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  • FIRST POST
    • cwhaley1
    • By cwhaley1 15th Sep 17, 1:53 PM
    • 13Posts
    • 1Thanks
    cwhaley1
    Consolidation loan
    • #1
    • 15th Sep 17, 1:53 PM
    Consolidation loan 15th Sep 17 at 1:53 PM
    For various reasons from the past, I have a bit of a portfolio of loans/credit cards... in total (across two cards and two loans) I owe around £17,300 Direct debits are in place and the credit cards are paid off above the minimum payment.

    Loan 1 £253 a month, £7000 remaining
    Loan 2 £53 a month £700 remaining
    Credit Card 1 £200 a month £4100 remaining
    Credit Card 2 £175 a month, £5500 remaining
    Total monthly payments at £681

    A dire situation I know... often keeps me up at night. Interest rates aren't great too.

    I live in a house with my partner, with a mortgage. My wages mean I pay my half of every bill (no luxuries) and the payments I listed above, but it leaves me with around £80-£100 a month which just isn't do-able. I struggle every single month.

    I've been looking at debt consolidation loans. The only two I have an "80% chance" of approval with are with Halifax and Sainsburys. I'm so nervous of being rejected and having a mark on my credit file, that I've not applied. What can I do? If I borrowed £18k at 17.9% it would give me a lot of breathing room and I'd lose some of that weight on my shoulders.

    Just need some positive thoughts and advice here I suppose. I'm on the verge sometimes.
Page 1
    • zx81
    • By zx81 15th Sep 17, 1:56 PM
    • 14,156 Posts
    • 14,859 Thanks
    zx81
    • #2
    • 15th Sep 17, 1:56 PM
    • #2
    • 15th Sep 17, 1:56 PM
    A consolidation loan is probably out of the question, due to the amount you already owe. Any additional borrowing will be added to that figure and most lenders will run a mile. The fact that a 17.9% rate looks attractive also suggests your credit history is flaky at best.

    You need to throw everything you can at the highest rate debt, while maintaining minimums (plus £1 for cards) on the others.

    You could look at small steps - eg try a 0% BT card - to test the water, but I wouldn't expect to be able to borrow yourself out of the debt. It generally doesn't work in any case, as people see they have some nice empty cards waiting to be used.
    • spadoosh
    • By spadoosh 15th Sep 17, 2:03 PM
    • 4,588 Posts
    • 6,012 Thanks
    spadoosh
    • #3
    • 15th Sep 17, 2:03 PM
    • #3
    • 15th Sep 17, 2:03 PM
    If you give the details of the loans (term, remaining term, interest rate) people can work out the best way to attack them.

    Im with zx81, youre essentially doubling your borrwing (even if its temporary) and most lenders wont like that.

    Also you can do a statement of affairs, basically covers all your ins and outs and if youre brave enough publish for people to rip apart! You might think theres no luxuries (or waste for that matter) but MSE are pretty good at finding the pennies to make the pounds.

    Consolidation rarely works out as planned.
    Don't be angry!
    • cwhaley1
    • By cwhaley1 15th Sep 17, 2:07 PM
    • 13 Posts
    • 1 Thanks
    cwhaley1
    • #4
    • 15th Sep 17, 2:07 PM
    • #4
    • 15th Sep 17, 2:07 PM
    Thank you for the reply. To clarify, the 17.9% was a made up rate; the 'representative' figure was actually 4.4%, so I just presumed a much worser-case and came up with the higher figure. It certainly doesn't look "attractive"! I don't know what interest rate I would be offered.

    My credit rating is fairly good in honesty, no defaults, no red marks, just purely high debt unfortunately.

    With regards to the cards with highest interest rates, that's exactly what I'm doing. I had looked up this advice on the forum a good while ago and followed it. Card 2 is minimum payment plus £1, whereas card two is double the minimum payment which has the higher rate. The loans are fixed rates.

    When you say empty cards, what do you mean?

    Would you say, with your experience and knowledge, that a loan like this is not the right option? Generally of course, I know there are multiple factors.
    • zx81
    • By zx81 15th Sep 17, 2:18 PM
    • 14,156 Posts
    • 14,859 Thanks
    zx81
    • #5
    • 15th Sep 17, 2:18 PM
    • #5
    • 15th Sep 17, 2:18 PM
    List out the debts, with lenders, balances, rates and terms. Then you can see what may be the best option.

    But consolidation is almost certainly not the right answer.
    • cwhaley1
    • By cwhaley1 15th Sep 17, 2:27 PM
    • 13 Posts
    • 1 Thanks
    cwhaley1
    • #6
    • 15th Sep 17, 2:27 PM
    • #6
    • 15th Sep 17, 2:27 PM
    Thank you, even looking at this is hugely appreciated as neither my partner nor family have loans. They were all brought up on the "neither a borrower nor a lender be"... bloody wish I'd listed to that.

