Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@. Skimlinks & other affiliated links are turned on

Search
  • FIRST POST
    • zippygeorgeandben
    • By zippygeorgeandben 3rd Dec 16, 11:11 PM
    • 709Posts
    • 883Thanks
    zippygeorgeandben
    Unsure whether to consolidate - please advise
    • #1
    • 3rd Dec 16, 11:11 PM
    Unsure whether to consolidate - please advise 3rd Dec 16 at 11:11 PM
    Hello everyone,
    First of all, I can't believe I still remembered my username and password. It's quite a while since I've logged into MSE!
    Anyway, here are the facts.
    I currently have three debts I am paying off
    1) £5727.54 loan(started at £11k)with Zopa @ 4.8% - I pay £230pm
    2) £7568.74 loan(started at £12k in 07/2014)with Tesco @ 4% - I pay £222.61pm
    3) £4211.19 credit card with Virgin Money @ 0% until June 2017 - I pay £200pm (which is more than the £50pm they ask for)
    Total debt equals £17,507.47.
    Total monthly payments are £653pm

    I wish to reduce my monthly direct debit outgoings to give me more flexibility for stuff I want to buy.
    After having a brief search, Sainsbury's have a loan for £18k (so this covers all the debts written above) @3.1% which would mean me paying £323.89pm.
    TSB have a loan for £18k @3.5% which is £328pm. I'd be paying £1621 in interest for this deal.
    Both these loan repayments per month are roughly £330 less than I currently pay off per month at the moment (which as I've said above, are £653pm)

    I can't seem to find the wood for the trees here. What would you do?
    Would you just continue to pay the three original debts off? I can afford these repayments (just) but it doesn't give me lots of flexibility.
    Or would you consolidate all three debts, pay them off, and take out a new 5 year loan where the monthly payments would be reduced by over £300?
    Or is there another option I should consider?
    Thanks for reading,
    Ben
Page 1
    • jonesMUFCforever
    • By jonesMUFCforever 3rd Dec 16, 11:25 PM
    • 24,174 Posts
    • 11,445 Thanks
    jonesMUFCforever
    • #2
    • 3rd Dec 16, 11:25 PM
    • #2
    • 3rd Dec 16, 11:25 PM
    The first thing I would be asking myself would be ..............with that level of debt will I find another lender willing to lend me money at any rate never mind at 3.1%??
    It might well work out for you but you will have to be disciplined for the next 5 years - can you honestly say that this will be the case?
    What goes around - comes around
    give lots and you will always receive lots
    • zippygeorgeandben
    • By zippygeorgeandben 3rd Dec 16, 11:30 PM
    • 709 Posts
    • 883 Thanks
    zippygeorgeandben
    • #3
    • 3rd Dec 16, 11:30 PM
    • #3
    • 3rd Dec 16, 11:30 PM
    THanks for the quick reply jonesMUFC (good luck tomorrow!) - my credit score is in the 'excellent' bracket. I've never defalted. Doing a soft credit search on the MSE site rates me at 90% to be accepted. I don't forsee any changes in circumstances, certainly for the next year. In a stable job and the landlord as just kept the rent at the same level for the next 12 months. Perhaps I should stay paying what I am for the next 6 months at least to reduce the debt even more. Just worked out that in 26 months this will all be paid off so maybe that should be the goal? Especially with the virgin card being 0%?
    Ben
    • DCFC79
    • By DCFC79 3rd Dec 16, 11:38 PM
    • 30,273 Posts
    • 19,151 Thanks
    DCFC79
    • #4
    • 3rd Dec 16, 11:38 PM
    • #4
    • 3rd Dec 16, 11:38 PM
    Your credit score albeit axcellent doesnt mean anything when it comes to lenders since they dont see it, they see the history.

    Your reports with the other 2 agencies will show you a different score anyway.
    Can people stop loaning money/being a guarator to family/friends, it rarely ends well and you lose out as your money is gone or you get shafted with being a guarantor.
    • YorkshireBoy
    • By YorkshireBoy 3rd Dec 16, 11:39 PM
    • 29,529 Posts
    • 17,326 Thanks
    YorkshireBoy
    • #5
    • 3rd Dec 16, 11:39 PM
    • #5
    • 3rd Dec 16, 11:39 PM
    I wish to reduce my monthly direct debit outgoings to give me more flexibility for stuff I want to buy.

