Loans - In a Quandry, Any Possiblities ?

smokinjdm

I have been paying off 2 loans for several years now and have never missed a payment. I currently pay £393 and £215 per month for loans which have settlement figures of £14076 and £12813 respectively.

I am currently paying 2 lots of interest which is very expensive and am under the impression that i cannot get an unsecured loan for more than £25000, ideally i would like to add the 2 loans together and only pay only one lot of interest. However, frustratingly I still owe £26,889!

Any ideas or brainwaves folks????

CLAPTON

If you want to pay them off more quickly then see if you can get a lower APR loan... simply adding the two loans together at a high interest rate will make no difference and may even be worse.

what APRs are you paying now?

Seekay_2

I'd be interested to know what rate you're paying on the two loans and what the original term of each of those loans was.

Also - have you looked into whether either of the loans have a degree of flexibility? Some (not many though) loan providers allow you to make ad-hoc overpayments which would drastically reduce the term of the loan. if you were to do this then you could consolidate most of your 2 loans into 1 £25K loan (that is the largest unsecured loan that I know of) and leave yourslef with maybe 3 or 4 payments on the loan that you don't manage to fully settle (that's if your finances will allow it).

It's worth noting that you do generally get a better APR on a bigger loan, but also that with the credit crunch, the loan rates out there aren't as good as they were even 6 months ago, and lenders are more cautious (picky) about who they lend to and at what rate. In my experience (I work for one of the big high street banks as an account manager) the people that can get the best deals are the people that don't want or need a loan, and the people that you want to help out get slapped in the face.

Excuse my cynicism, I hope that's of some help.

smokinjdm

Many Thanks. Im paying 7.6% and 6.5% respectively. I currently pay out in total £608 per month for the loans that have 3 yrs and 7yrs left until settlement. Looking at quotes today, a £25000 (8.4% apr) loan would only cost me £611 over 4 years. I currently cannot afford to pay more per month.

smokinjdm

Excuse my cynicism, I hope that's of some help.[/quote]

Yes it is, thank you, its an option that i could certainly consider.

CLAPTON

there's no point is replacing loans at 7.6% and 6.5% with one at 8.4%..
just continue as you are until you have paid the first one off, then use the full 608 on the second.

Seekay_2

I'd be inclined to agree with that. Although the term of the loan can make a big difference. It depends what is more important to you - your current amount of disposable income and current standard of living, or the length of time that you want to be in debt.

If you want to have a bit more cash to spend (and this is what I'm like), then I'd wait until you can consolidate your debts into one £25K loan and take it over 7 years (providing the APR is OK), that should give you £100+ more per month that you can enjoy. The other option is to pay as much as you physically can over a shorter period. You'll be debt free quicker, but you may end up depressed like me.

Everyone has a different outlook on it, just depends what works for you and what your goals are!