A Groan at a Loan - How do people do it?

[thejakes]

Hi guys, have just been to HSBC to have an informal chat about getting a £50k loan to finance me through training starting in Jan '05. I will have to pay back £600 PER MONTH over 11 years starting 6 months after graduation!!! I was indeed (as I hope most of you would be) quite shocked and wanted to know if there was anyone out there who has been through the same process successfully (or unsuccessully) in terms of getting a job and affording the repayments.

Once I started thinking about additional costs on top of these repayments while living somewhere such as rent, food, petrol, tax etc. I really started wondering how I'm ever going to do this! If I hope that my first salary will maybe around the £25,000 mark including allowances, then after tax and the loan repayments every month (plus additional costs), then I'll have no money to live!!!!!!

However, I believe that now is a good time to start training and I want to try and do everything in my power to start soon.

Anyone out there know how I feel? Please can someone give me hope?!!!

Thanks.

[jamestkirk]

Are you integrated or modular. If the latter, it should not cost that much.

You could try and get a couple of loans. To clarify, if the max payment terms are 6 years with hsbc then look at other banks who may do 10-12 years. A longer debt period but more managable payments.

e.g £20,000 fro HSBC over 6 years £30,000 from other bank for 10 years.

This could run beside a lower loan amount from hsbc.

Also, if you take a loan and can't pay it back due to no job etc. A bank will not immediately send the thugs round to collect. Generally, they will look for interest on the loan payments.

This can ease the pain until a well paid job comes up.

Thats if banks want to give you the money of course. And remeber that banks that do not do the HSBC study loan thing, do not really cater for that, no matter how much you explain it to them. So think of another reason.

Good luck, and hopefullly you'll find a cheaper way. I had to sell my house to fund it. Some people call that brave.......I know what I call it!

jtk

[Frank Furillo]

jamestkirk is right, if you want it you will find a way, i sold a very nice detached house and moved in to a largeish terriced, sold the wifes nice volvo V70 and changed it to an old 850 kept my car, as it is worth nothing, just to fund myself modular.
Should be finished mid next year
FF

[BigGrecian]

Have a look at this thread Easiest 35K I ever borrowed (http://www.pprune.org/forums/showthread.php?s=&threadid=145989)

Hope this helps

Marlow, Bucks - try going to a larger HSBC branch like Maidenhead/Wycombe - they might be used to dealing with the loans rather than Marlow (Used to live there) and might be able to give more advice. Althhough it sounds like a standard Prof' Studies loan though.

[thejakes]

Thanks guys, the £50,000 loan will be paid back over 11 years and I'm going Integrated. I just wanted to see if there was anyone out there who did the same thing and is reaping the rewards?

Respect to you guys selling your houses and cars, I'm sure it'll all pay off for me too, and I'm definitely going ahead with it - was just interested to see how many others have done (or are in the process of doing) the same sort of thing, and if anyone is currently managing quite comfortably to pay back a loan of the same proportions?

Cheers

[Birky]

I too am pondering the same questions. However, I'm willing to bet that I'm older than theJakes (just turned 40) so the repayment implications (below) really are at least as crucial for me as for him.

I have to balance the quality of school I choose (and therefore how expensive the training is) with my age (i.e. will I be employable AT ALL for much longer?) and with my ability to borrow (probably around £40,000) and with my ability to save (probably around £25,000/year net if I really put myself into it).

Take the integrated course at Jerez (after all, at 40, you KNOW there isn't much point in the modular route) for example;

...it's marked up at around £68k all in (that's course plus all basic accommodation and sustenance). If you were to borrow all that money from HSBC or the like, you would be looking at paying back about £95k (if you took ten years to do so at current rates). That works out at about £800 per month.

So you pass your course, then have to start paying the money back six months later. You are offered a job flying a cargo thing around for £28,000/yr. Your take home pay would then be around £1700 a month. After paying your £800 loan off you would net £900 to live on. Maybe that's not so bad, unless the job offered requires you to relocate and rent on top of your existing home!

Then again, if the job builds your hours fairly rapidly, your magical 1500 hours might happen within, say, 3-4 years. From that point on, you could start looking at the EasyJets of this world as a direct entrant. You are then on a slightly better (though not exactly exciting) salary of around £30-35000.

The way I see it, unless you get a job within five years that pays a substantial salary, you will have been better off spending your money on scratchcards.

Last but not least, whatever you can save rather than borrow...do it.

What do you think...?

[jamestkirk]

Big grecians link to 'easiest 35k....

interesting post.

Bit of advice to anyone taking a loan with the added credit insurance.

It is against the law for a loan company to decline you after acceptance because you did not buy any insurance product (i.e critical illness cover)

When you get proposed for the loan, take whatever they want you to. Cancel it after.

On a £600 pm repayment, i am sure that the life, critical illness cover would be £30-50. that is 30 mins flying in a PA28.