    What would you do?
    Originally posted by zippygeorgeandben
    Seems you're turning a 5 year debt repayment plan into a 7.5 year debt repayment plan so you can satisfy your "wants". I'd be concentrating on "needs" personally, and tightening my belt.

    But you say you want to free up some cash monthly, so why are you overpaying Virgin? That's £150 a month right there...isn't it?

    You don't say what your income is, but if it would support a loan it might support an MBNA money transfer card...and allow you to get some/all of the loans onto 0% interest for over 3 years for a small fee. Might be a better option?
    Last edited by YorkshireBoy; 03-12-2016 at 11:42 PM.
    • ratrace
    • By ratrace 4th Dec 16, 1:10 PM
    • 464 Posts
    • 316 Thanks
    ratrace
    • #6
    • 4th Dec 16, 1:10 PM
    • #6
    • 4th Dec 16, 1:10 PM
    Mate there is no way around it, you can shift it all you like but you are still not paying it off quicker all you are doing is delaying paying it off. its only 24 months mate knuckle down get it paid as fast as possible, then start saving for a house deposit so you can buy your own place and pay your own mortgage instead of someone else's

    Sorry to sound so blunt mate but there is no way out accept paying it off

    All the best
    People are caught up in an egotistic artificial rat race to display a false image to society. We want the biggest house, fanciest car, and we don't mind paying the sky high mortgage to put up that show. We sacrifice our biggest assets our health and time, We feel happy when we see people look up to us and see how successful we are”

    Rat Race
    • Superscrooge
    • By Superscrooge 4th Dec 16, 2:06 PM
    • 906 Posts
    • 627 Thanks
    Superscrooge
    • #7
    • 4th Dec 16, 2:06 PM
    • #7
    • 4th Dec 16, 2:06 PM
    This link helps explain why debt consolidation is often not a good idea. True, you might be able to reduce your monthly payments. But by extending the loan period, you actually end up paying MORE interest, not less.

    http://www.daveramsey.com/blog/debt-consolidation-truth

    Debt consolidation seems appealing because there is a lower interest rate on some of the debt and a lower payment. However, in almost every case we review, we find that the lower payment exists not because the rate is actually lower but because the term is extended. If you stay in debt longer, you get a lower payment, but if you stay in debt longer, you pay the lender more, which is why they are in the debt consolidation business.
    Last edited by Superscrooge; 04-12-2016 at 2:09 PM.
    • zippygeorgeandben
    • By zippygeorgeandben 4th Dec 16, 7:52 PM
    • 709 Posts
    • 883 Thanks
    zippygeorgeandben
    • #8
    • 4th Dec 16, 7:52 PM
    • #8
    • 4th Dec 16, 7:52 PM
    Hello everyone again (OP here) - thanks to all of you for taking the time to respond to me. Everyone gave me food for thought and I appreciate it.
    @ratrace - yes I think you are right. Knuckle down and keep reducing the debt.
    @yorkshireBoy - I see your point. I'm paying £200 instead of the £50pm for Virgin. The reason for that is because since September I've been doing to 50% 20% 30% money budget planner. I won't go into details here about the planner (will bore people I'm sure) but paying £200 a month to my virginCC meant that I was paying 50% towards all my 'needs' (monthly DDs)
    Thanks once again everyone and thanks @superscrooge for the link.
    Ben
    • Dobbibill
    • By Dobbibill 4th Dec 16, 10:51 PM
    • 2,457 Posts
    • 3,555 Thanks
    Dobbibill
    • #9
    • 4th Dec 16, 10:51 PM
    • #9
    • 4th Dec 16, 10:51 PM
    Just a little more food for thought OP.

    In June, roughly 6 months time, you will have a balance of approx £3k that is going to start incurring interest.

    The loan rates you have are reasonable, hang off with the consolidation and in May/June time, look at applying for a 0% card to move your VM balance when the interest kicks in.
    • MrsTinks
    • By MrsTinks 4th Dec 16, 11:11 PM
    • 14,993 Posts
    • 23,026 Thanks
    MrsTinks
    Also with 90% of people similar to you get accepted... 10 in a 100 do NOT It's never guaranteed even with the MSE checker, or any other checker.

