Is a personal loan the answer?

cybergirl2

Hi All,

I need some advice!

Basically my partner and I both have debts (which are currently managable), however we are due to have a baby early next year so I'm looking at ways to reduce our out-goings.

My partner currently has a loan with Welcome Finance :mad:(no comment!) which he has £1800 left to pay. He pays £195 per month - which will be for eternity I think.

I have a £1000 overdraft and £6000 on 2 credit cards (balance transfer rate which is due to end later this year). I pay £177 at least per month, but usually try and pay more.

What I am thinking of doing is taking out a Nationwide personal loan of £9000 to pay off both our debts at £180.09 for 5 years at 7.7%. Thus reducing our monthly outgoings and hopefully getting rid of that awful company Welcome Finance. The only flaw I can see would be 2 months interest if we pay back early (which ideally I would like to think we would be able to do, but who knows kids are expensive!).

Does this sound like a good idea? Or am I missing something!? My aim is to pay off our debts, without getting into more problems whilst our earnings are cut due to maternity leave.

Any advice would be much appreciated.
Thank you

Rafter

Good in theory, but all depends whether your income and credit rating is high enough to get the loan.

If you are not making signficant capital payments at the moment, then Nationwide might think you can't afford to make payments on this consolidation loan.

Suggest you get hold of Martin Lewis' money saving diet book and really cut your outgoings to the bone to put yourself in the strongest position possible to get your debts onto low interest rates before the baby arrives.

Good luck

R.

cybergirl2

Hi
Thanks for the reply.
I have a good credit rating and am currently earning 20K, I also hold a mortgage with Nationwide (don't know if this helps or hinders!). Your point about "not making signficant capital payments" is a concern, something I'd not thought of.
My partner earns more but this wouldn't be taken into account for the loan application. I'll have a look at "Martin Lewis' money saving diet book" and in the mean time I have drastically cut our outgoings!

I was thinking that it would be better to take the loan out (if accepted) and in addition save as much as possible in the next 6 months so that our debts would be consolidated and we would have enough cash saved (2k is my aim) for the things a baby needs rather - than paying by credit cards!

I just don't want to make the wrong decision!
Many thanks