This loan seems like a 'good' solution!! Is it still consilidation?

rubydoiwannabee

We owe First Direct just under £11500 on a CC and big overdraft.
OD is 12.19% (balance £4950) and CC (£6500) is 17.90%, according to the snowballing they will take 4.5 years to pay off. Currently pay £275 combined to them a month.

I have been looking at putting them both onto a loan for 4 years that will cost £285 a month and has an interest rate of 6.7%. I am struggling to see how this could be a bad idea, because I won't be paying more or for longer.... am I being dim??? or is it as good an idea as a balance transfer?

Thanks guys,

xx

rubydoiwannabee

bumpedty bump!!

boredofbeingathome

I think it would be a good idea as quicker than snowballing, and the date is quite low..you may regret it though if you run up more debt afterwards..so think about it for a bit.
I think there are lots of pros and cons!

Gemmzie

Is it a fixed rate loan? Will you definitely get that APR?

rubydoiwannabee

Gemmzie wrote: »

Is it a fixed rate loan? Will you definitely get that APR?

Good points, Yes to fixed rate and yes to that APR (does it seem low?) as far as the mailing we received today is concerned and what I can see on the website.

If so, worth doing?

boredofbeingathome

Hmm i think you are not going to lose anything by trying for it. You can always apply and decide afterwards..bearing in mind there will be a credit check. If you decide against it, then you have not lost anything.

firesidemaid

does that loan rate include insurance? as i would have expected the monthly payments to be less per month.

also that is a fixed amount per month, is the snowball a fixed payment of £275 - what does it say if you overpay on card/od by £10 a month?

can you move either debt to a 0% card etc?

boredofbeingathome

Just had some other thoughts!

Is interest front loaded?
Can you overpay without penalties?
Do you have protection of any kind against your income? just in case..not always use PPi with loans..

Seaxwyn

I think it's a good idea - so long as you don't run up any more debt on the card or overdraft after you've taken out the loan. I know from experience how easy that is...

Also, find out if/how you can overpay, to get rid of it even quicker.

rubydoiwannabee

We haven't got income protection because it was one of the things we cancelled to try and balance the books each month.

Not sure about front loaded interest... and terms don't give info about overpayments, but if fixed does that suggest no?

I agree about not paying off then considering it as available money... the od account is not used, we have moved our banking to a different bank with no od, so if I could pay the OD off I would be able to close that account. We are even considering applying for a loan just for the OD amount because I think it will only be a matter of time before FD start complaining about the lack of activity in the account and only £70 going in each month.

Think I will sleep on it....

Thanks to everyone for taking the time to reply.

GeorgeUK

For that interest rate it may well be worthwhile.

I'd keep a little aside to go into a savings account to possibly try to pay this off early if you get the chance.