    Your best bet really is to review why you want to free money up. Yes paying debt off is dull and boring and rubbish. But your target is to have ALL of that money spare so you can save some and spend some - without paying someone else lots of money on top.

    Think about it - next time you want to buy something look at the price - is it still good value if you add 30% on top of the price? Because that's likely to be the cost at least on top to you until you are debt free. Is it still such a fabulous thing you NEED to have right now
    DFW Nerd #025
    DFW no more! Officially debt free 2017 - now joining the MFW's!

    My DFW Diary - blah- mildly funny stuff about my journey
    • ReadingTim
    • By ReadingTim 5th Dec 16, 11:05 AM
    • 2,147 Posts
    • 3,048 Thanks
    ReadingTim
    I wish to reduce my monthly direct debit outgoings to give me more flexibility for stuff I want to buy.
    Originally posted by zippygeorgeandben
    Stuff you want to buy, but can't afford. Mate, you're living beyond your means - you're spending, or have spent, more than you earn. If your finances are a ship, you're taking on more water than you're bailing out, and eventually the ship sinks, and you drown.

    You don't need a consolidation loan, you need a wake up call - get over to the debtfree wannabe forum and sort yourself out.
    • zippygeorgeandben
    • By zippygeorgeandben 5th Dec 16, 6:18 PM
    • 709 Posts
    • 883 Thanks
    zippygeorgeandben
    Thanks Dobbibill. I've never paid interest in anything in my life so I don't intend to start in the Summer of 2017!
    Thanks MrsTinks as well - when I read it back, it does maybe come across that I'm not good with money but I actually think that I am. I can pay these monthly outgoings. I also have a bit of money in my account, not sailing close to the wind in the terms of going into my overdraft.
    ReadingTim - you haven't advised, you've just come across as, well, rude quite frankly.
    Ben
    • AliceBanned
    • By AliceBanned 5th Dec 16, 7:03 PM
    • 2,347 Posts
    • 1,099 Thanks
    AliceBanned
    I don't get it - you are paying interest on your loans? So you have paid interest.


    I think in the previous posts everyone is trying to be supportive. They can see you are wobbling and want an easier way out and they are just saying there isn't an easier way really.


    I need to hear it just as much so that's why I responded. I totally sympathise, it's no fun repaying so much every month but we are all here to encourage eachother.
    DFW - goal December 2019

    _________________________
    • Angry Bear
    • By Angry Bear 5th Dec 16, 7:08 PM
    • 1,909 Posts
    • 4,666 Thanks
    Angry Bear
    Thanks Dobbibill. I've never paid interest in anything in my life so I don't intend to start in the Summer of 2017!
    Originally posted by zippygeorgeandben
    Hmm, that doesn't agree with ...

    I currently have three debts I am paying off
    1) £5727.54 loan(started at £11k)with Zopa @ 4.8% - I pay £230pm
    2) £7568.74 loan(started at £12k in 07/2014)with Tesco @ 4% - I pay £222.61pm
    3) £4211.19 credit card with Virgin Money @ 0% until June 2017 - I pay £200pm (which is more than the £50pm they ask for)
    Originally posted by zippygeorgeandben
    The "best" option numbers-wise would be to take a 5-year loan at a lower rate that allows overpayments (such as Sainsburys). Then continue to make the payments at the same amount you are now.
    The snowball calculator http://www.whatsthecost.com/snowball.aspx suggests that you'd be debt free by April 2019 if you somehow managed to get a low interest loan for the full amount. However, that only works if you are PHENOMENALLY disciplined (most people, including myself, are not) - to make this worthwhile you would HAVE to make the overpayment every month, even though it was optional.