    Loan 1, NatWest, 17.9%, 60 months, £7000 remaining (about 2.5 years left)
    Loan 2, NatWest, 17.9%, 36 months, £700 remaining (about a year left)
    Credit Card 1, Barclaycard, 18.9%, £4100 remaining
    Credit Card 2, MBNA, 16.9%, £5500 remaining

    I hope that's enough information. Without consulting my files, that's what I know from memory. As I said, we don't have Sky, we don't sign up to anything that costs a monthly fee other than the internet. We live modestly and don't sit in front of a 50" TV with a car on finance outside. In fact, I sold my car so I could use the train and walk 15 miles a week to work to save money. I've done all the lifestyle changes I can think of to get through this.
    • zx81
    • By zx81 15th Sep 17, 2:31 PM
    • 14,156 Posts
    • 14,859 Thanks
    zx81
    • #7
    • 15th Sep 17, 2:31 PM
    • #7
    • 15th Sep 17, 2:31 PM
    In your position, I would try for a 0% card. If you could shift just a few thousand to 0%, it would enable you to hit the other debts much harder.

    Check all three of your files before you do though, to see if there is anything nasty lurking on them.
    • cwhaley1
    • By cwhaley1 15th Sep 17, 2:36 PM
    • 13 Posts
    • 1 Thanks
    cwhaley1
    • #8
    • 15th Sep 17, 2:36 PM
    • #8
    • 15th Sep 17, 2:36 PM
    Thank you again, I will look at one. I was going to go for the consolidation loan but I really needed to speak to someone first. I suppose ideally it would be great to shift one whole card to a 0% card while I pump money into the other one, but as you say pausing the interest on even a few thousand would help.

    At 27 and with a good job, I should be living comfortably and happy.

    I will sit down this weekend and get looking at it.
    • DCFC79
    • By DCFC79 15th Sep 17, 7:36 PM
    • 30,300 Posts
    • 19,166 Thanks
    DCFC79
    • #9
    • 15th Sep 17, 7:36 PM
    • #9
    • 15th Sep 17, 7:36 PM
    Forget the whole credit rating thing, it maybe nice to look at but thats all it is, lenders see your credit history.
    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.
    • zippygeorgeandben
    • By zippygeorgeandben 15th Sep 17, 10:29 PM
    • 709 Posts
    • 888 Thanks
    zippygeorgeandben
    I wouldn't advise consolidation but take a look this weekend, keep posting regularly and we can advise you on options available to you.
    End Sep 2016 End Oct 2017
    £8236.57 £0
    (Tesco 4.8%) £0pcm
    £6185.75 £0(Zopa 4.0%) £0pcm

    £5344.50
    £2610.04 (Sainsburys 0% until 06/19) £140pcm
    £2000.00 £1066.69 (Sister 0%) £133.33pcm

    Total debt
    £19.766.82 £3676.73 Original DFD May 2019.
    • Tarambor
    • By Tarambor 17th Sep 17, 10:48 AM
    • 1,610 Posts
    • 1,102 Thanks
    Tarambor
    My friend has £22k of credit card and loan debt, a good credit history and a £36k job. He cannot get a consolidation loan because of how much the debt and mortgage is as a percentage of his income so automatically fails any affordability tests which are mandatory for lenders to do.

    What you've failed to include in the list of debts is your mortgage which will also affect any affordability tests any lender you apply to makes, as it is joint you are treated as if you are fully liable.
    • redpete
    • By redpete 17th Sep 17, 4:42 PM
    • 4,131 Posts
    • 3,640 Thanks
    redpete
    A couple of applications will not make a big difference to your credit history / rating. Why do you need a 'good' rating anyhow? By not applying you will definitely not get a loan, if you apply you might get one.

    The above isn't suggesting that another loan is a good idea. I suggest putting a full Statement of Affairs in the Debt Free Wannabe board, it will force you to take a holistic view of your finances and might get suggestions for other action.
    loose does not rhyme with choose but lose does and is the word you meant to write.
    • Dobbibill
    • By Dobbibill 17th Sep 17, 5:01 PM
    • 2,471 Posts
    • 3,568 Thanks
    Dobbibill
    What are you credit limits on both Credit Cards?

    Do you have any existing customer offers of 0% Balance Transfer?

    Dependent on the answers to the above, you may be able to shuffle the debt and therefore pay the highest debt off first.

    Move away from the idea of consolidation - it doesn't work, you will end up back here with double the debt.

    This isn't going to be a quick fix either, it will take hard work and dedication but it will be worth it when you get to the other side
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