Consolidate? Black Horse Loan?

sillyme

Need some advice...

I have debt of £9k approx across 3 credit cards and one loan. My loan interest rate is 6.9% My credit card interest rates range from 16% to 25% *rubbish basically*.

Because I was a bad girl with my money a while back my credit history is chequered and I won't get approved for a credit card with a better interest rate and I can't increase my current loan with Egg at the same rate.

I'm now on top of my debts and while checking my credit score through my Experian online account I used their search tool to look for loans and credit cards that I would probably qualify for, based on my credit history.

The Experian 'matching' search returned a loan with Black Horse (part of Lloyds apparantly) at 15% - which isn't great but is better than the interest rates on my credit cards! The loan would allow me to consolidate all my debts into one loan with them, cancel my credit cards, and reduce my monthly payments - paying it off in 2 years.

What would you do?

Should I move everything to Black Horse for 16%?

Has anyone heard bad things about Black Horse?

mrcow

No way would I be moving to Black Horse! Or even considering consolidating debts that:

a. include credit cards whoch are easy and flexible to repay
b. includes a loan at 6.9% apr (what was the breakdown and the term and stating ballance of this loan and how much do you currently pay per month?)

Give us the breakdown of what you owe on your cards and what the APRs are and also the breakdown on the loan.

Ralphy101

Black horse is part of Lloyds i think.

Although it would be a company called QDL - Quick decision loans who will act as a broker.

They will charge you about £70 for this service!

I have done the same, and black horse came out. But QDL have yet to contact me. Although I am not paying £70!!

sillyme

Thank you. Am just thinking I could pay off the loan in 2 years at £450 a month.

Loan is £5030 - 6% - loan term is I think until 2011 but I can pay off early (or pay lumps I think). I pay £305 a month.

Barclaycard - £3000 - £25% - limit is £5k. I pay a fixed amount of £150 each month (more than the minimum).

Capital 1 - £750 - 16% - limit is £1300 - I pay £75 a month, fixed amount - again more than the min.

GMCard - £1000 - 18% - limit is £1500 - I pay a fixed amount of £50 - more than the minimum.

CLAPTON

it makes no sense to refinance your 6% loan with a higher APR loan.

if you can get a loan with an APR lower than you CCs then it may make sense to do that to repay the CCs

for now however, use your available money like this
-pay the minimum on each debt except the one with the highest APR (i.e.barclaycard)..on that pay as much as possible.
Always pay as much as possible on the highest APR debt so that you pay least interest overall and pay off your debts the fastest.

mrcow

CLAPTON wrote: »

for now however, use your available money like this
-pay the minimum on each debt except the one with the highest APR (i.e.barclaycard)..on that pay as much as possible.
Always pay as much as possible on the highest APR debt so that you pay least interest overall and pay off your debts the fastest.

Exactly!

It's called snowballing. There is a website where you can work out your debt free date:

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

It's a real motivator and will work better than any consolidation plan that Lloyds could come up with.

sillyme

Thanks. I have already a snowball calc I was playing with. But it just seems so much more logical to put everything I could - not the loan, I see that now, onto a cheaper rate.

Do you think putting the credit cards onto a loan at 15% is a good idea then?

mrcow

Nope it's a terrible idea.

mrcow

Just to confirm - your loan payments aren't adding up. Which is skewing the figures though. Are you paying PPI on it?

sillyme

No - had PPI refunded

Just checked my loan account online.

I owe £5038 at 6.73% apr. I pay £305 a month and the end date is 1st Jan 2011.

I can pay off early or pay off lumps (which I haven't yet done although I had approx £1k PPI refunded into my loan about 6 months ago).

mrcow

So you've got £5490 left to pay on your loan.

And £5867 to pay on your cards - made up of £4750 repayment and £1117 interest (assuming that you carry on the payments that you are, that the interest doesn't change and that you snowball the debt). It also assumes that you won't snowball in your current loan (which is your lowest apr anyway).


Total payable - £11357


If you take out the loan that you want - you'll pay £469.83 over 24 months - total payable £11 276

That's assuming that you actually get the apr of 15%

So to me, it's swings and roundabouts. You'll loose all your flexibility.

To me though 0 and please don't take this as an insult - you shouldn't consolidate as you need to show yourself that you can pay these cards off. You have accrued a massive debt. Absolutely huge. In my experience, people who use loans to pay off credit card debt only then go on to rack up more credit card debt on the loan has taken over.

Put the brakes on now.

Snowball your debt. And don't consolidate.