Secured loan or not?

roundthebend_3

Hi
Probably a familiar story, but could do with some pointers for our first steps. I'm going to do a full budget later but it's hard when my income varies greatly from one week to the next (self-employed). I'm trying to solve that by getting a well-paid salaried job.

Anyway, here's the details:

DEBTS
Car Finance £3,453.42 (£213 p.m - Sept 2007)
Loan 1 £3,389.70 (£134 p.m - August 2008)
Loan 2 £6,811.98 (£156 p.m - August 2010)
CC 1 £2,030.63 (£50 p.m - about £25 interest)
CC 2 £6,960.17 (£170 p.m - about £120 interest)


We've cut our living costs immensely and all that's left is to move to a cheaper house - we pay £630 per month for our mortgage currently.

I see our biggest problem as the interest on the credit cards. I've looked at our repayments and worked out that we spend about £670 per month. We have also been using our credit card for weekly shopping and fuel costs because our bank account was overdrawn. However, we've managed to get our overdraft cleared and now have about £1000 in the account.

I've looked at secured loans to cover all of the current debts that we have = £23k approximately. Over 15 years the repayments would be about £230. That's a monthly saving of £440 on our current repayments - of course, it means we'd be paying off our debts for longer.

I believe that with that extra £440 we'd be able to cut down (or stop) using the credit cards completely. The interest on the debt would be cheaper too - 7.9% APR instead of 16.9%.


My question is: is there a better option than a 15 year secured loan?


Thanks

$17mma

If you are self employed and your earnings vary, dip or and are delayed then why would you want to consider a secured loan?

You income is not stable enough to put that kind of risk on your home.

If you can switch your CC to 0% ones even if it is some of the balance to give you some breathing space.

If you cant do that then priritise which one you need to pay off first using the site below

http://www.whatsthecost.com/

cut your cards up, if you are still using them then this is even more reason why you should not secure your lending on your home.

Chortle_2

roundthebend wrote:

I believe that with that extra £440 we'd be able to cut down (or stop) using the credit cards completely. The interest on the debt would be cheaper too - 7.9% APR instead of 16.9%.

You sure the interest would be cheaper?

I just put the figures into the loan calculator on www.whatsthecost.com and came up with this...

The bottom line, is that this loan for £25,000.00, over 180 months, will cost you £237.47 a month.

In taking out this loan, you'll pay a total of £17,744.96 in interest. The true cost of this loan is £42,744.96

And thats without even thinking about the fact you'd be risking your home...

To answer your question 'is there a better option' - the answer is invariably YES! Read the thread by SouthernScouser at the top of the board, entitled first time posters, and post a statement of affairs. When we know where you really stand, we can advise more.

HTH

Annie_Fanny

Very very good advice from Chorlte and $17mma.

Just a few things to throw into the pot....
Any chance of getting a 0% interest loan from any relatives?
Can you work an additional part time job as well - just while you ditch the debt?
Ebay any 'big' items?

Good luck

Annie

System

Dont secure it against your house..... it could turn against you. Look at other options.

Lenny

In_Search_Of_Me

Just a short one...with income fluctuating a secured loan is NOT a good idea because if you have probs there goes your house. While YOu will be devastated & distraught the loan company wont give a hoot! Agree with the above re statement of affairs & a diary of every penny you spend is a great idea...good luck!