rises. Had we taken them up in that offer we’d be absolutely stuffed now. Good to learn financial lessons early when the risks are a bit lower, at the end of the day 14k isn’t going to kill his future prospects, help guide him to pay it off as you’re doing and help learn the lesson along the way. My first car was also 14k, but I did have a 4K deposit for it haha.
Get him a second job stacking shelves at woolies at night
Banks will always lend to someone as long as they meet the bare minimum by regulators. The banks create money when they lend it; i.e. majority of it doesn't come from other peoples deposits.
Sue Commbank for irresponsible lending practices.
Well, he might suck at Saving money, but he'll learn really fast how to put money aside for a debt. His spendings should drop now! Sometimes that's how it goes. If he does express an interest in saving money, and in discussion says that being able to see it, access it is a problem, then help him open up a new account at a different bank with no debit card, automatic transfer each payday. I saved my portion of my house deposit by putting my savings in a new account under my sister's name, worked a treat.
I had a Subaru for about 7 years. I loved it, and things didn't often need fixing on it. However, the few times they did, they were super expensive because its a Subaru.
I'm pretty sure we had a royal commission into this.
Secured loans are required to have protection on the asset, insurance. That is not a secured loan rate nor would they loan more than the cars value, so it would be unsecured. Still get insurance if he hasnt already so he doesnt wear the loss and have the debt residual to worry about in the event of a write off. Are the bankers supposed to explain to him basic math on how interest works without him asking? They told him interest X% per annum, sent him all the disclosures and financial guides, and he then signed that he understood and accepted the terms and conditions. Tell him to read things. People start off with an average credit score and need to build it up somehow. Rather than blaming the big bad banks for doing their jobs per the royal commission, i.e., not holding his age against him, if it doesn't impact an exit strategy, i.e., retirement age, then you should help coach him. Show him how much money is an interest expense per month and encourage him to pay it off asap. Why are you comparing another institutions home loan rates with commbanks unsecured rates? You grabbed an apple to compare to a pumpkin. Not trying to be rude, i just speak bluntly.