Advice Welcome!

keepingitquiet

Hi All, not exactly a new poster this is an ailias as I seem to have too many friends and family joining the forum and would rather people didn't know the full ins and outs of my finances!

We have 20k of CC and loans debt. I'm managing to pay and everything it just feels a bit depressing to have it hanging over us.

I have 100% mortgage on my house due to falling prices, I really want to move within the next 5 yrs but I need to clear the 20k before I even start to think about it!

Heres a brief rundown of debts and (minimum) repayments:
MBNA -£700 £25 per mth 0%til June
MBNA-£2600 £25 per mth 0% til August
Hbos-£950 £10 per mth 2.9% LoB
Hbos-£1350 £14per mth 2.9% LoB
BCard-£300 £25 per mth 22.9%
CF- £1600 £40 per mth 0% til August

Hbos Loan 6850 £178 per mth 4 yrs to go
A&L Loan £153 per mth 5 yrs to go.

So total debt £20,150 Total payments £510.


I currently have around 300 per mth to overpay BUT I have seen a loan for £20k for 3 yrs at around £620- £700 a mth.
Is a consolodation loan the way to go????

It would be all gone in 3 yrs, I'm not sure I could manage that just by overpaying?

OK, let me have it

Tixy

Hi

A lot of your debt is a good interest rates. What would be the APR on this 20k loan? (assuming you could get it of course because thats a lot of extra credit to get on top of what you already have above - you may well be turned down on affordability).

You need to know the APRs on your existing loans as well. And what the standard rate is on the cards once the promotions are finished.

I would plug it all into a the snowball calculator to see how the interest compares if you keep the debts as they are but repay in the most cost effective manner and how long it would take you to repay with your £300 overpayment. Then compare this to the amount you would pay with your new loan (should you get it)

Were either of the exisiting loans consolidation loans? if so and you have run up extra debts since taking these out I would suggest a consolidation loan is a bad idea as you may do the same again and end up with even more debt.

debtdesperado

Have you done the debt snowball calculator? (Some kind organised soul might post a link or google it) as that might help you make a decision.

IMHO bearing in mind that the interest rates you have shown are low (apart from Bcard) and lower than you would pay on a loan, consolidation probably isn't the right thing to do yet.

The caveat would be when your interest free payments end, and also your MBNA cards - their interest rates go from zero to about 35% (I hate MBNA with a passion). So I would pay your cards off in this order:

1. Bcard (paid off in month one with the £300).

2. MBNA 700 - paid off in 2 months (because you've closed bcard, you have £325 a month to overpay) so done by April.

3. MBNA 2600 (you now have £350 a month to overpay) circa 1400 paid off by August, so this will have around 1000 left to pay off. At this point I would see if you can balance transfer to a lower rate on other card(s) and then shut this card so you never fall foul of this awful organisation (I had £12,000 balance with them at 35%... I would never have paid it off I didn't consolidate....)

4. Then you might want to check out the rates to move the CF card and your loans onto a shorter timeframe and lower interest rate so you are debtfree quicker.

You won't get the Hbos rates cheaper than a loan so no point consolidating them onto the 7 to 11% you will pay for a loan.

That would be my sugggestion - hope it's useful.