More Out than In

Optik_2

Ok here is my situation.

I am earning approx £1200 per month (after tax)
My outgoings are:
£500 for mortgage / food etc.
£230 - loan with barclays - £9600 (over 5 years!)
£185 - load with direct line - £3500 to pay (17 more payments)
£150 petrol money
£35 car insurance
£85 for misc bills

This makes a total of £1185?

I have an overdraft limit of £900 which some months I go over but mostly just about touch on.. so in a month i'll probably get £200 clear then 1st back in to - figures.

I am budgeting soo much, given up smoking, never go out etc.

Could anyone give me ideas on lowering my loan payments etc

Bear in mind I have a low credit rating as I was seeking alot of credit when I was buying a house so I have over 15 searches.

If I clear the £3500 one off on a credit card how much do I need to pay per month (minimum)
Also what are my chances on getting a credit card (never had one!) and sticking £3500 on it in 1 payment?

Heeellllppppp

Rafter

Optik,

Getting a credit limit of £3500 if you have a poor rating may be tough, but not impossible.

The minimum payment should be around 2.5% or £90 but it will take you a lot longer than 17 payments to pay off as a result. The main benefit may be saving interest during the introductory offer.

However, you may find there are redemption penalties to repay either of your loans early.

Looking at your outgoings, your biggest cost appears to be your car. Is there any chance you could car share going to work to reduce your petrol costs?

Not sure how big your house is, but do you have a spare room you could rent out to generate some additional income.

Although it is tempting to reduce your monthly outgoings by converting short term loans to long term debts (either mortgage or secured loans) be very careful.

Presumably your debts have been built up from doing up your house, buying a car etc and you don't want to still be paying for your current car long after it has been scrapped.

Use the tips on this site and in martins book to try to get yourself debt free and pay the minimum interest possible. You are going to have to budget as you are for a while, but you should be able to get the debt and your outgoings down faster.

Good luck.

R.

thaylock

As far as your loans go, try consolidating with Northern Rock. A loan to cover your 2 loans would cost you approx. £147 per month over 10 years (no protection). 10 years may be a long time but I am of the opinion that you should take the loan out for the maximum term possible to make the monthly repayments as low as possible, then if in a year or two down the road you are in a position to pay lump sums then do that to replay the loan quicker. I believe Northern Rock has no early repayment penalties on this loan. I have taken several loans like this in the past & have always paid the loan off in a couple of years instead of the initial loan term.

thaylock

As for your credit rating, I don't know if this is too much to worry about, as long as the loan company can make money out of your & you have the means to repay then everyone is happy. Loan companies are falling over themselves to lend money, think about it, they borrow from the Bank of England at the base rate (4.75%), then lend it to you at 6.5%, If the loan company lends the money to several hundreds of thousands or millions of customers then then are making a fortune. I read somewhere than companies borrow money from the Bank of England in x million chunks, where x may be 5, or 10 or whatever, so they NEED to offload that debt to customers like you as quickly as possible otherwise they will be losing money.

Optik_2

As I have too many searches for credit on my report will Northern Rock give me a loan.
Are consolidation loans viewed differently?!?

So I need a loan of aprox £13000.

According to equifax I have over 10 searches on my report!!
View VERY bad by credit agencies.
As I was buying a house at the time, can I write to them about this to see if they can remove them?!?

Thanks everyone for your help, getting my loan repayments down to about £150 would be a life saver.

If I just enquire to Northen Rock will they do a credit check?!?!

Jen_Jen_5

Remember consilidation loans are likely to be secured loans. You are swapping an unsecured debt for a secured debt, if you are unable to repay it you could lose your home.

Not saying dont do it, just be very aware of what you are getting into. It is up to you to read the agreements and think about the long term repayment of this debt.

Walletwatch

How long have you been with your bank where your salary comes in? Have you tried to get them to issue you a credit card?

My credit score is also one that would not exactly get an Oscar nomination , having been turned down for three cards till date. But when I approached the guys I've been banking with (Citibank) since two years, they immediately gave me a £3500 limit without any hesitation (with the usual works - 0% for six months and stuff). This might help take you through the inital 0% period.

Do bear in mind though, that this is a big risk you'll be taking. For after six months, if you don't manage to be issued another card (as your credit score hasn't improved substantially), the net effect will be devastating, as you'd have doubled your interest cause just to avail of some reprieve for six months.

I agree with one of the posters saying that it has to be an extreme situation where one replaces unsecured debt with secure debt. Do give it a lot of thought before going in for this.

Sorry, I know I haven't been as helpful as I would've liked to be, but at the cost of repetition, I'd say, if the interest cost cannot be brought down, look at the rest - pick up tips from other posts on this site, you'll be overwhelmed with the possibilities. Scan all your providers (gas, electricity, fuel, water) and work on the car expense and the misc bills. Remember, every pound counts.

Ambitious at this stage, but see if you can try and prepay part of one of your loans from any amount that you manage to save. Also, if the place you work for gives you a periodic bonus, or if you chance upon some unexpected inflow, dedicate it to part-prepaying your debts. It will reduce the timespan for which you'll have to go through the pain.

Finally, have you explored the possibility of your family, close relatives/friends lending you some money (repayable of course) at better terms than the Banking community? Just a thought, if you haven't explored that option.

Best of luck

Optik_2

If I don't consolidate both of them I would like to half one.

currently I am paying approx £420 on loans a month

the direct line one is about half paid off
originally for £6000 now only have £3200 to go (17 more payments i think!) or £185
and the barclays is quite new so approx £9000.

I am paying very high interest on the barclays one about 17% and only 7% on the direct line one.

How could I pay off the direct line one (early settlement)
and pay about 70-100 per month instead of £185.

could i stick it on a credit card!! never had a credit card so don't know much about them.
could someone teach me

thaylock

Phone Northern Rock & explain your situation, be completely honest, consolidation loans are not a problem. I recently helped somebody to consolodate their loans with Northern Rock without any problems, they will of course carry out credit checks.

thaylock

Re: Remember consilidation loans are likely to be secured loans. Not true, Northern Rock will not secure your loan against your assets (property). Whatever you do, get an unsecured loan, not a secured loan.

Nickynoo1

I wouldn't put the direct line loan at 7% onto the new credit card if you get it. It's the barclays loan you need to address first and foremost. At 17% interest you need to either convert taht to a lower rate, if you cant, concentrate on paying that one off first. Check out snowballing in the money diet.

Nickynoo