And please check that is covers you when you are NOT working. If it was sold to you and that is one of the conditions, you can claim it was miss sold and get a refund on the premiums you have paid.

hope this helps anyone thinking of a loan

[G SXTY]

Hmm. I’ve got an £80k mortgage from First Direct, and I have to pay £600 PER MONTH over 20 years. But at least I’ll have a house at the end of it.

Call me chicken, but the thought of owing £50k without any guarantees of a job would scare the hell out of me – I’d have trouble sleeping at night.

As you correctly point out, you won’t have any money to live – and that assumes you find a decent job straight away. Assuming the worst, and you’re unemployed for a while, what’s the plan ‘B’?

Why not consider modular training, then at least you can do it bit by bit as money allows. You’ll also have the flexibility to match your training schedule to job market conditions, and although you still have debts when you qualify, they won’t be anything like that much.

Scary stuff.

[Birky]

You're absolutely right...it's scary stuff. However, I have thought long and hard about this and realised the importance of questioning your own motives. Try these...

1. If you won the lottery, would you still pay up for an integrated course of £70? (If so, then you obviously really love the idea of flying than being a lazy bastard supping a pinacolada on a beach)

2. If you calculated that you could have made exactly the same money (and no less) by doing something way less risky, would you still do it? (If so, then you have to admit that job satisfaction is at the top of your motive list, not earnings)

3. When all is said and done, do you find the idea of ending up like Steve McQueen's bad dream in Papillon ("Guilty...of a wasted life") far more worrying than risking going for an ATPL? (If so, you must realise that never having tried for a dream is far worse to live with than having tried your best but failed)

Modular vs Integrated...My view is...do you want to risk £40,000 and have no job or risk £70,000 and improve your chances enormously?

Birky

[G SXTY]

Oh dear, I really hope I haven’t started another integrated v modular argument.

My point was about risk and exposure. Let’s put it another way; unless someone has guaranteed you a job at the end of it – and no-one will - any money you spend on training is a gamble. Call it an investment if you like, but the hard truth is that you’re spending a large amount of money in the hope that there’s a job at the end of it. There are no guarantees, whether you’re modular, integrated, or even sponsored.

Now that’s fair enough, it’s a risk we all take, and we wouldn’t be doing it unless we were optimistic about finding a job. However, that optimism must – absolutely must – be tempered with a cold dose of reality. You must consider the possibility that maybe, just maybe, you will be one of the 80-90% of people who start training but never make it to an airliner.

Now I am absolutely, utterly determined to succeed, but even I have to admit there’s a chance I won’t make it – and even if I do, I’ll always be 1 medical away from losing my career. The reason I can sleep at night is that I won’t gamble what I can’t afford to lose. There’s enough equity in the house to go and do an integrated course tomorrow, but I won’t do it because it means jacking my current job in and taking on another £50,000 worth of debt.

Instead, I’m keeping the day job for as long as I can and paying for my training bit by bit. Of course it’s taking much longer than I’d like, but I’ve got 90 hours, I’m half way through the ATPLs, and the biggest credit card statement I’ve seen was around £6,000. The CPL/IR will obviously add to the bill, but I fully expect to complete my training with no more than £15-20k extra on the mortgage – and still in full time employment. Now that’s still a lot of money to risk, but it’s way, way different to being £50k in debt with no job. I’d call that rather exposed.

And that’s the point – employment wise, this is a very risky industry to get into. Get it wrong (or just be unlucky) and you could be financially crippled. I would strongly suggest that anyone embarking on commercial training should try and minimise their risk and exposure, every step of the way. To get a loan for £50k and bet everything on getting a job at the end of it might imply big cahones, but it strikes me as foolhardy.

(And yes, if I won the lottery, sure I’d sign up for an integrated course – but then I could afford to lose £70k).

[Flying Farmer]

Birky

Just remove the rose tinted specs for one minute and work out the figures if you qualify and two years later still have no airline position, hows it looking now?? not quite so rosy I guess.

Add shall we say £5000 for an instructor rating and figure on earning somewhere around £6000 a yr for a while as an instructor, I did hear a few positions were available now.

Just a little advice from where I stand at the moment, at 40 you will find it damn near impossible to get a foot in the door, it dosen't matter if your are the star student, face the facts that there are younger, equally talented guys out there for the picking. Not saying you wont make it, it's just more difficult.

Flying F

[redsnail]

Birky,
I'm mildly amused at the pay rates for a cargo "thing".
Jet, yep, you're on the money. Turboprop? Nope, that's closer to command pay. For an FO on a Shed flying freight, you'll start on about £14K (add in ~£2-3K's worth of allowances). You'll be flat out taking home £900-1,000 a month. Now do the budget.

