Help! Loan advice needed

shezza

Can anyone help me. My partner's and mine financial situation is getting out of control, and we want to get a loan to consolidate all our debt. We need to get a £25000 loan and we know that we will have to get a secured loan, but we have tried a couple companies and we have been refused. Can anyone suggest a company that will help us, that does not have an exorbitant APR rate. We are currently paying out over £800 a month in repayments and if we get a loan over 10 years the payments will be between £300 and £400 a month which we can comfortably manage.

All advice welcome.

Deep_In_Debt

Hi

Firstly, I wouldn't advise getting a consolidation loan - it only adds to your debts. Many of us here, including myself, have been there, done that. Also, is it wise turning unsecured debt into secured debt?

Please think very carefully about this before going ahead.

Good luck.

**Amy**

Hi

As other poster has said, i would advise against making unsecured debts secured against your home. And also against consolidation as generally you end up paying a lot back.

Have you posted your SOA up? (statement of affairs). if not, then it might be a good idea as you never know what we could help you save on:

http://www.makesenseofcards.com/soacalc.html

Have you also contacted any of the debt charities? Might be a good idea if you are struggling:

www.cccs.co.uk or www.nationaldebtline.co.uk

Generally its best to try these avenues before getting more credit out.

xx

RAS

Please do not.

Follow Amy's advice and post your SOA.

And have a look at the snowball on www.whatsthecost.com, to see how much extra you will pay in interest. It could cost you thousands.

shezza

Many thanks for the advice, I am confused though. Our plan was to get the loan, pay everything off and cancel all but 1 of our credit cards (for emergencies only). At the moment we are only just managing to pay the minimum amount off our cc's so I was very surprised to hear that getting the loan would mean we would be worse off. Can some one explain this please, as I am totally lost with this.

bargainbetty

You would be adding the cost of the interest onto all your existing debts, and securing that against your home. Most of these companies front load the APR so you cannot pay it off quicker, or have a rapid accumulation of interest. Look at how much debt you have, and then see how much you will actually pay over those 10 years. £300 per month is £36,000 in repayments. the closer to £400 per month you get, the closer you get to doubling what you owe.

The sad fact is (I know, I was a consolidator too) that in getting another loan and keeping a card 'for emergencies' you don't break the spending patterns that caused the debt.

Post up your SOA, follow the advice on here, and you may find you can pay off your debts another way.

1. Contact all your lenders, explain the problem and ask them to freeze the interest, even just for six months breathing room.

2. Look at the APR on your cards - can you switch debts to the lowest APR cards and then throw any spare pennies at the highest debt to bring it down.

3. Start looking at your spending. Keep a spending diary, and review everything you currently lay out money on. You'd be amazed where it goes.

4. Use the Old style boards to save money on practical things...

4. Use MSE tools and listen to the people. They are lovely, kind, knowledgable and keen to help everyone - we've pretty much all been there.

Good luck honey, and keep posting.

bargainbetty

Oh, and stop applying for the time being - every refused application knackers your credit rating a bit more.... not what you need right now.

Jacks_xxx

Hiya my lovely, :wave:

I'm no expert. I only know what I have learned through being in your position myself.

We consolidated loads of times, but our debts just grew and grew until we stopped consolidating. Each time we said we'd never do this again but we continued to spend more than we earned and " had to " consolidate time and time again.

But then I came here, and now we know better!

Definitely stop applying for more credit, and try again after Christmas maybe?

Any further credit applications will just make things worse for now.

Have a play with the Snowball Calculator:

http://www.whatsthecost.com/snowball.aspx?country=us

When we first punched all our debts into it two years ago it said we would be paying for 20 years but when we get free and clear next Feb it will have been about two and a half. (The consolidation loans we were looking at were for ten years upwards.)

Working out your SOA would be useful even if you don't want to post it up on here.

When we did ours it told us that after all the essential bills were paid we still had quite a lot of money to play with and we could choose to pay down our debt with that money - or not!

We earn a basic take home of £2644 and aim to pay at least £1200 a month out on debt repayments. (When we started the minimums were about £1000 a month.)

The mortgage and bills etc are about £1000 a month and we live on the remaining £250 plus what we earn eBaying. babysitting, carbooting mystery shopping etc.

It's been a tough two years at times but mostly I enjoy not being such a muppet any more - and I know we would have been in debt until we died if we hadn't changed our spending habits.

Love Jacks xxx

rubydoiwannabee

shezza wrote: »

Can anyone help me. My partner's and mine financial situation is getting out of control, and we want to get a loan to consolidate all our debt. We need to get a £25000 loan and we know that we will have to get a secured loan, but we have tried a couple companies and we have been refused. Can anyone suggest a company that will help us, that does not have an exorbitant APR rate. We are currently paying out over £800 a month in repayments and if we get a loan over 10 years the payments will be between £300 and £400 a month which we can comfortably manage.

All advice welcome.

Hi there, just to say please, please, listen to the advice from the good people on this forum. We owe the same amount as you and are currently paying £580-£600 a month and that is making small overpayments on some debts. What worked for us and may work for you, is to examine every penny that is leaving your bank account and look at how you can spend less.

It works it really does, and although you don't get a quick fix like you do with a loan, it is so very satisfying to see the overall debt actually coming down every month and whilst you are managing to have a life!!

I could go on for hours about what worked for us, and although we are only three months in, we are in such a better place because our attitude to debt and money has changed.

Best of luck and please think again about getting a loan.

RAS

shezza wrote: »

. Our plan was to get the loan, pay everything off/quote]

Except you are not paying everything off, you are swapping flexible, unsecured consumer credit for inflexible dangerous secured debt.

shezza wrote: »

.
At the moment we are only just managing to pay the minimum amount off our cc's so I was very surprised to hear that getting the loan would mean we would be worse off. Can some one explain this please, as I am totally lost with this.

Hi right now you can possibly get a better deal in 6 months and put some of your debt on that. If one of you gets ill, you can reduce payments if necessary, or you can overpay if you get some bank changes or a PPI claim repaid. The worst that can happen is a CCJ or a damaged credit rating.

With the loan, you have to pay every month and if you fail to do so, you could lose your house. If you overpay, there may be a penalty. and the interest may well be front loaded so that your £25,000 becomes a £32,500 liability overnight.

The best thing would be to put up your Statement of Affairs and we can help you work out how to pay the money off most effectively. See here for how to do an SOA http://forums.moneysavingexpert.com/showthread.html?t=107280