I want: 5k over 3 years... (or do i)

Vini123

I'm 20 and currently have a 0% interest CC with Barclays which runs out in August and a Car loan.

I owe £1600 to them.

I also have a car on Finance, at £122 a month. Owing ~22 months.



My original plan was to take out £2k to pay my CC back and have £400 'fun money' with which i planned to buy a Plasma for my new flat.


However, my dad has just been offered a loan extension with £5k (over 3 years) as the example (at 5.8%) and was wondering if this might help me.

So i got thinking... the monthly repayments would be £152... only £30 on top of my Current Car payments... and a saving of £30 on my current Car + CC payments.

With this £5k I could pay off my Car + CC (~4k) and have 1k fun money... and be paying similar to what im paying now.


What do you people think, could i get a better loan. Is there a better way to achieve similar?

My original plan with the 0% CC was to force myself to pay it back... but i guess i wouldnt be alone in saying 'this didnt work out'

Ideas?

Rafter

Please please please don't just focus on your monthly outgoings.

You are proposing to spread your current debt over a much longer period.

Will your car still be going in 3 years time. Do you really want to be paying for the stuff on your barclaycard in 2009?

5.8% is a good rate, and at 20 years old you are unlikely to get such a good offer elsewhere.

I suggest you take your dad up on the offer, but only borrow what you need from him (ie £400 not £1000 for fun money), that you set up a direct debit to pay your credit card in full each month, to avoid temptation to fill it again and that you transfer the amount you save in payments each month (£30+ per month) to a high interest regular savings account paying 10% (eg Barclays regular saver).

That way you can either pay off the loan early, or when your car needs replacing you will already have a good sum saved up to go towards it.

Living on credit is really easy, but just because you can buy stuff, doesn't mean that you should or that in the long term it won't lead to financial distress for many people.

Good luck.

R.

roswell

Just think this way, if you spend your 1000 "Fun money" on a new TV what will it be worth in 3 years time .... if you banked that at 4% you shoudl be looking at £1124 roughly in the bank towards your new car

Debt_Free_Chick

Vini.co.uk wrote:

I'm 20 and currently have a 0% interest CC with Barclays which runs out in August and a Car loan.

I owe £1600 to them.

I also have a car on Finance, at £122 a month. Owing ~22 months.

My original plan was to take out £2k to pay my CC back and have £400 'fun money' with which i planned to buy a Plasma for my new flat.

So you currently owe roughly £4k and this would all be paid off in no more than 2 years time? If you got another 0% card for a balance transfer, you would pay back a total of £4,284.

However, my dad has just been offered a loan extension with £5k (over 3 years) as the example So i got thinking... the monthly repayments would be £152... only £30 on top of my Current Car payments... and a saving of £30 on my current Car + CC payments.

You would then owe £5k, which would take 3 years to pay back and you would pay out £5,472.

Why would you want to do this?

My original plan with the 0% CC was to force myself to pay it back... but i guess i wouldnt be alone in saying 'this didnt work out'

Only you know why not, but I expect you have been spending "fun" money, rather than paying off the card. You don't mind paying this back via a loan, so why not just pay it back anyway?

Why on earth would you suddenly want to give the banks interest on this amount, when you've got it on 0% and could probably get another 0% deal in August??

You need a plan to pay back the CC over the next .... 18 months? by switching to new 0% offers. This would only cost £89 a month. Take a hard look at your finances and you may find you can easily manage this - or possibly more.

Given the choice between forking out £4284 over 2 years and £5472 over three years ..... it's not a difficult decision, is it?