£4,500 over 5 years

beeniemac

I am planning on getting a loan as per title to consolidate some debt;

£3,000 car loan
£1,000 overdraft
£500 I owe to my mum.

I want to be able to pay off a big chunk, if I need to, without getting screwed over on penalty charges.

I'm 19 and earn around £8,000 after tax in a part time job hence me going for the long term option, so that I can have lower payments. I have no missed payments/defaults/CCJs etc

Who should I be looking at?

osagefo

If you can avoid it, do not take a loan out for a car. A car is a depreciating asset and the most painful experience is where you find yourself paying a lot of money out regularly for an item which is now worth nothing. You also need to factor into the equation your age. At 19, your insurance premiums are bound to be a lot higher so the cost of owning a car would be a lot higher.

Taking a loan out to pay of your overdraft may make some sense if the interest on your loan is a lot less. The problem is that once you still have that overdraft facility, the temptation may be to reuse it again which put you back in the same old position.

Regarding the £500 you owe your mum, I will be inclinded to come to an arrangement with her where payment would be made on a regular basis, if necessary by direct debit. The benefit of this is that you are paying no interest on this money, and if things are really really tight, you could always go crying to mummy!

If upon all of this you still would like to go for a loan,there are a number of competitive deals at 7% or less, but whatever you choose, make sure you have secured the loan at terms you are happy with first before going out to spend it. I had a loan agreed once, made my purchase then went back to the bank to sign on the dotted line. It was only then that I was told I had to take insurance otherwise my loan would be declined!!! That is the last time I took out a loan with insurance.

beeniemac

Sorry the opening post wasn't all that clear. I have already taken out the loan for the car, which I have now had for around 6 months with HSBC at something like 12% and have just under £3,000 outstanding (£3,300 outstanding total but £2900ish if I were to settle at this point)

Depreciation on the car I have is relatively limited and insurance has been accounted for.

The overdraft will be completely removed from my current account if I go ahead with this.

Mum agreed a monthly repayment which has brought it down from about £700, but keeps going on about the fact I do owe her money which is making life at home a nightmare. I would rather accept a little intrest on the £500 than continue with the current atmosphere in the house

None of this money is being spent as such, just used to consolidate existing debt

Any suggestions as to where to go?

snowstorm

Egg offer loans at 7.9% and allow you to make overpayments at any time.

Rafter

Very few banks would consider lending you over 50% of your take home pay at your age, particularly from a part time job.

As already mentioned Egg and Cahoot both do flexible loans and Nationwide have a good reputation for not charging high rates to slightly higher risk borrowers, but my personal view is that you will be rejected for all these.

I think your only option may be to talk to HSBC about 'topping up' your loan to pay off your mum and your overdraft.

You then really need to get your income and outgoings to balance again so that you start to repay the debt and save for a rent deposit for when you get your own place.

Could you get another part time job (bar work perhaps) so that you could pay off your mum faster without taking out more expensive borrowing?

R.