Secured Loan - How to get rid of it

camper_1982

Ok, took out a secured loan, most stupidest thing to do, ive realised that now.

Borrowed £25k over 20 years - i did want 15, but realised its actually 20 i signed for. rang and asked them for shortened term, they said cant do that, has to stay at 20 years.

Got a settlement figure, 23500 after paying the loan for nearly 3 years.

How am i going to get rid of it, its killing me! Im going to end up paying them nearly 60k back!!!

i came up with some ideas, some a bit mad.

• i have a 10 grand overdraft that i havent used and a good credit scrore, so could pay the 10 grand overdraft and get a unsecured loan of 13500.
• track down someone who works there and offer them 3 grand cash to show the loan has been paid on there system.
• take out a 20 grand unsecured loan over 5 years
• ring them and say cant pay anymore, i have no money and offer them 5 grand to clear the loan as full and final settlement or tell them im giving the cash to another lender if they dont accept and then im going bankrupt.

any other ideas?

Tixy

Why particularly do you want rid of this debt? Is it because the APR is high? because you are likely to find that an overdraft and an unsecured loan might be just as high APRs. What is the APR?

Presumably you also have a mortgage on your house as well as the secured loan? In total do you have equity or negative equity?

milliemonster

Yes some of those solutions are a bit mad!

Without being able to pay it off (I doubt they would agree to a reduced settlement as with it being a secured loan they would probably just go for the security instead - your house?

Your other option is to completely remortgage if that is possible, incorporating the secured loan into your mortgage so you will then hopefully be getting a better deal on the interest

Tixy

camper_1982 wrote: »

i came up with some ideas, some a bit mad.

• i have a 10 grand overdraft that i havent used and a good credit scrore, so could pay the 10 grand overdraft and get a unsecured loan of 13500.Likely to cost a fortune in interest, even if anyone would lend you this much
• track down someone who works there and offer them 3 grand cash to show the loan has been paid on there system.Um....!
• take out a 20 grand unsecured loan over 5 years Could you afford the repayments? Would anyone lend you this much? APR would be high.
• ring them and say cant pay anymore, i have no money and offer them 5 grand to clear the loan as full and final settlement or tell them im giving the cash to another lender if they dont accept and then im going bankrupt. They won't accept it.

any other ideas?

Can you incorporate into your main mortgage? What would the total LTV be?

sheraz2

What've you done with the money you borrowed?

camper_1982

the apr is 9.9% :eek:

I was so stupid signing the agreement, i was young and it was all new to me and i didnt know what i was doing at the time. has taught me a lesson thats for sure!

Our mortgage balance is 82300 when we had last statement a few months ago. had the house valued for a relistic sale price min £115k we should accept. So not in negative equity yet.

he money was used to clear my oh debt and for renovation of the house.

milliemonster

I don't think based on those figures you would be able to remortgage as yout LTV would be too high

Your options are a bit limited in the meantime, as long as can continue to afford the repayments (as your home is a priority) then I would keep up with the repayments for now and hopefully in a couple of years your LTV will have increased enough for you to remortgage to pay off the loan

Tixy

I don't think 9.9% is that bad really - well obviously its higher than a mortgage would be but certainly will be less than an overdraft or unsecured loan. (I thought you might say it was 20% or something truly horrific!)

Are you allowed to overpay on the secured loan? If you were thinking of a 5year unsecured loan presumably you can afford more than the amount you are currently paying each month?

camper_1982

I could afford to pay up to £500 per month. a secured loan for 20k over 5 years would be around 400.

Problem i have is they wont adjust my payment and im only paying £233 per month. I need to pay more. Ive started saving a few hundred each month now and then pay of lump sum in one go at the end of the year.

dancingfairy

Trouble is if you go for a secured loan of 20k over 5 years are you going to be able to make the payments - what happens if you lose you job etc? The apr is not ridiculous but I would be careful not to get another secured loan for a lot more payments as if you got into difficulties it would be easier to find 233 a month than 400 - if you see what I mean? even though obviously the interest will mount up?

A unsecured loan would be great if you could get it and if you could get a decent interest rate though and if you could reduce the term - not sure what rates are typical at the moment - might be worth asking on the loans board? or having a look around the internet for typical rates just to see what they are like?
What's the rest of your finances like? Obviously you've got more chance to get another loan if you are not massively in debt with credit cards etc?
df

dancingfairy

Right here's what I would do:
1) look around the internet /ask on the loans board and check out current UNsecured rates
2) if they are decent and you feel you have a good chance apply for one obviously reducing the term and interest rate as well
3) if unsuccessful (or you get offered a rubbish deal) save what you can in a high interest account until you are able to pay off your current deal.

Best of Luck
df