[Blinkz]

I really still don't understand peoples views on integrated courses. Do you *reallly* think that their good value? They in no way guarentee you a job, do they even give a better chance then a modular??? prob not. The only airline I have heard that cares about the difference are BA.

Does it REALLY matter? £20,000+ for less hours then a modular course, not good value where I come from :confused: :confused:

[Birky]

Dear G SXTY...

Gosh, it is easy to sound controversial on Pprune even when you don't intend to. No controversy intended. I agree that one would be insane to 'expose' oneself to huge debts if one hadn't thought about worst case scenarios.

Dear Flying Farmer and G SXTY...

Just for clarity, my worst case scenarios are as follows (and in this order):

1. Being 65 and kicking myself for never having attempted to fly commercially....something I have wanted to do since being a boy. I'm still contributing to PPRUNE though. Oh my God...unimaginably depressing.

2. Being 42 (and having borrowed ALL the money to do it) and am now without any flying job at all because I was considered too old at all the interviews. I am now in debt to the tune of around £100,000. Utter nightmare.

3. Same as above except I have saved HALF the money and BORROWED the other half. I still have no job to show for it and am now in debt to the tune of £50,000. Half an utter nightmare.

4. I am now 44 (having taken two years to save the money and another two to pass the courses). I have saved ALL the money to learn to fly but I still have no job for the same reasons as above. I am not in debt but I feel pretty cheated and my wife has divorced me as a result of all the rows about wasted money. Er, pretty grim.

5. I am 44 and have saved ALL the money to learn to fly. I have a paid flying job but the salary is ****E. I feel resentful toward my employer and the industry for undervaluing me so much. I kick the cat a lot. Rough, but not the end of the world.

6. I am 44. I have saved ALL the money to learn to fly. I have a paid flying job and the money is OK but not earth shattering. I spend the next 20 years of my life pottering about the skies, earning a reasonable living and not owing anyone a penny. Happy chappy!

In other words, I have no rose tinted specs on. I know how much I'm up against.

Ultimately, I reckon that if you can save all or most of it (rather than borrow it) then it's not going to feel like life-and-death either way.

(One thing I don't know for sure is how much LESS employable I would be at 44 with a paid for licence than at 42 with one I've borrowed all the money for. Interesting topic perhaps?)

Dear Blinkz...

...regarding mod vs integrated...

My point was this; if you're going to risk a huge amount of money, then it may as well be on training that is:

respected by the airlines
targeted at the airlines
examinable by the airlines

Don't you think? It seems to me that modular training falls down somewhat on those three key areas. I'm only repeating the feedback I have had from a lot of sources. Would you or anyone else agree?

Dear Redsnail...

I agree. You're right, I'm wrong. There are some really badly paid jobs out there. Does anyone know of a website with a good cross section of UK airline salary scales (that are current)?

----------------------

[High Wing Drifter]

It seems to me that modular training falls down somewhat on those three key areas. I'm only repeating the feedback I have had from a lot of sources. Would you or anyone else agree?
I can't disagree, but it is a matter of degrees. I don't think the difference is as stark as some claim, but modular students are undoubtably at a disadvantage.

[G SXTY]

Controversy - on Pprune? Surely not.:p Just come along to the Gatbash and we'll discuss it over a beer or three. It's bound to make more sense then. :ok:

The serious point is that people need to understand the risks they are getting into - I can't stress that enough. Sometimes I get the impression that some people are too eager to get an enormous loan without considering their back-up plan should it all go tango uniform. That worries me.

[Bluejet]

Yep, been there and done it.

Borrowed 44k off HSBC back in '99. Completed modular route from nil to cpl/ir in 11mths 15 days. Then spent year and a half unemployed before ending up in the RHS of a medium jet.

Top tips from me.

1. Your loan starts to accrue interest the moment you draw the first bit down.

2. If you need 55k for the course, by the time you get to the end of the course you will have picked up around 2-3k of interest...so you now need to borrow 57-58k to fund the course and the interest on the loan.

3. Immediately you graduate get a job, any job (would you like fries with that?), preferably one you can walk away from at v.short notice and start making interest only payments. The bank will love you for it and your loan will not get any bigger. I know you can get a 6 month repayment holiday, but in 6 months you will owe them another 1800 quid. In my case as I was making interest payments the bank allowed me to continue in that vein for 18 months till I got my job. My mate who thought I was mad not taking advantage of the 6 month repayment holiday had to start repaying his loan at the 6 month point. The bank would not entertain an interest only option for him.

Once I got my job, I started throwing 800 quid a month at the loan. On top of that I bought a house with my wife and struggled through each month. After 2 years, sold house, used equity in house to pay off outstanding loan, world now a great place. New job, much bigger salary and no loan. So from completing flying training to repaying loan 3.5 years.

Glad I did it, and a lot of people out there thought I was mad to do it and take the risk. Now spend quite a lot of time telling them to sod off when they ask me to get them cheap flights ;)