Loan to consolidate

colink24

My partner and I are considering taking out a loan to consolidate our debt. We will look to borrow around £15,000 to clear up

£1,500 credit card
£2,000-£3,000 car (we have a loan for this, but value of car covers the rest)
£3,000 overdraft, sofa, etc etc
Remainder would go on a lower vlaue car than we currently have

We currently have a mortgage on our house at £145,000.

Our car payments currently cost us £275 per month for the next 3 years, after which time we will have to make a final payment of £7,800. We will most likely hand the car back at this stage, with the value of the vehicle guaranteed as the final payment. So no debt outstanding but obviously no vehicle

Should we take the loan, we will buy a car outright, so this will be ours outright before the payment of the loan is finished, which will be a 4 year repayment. So if the car is worth, say, £4,000 after 3 years, we could sell it and pay off the loan anyway, leaving us in the same position if we decide not to take the loan, except we will have cleared all our other debts and incured no interest on the above debts

Thoughts welcome. Also, my credit rating isnt brilliant but my partners is very good. She earns £17,000 pa, whereas I earn £38,000. Would it be easy for her to get the loan without me being taken into consideration, as this may affect the rate we are offered?

Thanks in advance all

milliemonster

Honestly? don't consolidate, please, it's going to cost you heaps more in interest in the long run and unless you make some serious changes to your lifestyle and learn to budget and live within your means you will just end up in a vicious circle of credit cards/consolidating etc

Also, from your post you have approx £7.5k debt excluding your car but are going to take on a loan for £15k and then buy a car with the remainder another £7.5k???? so in effect you are increasing your debt 100% and 2 cars is this right? I think you are mad

colink24

milliemonster wrote: »

Honestly? don't consolidate, please, it's going to cost you heaps more in interest in the long run and unless you make some serious changes to your lifestyle and learn to budget and live within your means you will just end up in a vicious circle of credit cards/consolidating etc

Also, from your post you have approx £7.5k debt excluding your car but are going to take on a loan for £15k and then buy a car with the remainder another £7.5k???? so in effect you are increasing your debt 100% and 2 cars is this right? I think you are mad

Thanks for the reply. In essence (and after some more thought!) we are not consolidating as such. I mean, we already have a car loan amounting to what we want to borrow (15k). The money is being saved in the downsizing of our vehicle. We will not keep 2 car, we currently owe around 16k on our car (its worth about 13-14k)

By downsizing we are clearing up our credit cards etc, clearing the car loan and paying the same amount of interest on a cash loan as we would be on our car loan

Hope this makes sense - and yes, we do need to leanr to budget better!

CLAPTON

I'm afraid your post is very confusing.

So are you saying you have debts of
1,500 CC
3,000 sofa etc?
16,000 car
(although 36 payments of 275 is only 9,900?)

and are you planning to sell the car ?
If so what is a realistic selling price given the current financial climate?
Does your car deal allow you to sell the car?
What is the settlement figure for the car loan?

How much do you expect to spend on a replacement car?

Then it might make some sense.

colink24

CLAPTON wrote: »

I'm afraid your post is very confusing.

So are you saying you have debts of
1,500 CC
3,000 sofa etc?
16,000 car
(although 36 payments of 275 is only 9,900?)

and are you planning to sell the car ?
If so what is a realistic selling price given the current financial climate?
Does your car deal allow you to sell the car?
What is the settlement figure for the car loan?

How much do you expect to spend on a replacement car?

Then it might make some sense.

I know, I knew it would be difficult to put into words!! Your calculations are correct, we would have a final payment of our car at the end of the loan of almost £8,000

We wont sell the car, we will hand it back (it will be worth 8k)

CLAPTON

.. are you saying you will hand the car back in three years time?
if so there is really no point in getting any sort of loan ..
just start budgetting a bit and get rid of the CC and sofa loan and start to save up for a modest replacement car in three years time

With a combined income of 45,000 it shouldn't be difficult.