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Consolidating all debt into one loan - worth it>?
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airking
Posts: 11 Forumite
Hey everyone!
Just wondering if it would be worth me taking out a £5k loan to pay off my credit card, my partners credit card and our car finance? Does taking out a loan to cover another loan affect credit rating and potentially mortgage amount? The actually loan will be around £50-£80 cheaper a month for us than the two credit cards and the finance on the car.
thank you
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Just wondering if it would be worth me taking out a £5k loan to pay off my credit card, my partners credit card and our car finance? Does taking out a loan to cover another loan affect credit rating and potentially mortgage amount? The actually loan will be around £50-£80 cheaper a month for us than the two credit cards and the finance on the car.
thank you
If you haven’t already, join the forum to reply!
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Hi. If you're 'credit worthy' enough to get a loan then perhaps look at getting a 0% balance transfer credit card(s) for each of your cards instead - then you won't be paying interest and can pay them off quicker and then possible look at overpayments on your car loan.Debt 2008 - Approx £20k | April 2014 £6526 | 30 October 2015 DEBT FREE
PPI claim success - £4338 & £764
YNAB Convert
Saving Goals - YNAB Buffer: £100/£850 | Emergency Fund: £0/£1000 | Maldives: £0/£10,0000 -
If you do, just make sure to close the credit card accounts as soon as they are paid off. Otherwise they will likely just build up again0
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ShirePiskie wrote: »Hi. If you're 'credit worthy' enough to get a loan then perhaps look at getting a 0% balance transfer credit card(s) for each of your cards instead - then you won't be paying interest and can pay them off quicker and then possible look at overpayments on your car loan.
Hi, thank you for the reply. Lloyds actually approached me earlier this year while i was in branch after snapping my debit card about whether I'd be interested in a 6k loan so I know I'm 'credit worthy' as you put it.
I know next to nothing about 0% balance transfer credit cards, would this essentially just be moving from credit card to another? thank you0 -
Million_Percent wrote: »If you do, just make sure to close the credit card accounts as soon as they are paid off. Otherwise they will likely just build up again
They really wouldn't0 -
A 0% credit card for balance transfers over say 20 months or longer if you can get one saves a lot of interest during that time & allows you to pay what you were paying previously say so you get rid of the debt sooner. Some even allow you to pay off an actual overdraft which if you are with barclays really will save you a fortune. Always set up a direct debit for the min, then you will not get charged & lose the 0% terms.
never spend anything on one though - defeats the object!0 -
Why, what's changed? You've run up debts once, why are you so sure that you won't again?
Self control. It's pretty simple. There were extenuating circumstances to my debt, prior to losing my job, (this was couple of years ago) and then having to move house (find deposit and first months rent) I would use the credit card sparingly and pay off the full amount each month. So I'm 100% sure, this debt has not been through greed, or living beyond my means.
So my question is, is this the best option? To consolidate into one loan/one monthly repayment? Does this affect future credit and/or mortgage prospects? Thank you0 -
They really wouldn't
Why not? I did it twice. Unless you change your spending habits and close the cards, there is a risk that they will fill back up, bit by bit. You wouldn't be the first and won't be the last to say it would never happen and then find you now have two debts.
The best idea would be to do a full statement of your accounts, working out where you are spending money and if you are living within your income. If you aren't, cut back because refinancing your debt won't solve the problem. If you are living within your means, then throw all your spare money at the debt with the highest interest. Getting those debts onto 0% cards would be better than a loan that charges interest.
Good luck!Some days, it's just not worth chewing through the leather straps....
LB moment - March 2006. DFD - 1 June 2012!!! DEBT FREE!
May grocery challenge £45.61/£1200 -
The issue with a loan is you can be tied in to their terms as to how long you're paying it off, it depends what is more important to you - being debt free sooner of having more money a month.
Personally I would rather 'bite the bullet' on paying off all I can in a shorter period of time. Then you can spend all your money how you want, rather than handing it over to someone else!
Someone may be able to help, but I'm sure I've seen mentioned an online calculator that will show you how much interest you pay on different debts over their lifetime, when really you want to be paying OFF the debt itself.Debt 2008 - Approx £20k | April 2014 £6526 | 30 October 2015 DEBT FREE
PPI claim success - £4338 & £764
YNAB Convert
Saving Goals - YNAB Buffer: £100/£850 | Emergency Fund: £0/£1000 | Maldives: £0/£10,0000 -
If you get a loan and say it's for 'consolidation' that can be a bit of a flag for future credit. It can look (rightly or wrongly) as if you can't manage your finances.Debt 2008 - Approx £20k | April 2014 £6526 | 30 October 2015 DEBT FREE
PPI claim success - £4338 & £764
YNAB Convert
Saving Goals - YNAB Buffer: £100/£850 | Emergency Fund: £0/£1000 | Maldives: £0/£10,0000
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