Loan advice (high interest rate...)

ryanm8655 · 18 October 2016 at 11:52PM

Why isn't 123 account a good idea? The cashback more than covers the fee?

I can definitely comfortably afford to pay £200/£250 more a month. That rate will also enable me to continue to save, so I could probably afford to pay off more...but paying off over 24 months gives a little more leeway in the budget.

Gunther_Golf · 19 October 2016 at 8:55AM

It absolutely is possible to access a debt consolidation loan at a reasonably low interest rate. My partner borrowed £20k from AA Loans (Bank of Ireland) 3 months ago for the purpose of debt consolidation which was stated on the application as the purpose of the loan. Representative APR was 3.9% and they offered a loan for £20k at 5.9%

Much healthier than the 16.9% that the OP is paying currently.

There ARE options depending on your personal circumstances.

Pixie5740 · 19 October 2016 at 10:45AM

ryanm8655 wrote: »

Why isn't 123 account a good idea? The cashback more than covers the fee?

The Santander 123 account offers cashback for household bills and interest on credit balances up to £20k and cost £5/month. The Santander 123 Lite account offers cashback on household bills and costs £1/month. As of 1st November the interest rate for credit balances up to £20k in a Santander 123 account is dropping from 3% to 1.5% which could mean you'd be better off with the Lite account instead.

Edit: Are you getting value for money from your NatWest account? Could you get the same cover for less elsewhere or buying separate insurance policies?

Have you signed up for Experian's expensive Credit Expert product. If so cancel it once your free trial is over and save yourself £14.99 a month.

Consolidation isn't necessarily a bad thing if you can make your debt cheaper. That doesn't just mean getting a lower rate because a lower rate over a longer term can actually make the debt more expensive. It's not that consolidation is bad as such, it can work providing you have tackled the root cause of the debt and have started budgeting properly.

ryanm8655 · 19 October 2016 at 12:24PM

Ahh I see...didn't know about the 1,2,3 lite...

I don't think I could get the same cover for less elsewhere but am thinking of cancelling the Natwest account regardless...certainly in the short term as I rarely use the tastecard, have no holidays planned until summer next year, and won't have a car until early next year so the breakdown cover is pointless...the only thing I really use is the phone insurance...

I have signed up to Experian so will make sure I cancel...

This time I am planning to reduce the repayment period as well as interest rate (if I can). I am even considering repaying over 12 months (I could afford it but would need to cut back - there is room for cutbacks but it would involve a change of lifestyle i.e. far less eating out, cutting back on drinking, and no holidays next year (other than the 2 week trip to Thailand for which I have already paid, though will need spending money...).

Plan to complete the budget spreadsheet from the debt section (when I manage to find it...).

Thanks,
Ryan

Pixie5740 · 19 October 2016 at 12:54PM

This is the statement of affairs calculator that is commonly used on the Debt Free Wannabe board.

I've been on NatWest's website and I reckon you must be paying at least £12 a month for the account. You say you don't use the taste card so that's no benefit to you. If you are under 65 then I think you'll be able to get travel insurance for you Thailand trip for less than £24.

http://www.moneysavingexpert.com/insurance/cheap-travel-insurance#annual

Mobile phone insurance you can get for less than £6 a month.

http://www.moneysavingexpert.com/insurance/cheap-mobile-phone-insurance

So even though you're planning to close your NatWest account you can still get all the cover you need.

enthusiasticsaver · 19 October 2016 at 2:07PM

The reason I advised Santander 123 lite is that the fee is lower (£1) rather than the £5 the Santander 123 charges. The Santander 123 is ok if you have savings of £10-£20k as it pays 1.5%, currently 3% but if you have little savings it makes no sense to have it. Go for the lite version instead and save yourself £48 per year.

ryanm8655 · 19 October 2016 at 2:28PM

cheers! Didn't realise lite exists!

ryanm8655 · 21 October 2016 at 2:16PM

Update...

Opened a 1,2,3 lite account...

Also applied for a loan of 10K, rate offered was high (13.49%) but less than HSBC (16.9%) and reduced the repayment period to 2 years (from 4 years) so overall about £150/month more to pay but save about £3/4k in interest...so I can save money by consolidating after all...

Rate Setters offered 10% at the Pre-app stage so will see if I can get that rate otherwise go with Santander...

ryanm8655 · 21 October 2016 at 5:26PM

Ok so I've now been accepted for a ratesetters loan of £10k @11.1% (10.9% was for £12k...).

Is there any reason to go for the Santander loan over ratesetters? I.e. any hidden costs I'm missing or anything?

I am going to want to overpay in all likelihood...

Thanks,
Ryan

Thrugelmir · 21 October 2016 at 5:38PM

ryanm8655 wrote: »

there is room for cutbacks but it would involve a change of lifestyle i.e. far less eating out, cutting back on drinking, and no holidays next year (other than the 2 week trip to Thailand for which I have already paid, though will need spending money...).

Precisely why debt consolidation doesn't work. ( Lenders basing their experience on statistics that evidence this fact). As people still expect to enjoy themselves. Paying down debt is boring and too much like hard work. Worrying about tomorrow when it arrives. Is where disaster strikes. When income for any number of reasons falls or dries up.

My grandfather used to walk 4 miles to work and back to save the bus fare. Then used the money towards his first house deposit. Shows the change of culture over the decades and the addiction to debt.

Loan advice (high interest rate...)

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