    Play about with some of your options on the Snowball calculator to see what difference it makes - I can't help but notice that at £200 a month you won't have cleared the Virgin card by the time the 0% runs out (as Dobbibill has already said). What are you going to do if you can't switch to another 0%? I don't know what the rate would revert to, but guessing something like 13.9% would mean you'd still be debt free by May 2019 at your current rate. Better than Nov 2021 with a new 5-year loan!
    Do you not know that a man is not dead while his name is still spoken?
    ― Sir Terry Pratchett, 1948-2015
    • zippygeorgeandben
    • By zippygeorgeandben 5th Dec 16, 7:54 PM
    • 709 Posts
    • 883 Thanks
    zippygeorgeandben
    Sorry! I meant that I have never paid interest on a credit card! My apologies.
    As someone who had student loans, I'm aware of paying interest in my life!
    I appreciate everyone taking the time to respond and copy and paste certain anomalies in my posts.
    Thank you Angry Bear for the link too.
    Thanks for the encouragement AliceBanned.
    Ben
    • zippygeorgeandben
    • By zippygeorgeandben 5th Dec 16, 11:08 PM
    • 709 Posts
    • 883 Thanks
    zippygeorgeandben
    @dobbiebill - I just received this email from HSBC (my bank) regarding a new CC
    0% interest on balance transfers until July 2019 with our low balance transfer fee of just 1.4% (min. £5)*1, *2 – as long as you apply and transfer a balance by 31 December 2016.

    I've worked out that that is roughly £60 to transfer and nothing to pay for 32 months.
    I could also reduce the repayments and make overpayments on one of the other loans yes?
    I obviously wouldn't have any interest to pay for a couple of years (although I know it's £60 to transfer).
    • Nebulous2
    • By Nebulous2 6th Dec 16, 12:44 AM
    • 1,627 Posts
    • 987 Thanks
    Nebulous2
    @dobbiebill - I just received this email from HSBC (my bank) regarding a new CC
    0% interest on balance transfers until July 2019 with our low balance transfer fee of just 1.4% (min. £5)*1, *2 – as long as you apply and transfer a balance by 31 December 2016.

    I've worked out that that is roughly £60 to transfer and nothing to pay for 32 months.
    I could also reduce the repayments and make overpayments on one of the other loans yes?
    I obviously wouldn't have any interest to pay for a couple of years (although I know it's £60 to transfer).
    Originally posted by zippygeorgeandben
    That is a good deal!

    However there are two issues:-

    1. You don't really need a BT yet, as your credit card is still interest-free until next year. (presumably something you have already paid a fee for.)

    2. You might not get much of a limit given your other debts.

    Does your Virgin card allow money transfers? One possibility might be applying for that card, seeing what the limit is, doing a money transfer to pay off some or all of a loan, then doing a BT to cover the money transfer.

    That becomes complicated though, with potential missteps, and two fees to pay.

    It might end up more expensive than applying for a money transfer card and not a huge saving on the interest you will pay on your loans.
    • YorkshireBoy
    • By YorkshireBoy 6th Dec 16, 10:04 AM
    • 29,529 Posts
    • 17,326 Thanks
    YorkshireBoy
    I've worked out that that is roughly £60 to transfer and nothing to pay for 32 months.
    Originally posted by zippygeorgeandben
    Other than the £105 a month (at the outset) minimum payment of course.
    • Dobbibill
    • By Dobbibill 6th Dec 16, 6:03 PM
    • 2,457 Posts
    • 3,555 Thanks
    Dobbibill
    You will have to weigh this one up OP.

    You don't need it yet, you still have 6 months left on your VM card.

    I would be asking myself 'What is the rush with HSBC, why before 31st Dec? Are they planning better/longer BT deals at the beginning of 2017?' If only we had a crystal ball

    Waiting comes with the risk that they won't offer anything as long, or with a limit high enough....that said you will owe less by June.

    Another option would be to transfer some of your VM balance now, assuming you are given a limit high enough, leaving just as much as you can clear by June. (Remember to factor in the minimum payments to HSBC so you will possibly be paying less to it than you have been)

    Either way allow time for a contingency- if you don't get the limit you want/need from HSBC, you have time to consider your options.

    As said though, something you need to weigh up, do you apply now? or do you wait until May 2017 ish?
    • zippygeorgeandben
    • By zippygeorgeandben 6th Dec 16, 7:43 PM
    • 709 Posts
    • 883 Thanks
    zippygeorgeandben
    Thank you once again for the feedback everyone! All food for thought!
    Yes I don't need that card but it's not often I see a 32 month balance transfer offer at such a low rate!
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

160Posts Today

1,254Users online

Martin's Twitter