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  • FIRST POST
    • Amara
    • By Amara 21st Sep 16, 10:25 PM
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    Amara
    Secured consolidation loan
    • #1
    • 21st Sep 16, 10:25 PM
    Secured consolidation loan 21st Sep 16 at 10:25 PM
    I've noticed other thread about consolidation loan. Person I know wants to take secured loan to pay off other debts. Has an offer, but lender doesn't want to just give them money, only cheques payable to debtors ( credit cards companies, banks) . Is it normal? It sound weird to me. It's not about loan being secured on the house, just form of it, not money, just cheques. So, is it a common practise?
    Tackle your debt, take a part in 1 debt vs 100 days challenge.
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    • Pixie5740
    • By Pixie5740 21st Sep 16, 10:31 PM
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    Pixie5740
    • #2
    • 21st Sep 16, 10:31 PM
    • #2
    • 21st Sep 16, 10:31 PM
    Why does this person want to take what is presumably unsecured debt and turn it into debt secured against the roof over their head. Consolidation is rarely a good idea but to consolidate and risk your home is a doubly bad idea. Consolidation doesn't pay off debt you just owe someone else the money.

    It's not unheard of for lenders to want to pay other lenders directly when consolidating. If this person wants a consolidation loan what difference does it make if they give the money to their creditors or the new lender does it?

    If this person wants to consolidate because they are struggling to keep up with repayments I urge them to contact one of the debt charities (CAP UK, National Debtline or Step Change) before making any hasty decisions.
    Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery.
    • Amara
    • By Amara 21st Sep 16, 11:01 PM
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    Amara
    • #3
    • 21st Sep 16, 11:01 PM
    • #3
    • 21st Sep 16, 11:01 PM
    Thanks Pixie. I just find this idea weird. Fair enough , they want to consolidate, but still.
    Tackle your debt, take a part in 1 debt vs 100 days challenge.
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    • enthusiasticsaver
    • By enthusiasticsaver 21st Sep 16, 11:07 PM
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    enthusiasticsaver
    • #4
    • 21st Sep 16, 11:07 PM
    • #4
    • 21st Sep 16, 11:07 PM
    I would agree it is not a good idea to consolidate unsecured debts into a secured loan. Maybe the new lender wants to make sure the money will be used for purpose stated.
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    • jonesMUFCforever
    • By jonesMUFCforever 21st Sep 16, 11:09 PM
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    jonesMUFCforever
    • #5
    • 21st Sep 16, 11:09 PM
    • #5
    • 21st Sep 16, 11:09 PM
    I think this is a vey good idea - if the idea is to consolidate why not have cheques payable to creditors?
    Safer for the lender in case the debtors were not paid.
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    • Thrugelmir
    • By Thrugelmir 21st Sep 16, 11:42 PM
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    Thrugelmir
    • #6
    • 21st Sep 16, 11:42 PM
    • #6
    • 21st Sep 16, 11:42 PM
    I just find this idea weird.
    Originally posted by Amara
    The alternative is that the borrower has a lot of money in their account. That they can go and spend. I'd find it weird that a consolidation lender would want to risk this.
    A man is rich who lives upon what he has. A man is poor who lives upon what is coming. A prudent man lives within his income, and saves against a rainy day.
    • DCFC79
    • By DCFC79 22nd Sep 16, 11:25 AM
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    DCFC79
    • #7
    • 22nd Sep 16, 11:25 AM
    • #7
    • 22nd Sep 16, 11:25 AM
    I see the logic in it, it prevents your friend from spending the money on something else which in turn creates more debt. Just might be paying more for the privilege.
    Je Suis Charlie
    • AnotherJoe
    • By AnotherJoe 22nd Sep 16, 12:18 PM
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    AnotherJoe
    • #8
    • 22nd Sep 16, 12:18 PM
    • #8
    • 22nd Sep 16, 12:18 PM
    Thanks Pixie. I just find this idea weird. Fair enough , they want to consolidate, but still.
    Originally posted by Amara
    I find it prudent rather than weird. If the lender doesn't do this, there will be for sure be some customers that simply go and splurge the new money rather than spend it on consolidation .
    • dealer wins
    • By dealer wins 22nd Sep 16, 1:05 PM
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    dealer wins
    • #9
    • 22nd Sep 16, 1:05 PM
    • #9
    • 22nd Sep 16, 1:05 PM
    Wow cheques still exist!
    All replies are super fluffy and nice, and newbies are so lovely and welcome. PPR never again!
    • Thrugelmir
    • By Thrugelmir 22nd Sep 16, 2:57 PM
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    Thrugelmir
    Wow cheques still exist!
    Originally posted by dealer wins
    Money remains in the lenders account while earning them interest.
    A man is rich who lives upon what he has. A man is poor who lives upon what is coming. A prudent man lives within his income, and saves against a rainy day.
    • Amara
    • By Amara 22nd Sep 16, 10:00 PM
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    Amara
    Thanks for replies. So, nothing dodgy in it? I admit I thought for a second
    Tackle your debt, take a part in 1 debt vs 100 days challenge.
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    Gaining assets
    • Pixie5740
    • By Pixie5740 22nd Sep 16, 10:29 PM
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    Pixie5740
    If it's a secure loan for consolidation then no the new lender issuing a few cheques isn't dodgy. If this person is determined to secure a whole bunch of debt to their home then I hope, at the very least, it's not one of those secured loans with a variable interest rate because those rates only seem to vary one way and that's up.
    Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery.
    • andyfromotley
    • By andyfromotley 23rd Sep 16, 9:29 AM
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    andyfromotley
    This happened to me on a personal loan about 15 years ago. I thought it was an emminently sensible idea.
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