Seeking your expertise!

Charlies_angel_2 · 4 March 2006 at 1:59PM

I'd be really grateful for any recommendations about the following;

Personal loan 12 864 outstanding 5.9% 2 years left 536 per month
Car loan 9 405 outstanding 5.6% 2 years 9 months left 285 per month
Credit card 1 700 (virgin 6.9%)
Overdraft 4 300!! (feel awful putting that down) Totalling 28 269

We are currently selling our house (now in rented due to relocation) and will make a delightful 60K profit after fees. What is the best way to go? should we pay off all debts start again debt free with only 30K to put down on next property, or continue paying loans but have lovely amount in bank to put as deposit on next house.

Feel quite ashamed of amount we owe but really don't know how it happens, overdraft seems to creep and creep. We are with Lloyds TSB gold account. Should we change banks to get better deal (have never liked Lloyds or their attitude) or is it too much hassle, plus will we have to take out another loan to pay the overdraft? Really dont want to!!

Also I don't have a brilliant understanding of loans and how they work, someone on another thread suggested if the interest is paid its not worth paying the debt off why is this and would this apply to me?

Finally... whatever happens there will be 30K to invest for a period until we move again (currently relocated for partners job) what do you wise ones suggest for this.. I really fancy premium bonds, he does not! which account etc is best for increasing returns????

Thanks in advance really hope you can help.

jobbingmusician · 4 March 2006 at 2:04PM

Welcome to the board!

I'm not an expert in whether you should pay off your loans or not, EXCEPT that you sound to have a fair credit rating, so why don't you aim to transfer the CC to an interest free one?

YOu will need to check, with the loans, whether there is a penalty for repaying early.

DON'T go for Premium Bonds for the 30k investment. Apart from the fact that you are gambling the interest, it's a low interest rate anyway, and (main reason) your funds have to sit in PB for a MINIMUM of a month before they are put into the draw. So you kiss goodbye to the first month's interest!!! It this therefore a REALLY bad idea to use PB for short term investment.

Hope this helps!

Me_Myself_2 · 4 March 2006 at 2:05PM

My only advice (from personal experience) is to definitely pay the debts off and then invest the rest.

For me temptation is too great and then you can add the money you're not payiong on loans to savings. It's great seeing it grow (a distant memory for me).

acheekymunky · 4 March 2006 at 2:11PM

My minimum payment on my debts at the moment exceed my wage..I have just started a new job with a very low basic salary but the opportunity for commision is huge. Obviously with just starting the job I am just setting up my business as such and will only be on the basic for a few months.

I cannot get a loan to consolidate my debts as I have been refused multiple times and my credit score has gone from good to fair in a matter of weeks.

What should I do?!?! Would anyone suggest going to a credit counselling service?

Help!

Doomed_Economy · 4 March 2006 at 2:17PM

Pay off your debts & cut up your credit cards.

Its tempting to have the £60K in the bank because it "feels good" but in reality the interest on the loans is eating into the capital & reducing your savings - you just can't see it because its coming from your salary. Paying off your debts, living within your means, & saving what extra you can will have a much more beneficial & dramatic effect on your net worth.

You must change your habits though & stop using credit!!

tyllwyd · 4 March 2006 at 5:38PM

My feeling is that you don't have a 60K deposit to put down on your new house, because whatever way round you look at it, you have already spent 30K of that money. I would definitely pay off the debts and start with a clean sheet (but being careful not to run the debts up again!)

If nothing else, at least that means that you will start off living within your means. What would happen if you put 60K deposit down, then found you struggled to pay off the other debt. You don't want to be in position where you have to sell the house you have only just bought so that you can get your equity back.

If you go for a flexible mortgage, you can always overpay and build up the equity again.

MrsTinks · 4 March 2006 at 6:28PM

i think the others have said it well... BUT do you really need the GOLD account? you pay for the priviledge every month... about £10 i think... so £120 a year. Check the benefits you get and decide if you actually use them... i didn't so just downgraded

As for Lloys... THEY SUCK

I was happy with them for 8 years. Then I wanted to re-arrange my loan to buy a newer car and because I also have a business account it turned into a nightmare. The Loan department said "Suuuuure! Here we'll give you 9.9% apr, ah but you're a business customer so your business account manager needs to approve this" HA! The business branch said £18.9% and I said "YOU WOT!!!!" Afterd days of runing round and getting very legal on them etc (oh and getting the number for the head office for Lloyds TSB in London and calling them and speaking to an executive in the headoffice...) I suddenly got everything approved. Soon as I had time I called round for a better deal and now have 7.8% I think loan with Egg. What a difference! Really healpful! Also changing my bank account to Alliance and Leicester. ALL my money business is leaving Lloyds! My loan, current account, credit card and business account...

Uhmmm I'll get off my soap box now

ladywood · 4 March 2006 at 6:45PM

Second that about LTSB - we have just closed our platinum account - once I realised we were paying £180 for the privilege of them having our money - and getting an interest rate of next to nothing (yet paying a fortune for arranged overdrafts!).

Have also moved to A&L. I would not say it has been without any problems - they cancelled 2 DDs before the new ones had been properly set up so we had a couple of "where's our money letters" over those bills (but all sorted out quickly - no long term damage). But it has been a lot less hassle than I imagined. We now have a free account, 0% intro. overdraft facility and interest on the balance.

And the "freebies" we actually used from LloydsTSB Plat. (mainly the AA cover & travel insurance) we can replace for a fraction of the money we have saved!

lifesachallenge · 4 March 2006 at 7:43PM

acheekymunky wrote:

My minimum payment on my debts at the moment exceed my wage..I have just started a new job with a very low basic salary but the opportunity for commision is huge. Obviously with just starting the job I am just setting up my business as such and will only be on the basic for a few months.

I cannot get a loan to consolidate my debts as I have been refused multiple times and my credit score has gone from good to fair in a matter of weeks.

What should I do?!?! Would anyone suggest going to a credit counselling service?

Help!

Cheeky - start a new thread so people can answer you query, otherwise it takes it away from OP.

lifesachallenge · 4 March 2006 at 7:49PM

The only reason I would use the 60K for a deposit is if you can get a significantly better deal on a mortage - ie better interest rate, which would equate to a bigger saving than what the devt is costing?

Speak to some mortage companies or brokers and find out ( or someone here Im sure or on mortage board could tell you~) and then put your figures through the snowball calculator to work out which works out cheaper,.

Otherwise I would least try and shift everything to 0% and pay off at end of 6 month period. - BUT be careful making too many applications before mortage appl.
Good luck!

roswell · 4 March 2006 at 9:13PM

You need to change the way you use / see money obviousely you have consolidated in the past going by the personal loan, then you got a new car at the same time ??? I think there is a pattern there.

Once you have changed the way you use monay and only live with in your means should you consider paying off your debts with the profit from your property or else you run the risk of A) Spending the profit

Being in the same situation in a few years time.

have look in this board there is a post about the worst money saving decissions people have made and most of them have been !! CONSOLIDATING DEBTS and running up the debts again.

Seeking your expertise!

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