To Consolidate or Not To Consolidate?

Gemmzie

That is the question

My aim is to reduce my monthly payments because they are far too high...

Two loans (IF and HSBC), the settlement figures have been given as £6,100 and £6,900 as of today.

Especially want to move the HSBC one to remove the PPI and the only option they have given is £7k at £136 a month - a pound more than I'm paying now.
The original loan was £8k plus £1.5k PPI and £500 interest. So why would it cost more per month?!

Is consolidating the right idea here?

moozie_2

Hello Gemmzie and welcome

I would not say consolidation is the answer. Have you reflected on the reasons for the two loans and how you can avoid finding yourself in that position again? Perhaps posting a Statement of Accounts - SOA - may be a good idea. This should include all income and expenditure plus any loans and cradita cards with amount outstanding, APR and time left on loans/special deals etc.

There may be savings that you can make that will make it easier to meet your repayments and actually make some overpayments too to become debt free quicker.

Don't rush into anything, we are here to help.

southernscouser

The problem with reducing your monthly payments means that it will take you longer to clear and cost you more in interest! :rolleyes:

Have a look at this thread to see about cancelling PPI!

Also post a SOA. See this thread for a guide. We maybe able to help you so you can more easily afford the repayments.

Gemmzie

HSBC will not cancel the PPI and have only offered a new loan without it which ends up costing more, which they can shove

The reason for the loans originally was to pay off my Dad's debt - they are my mother's loans. She earns a very low wage at the moment, and reduction of monthly payments are really the only option at the moment.

The loan amount we arrived at was £700 more than we need to pay off the remainder of her credit cards (£1k) and then the spare money from reducing the payments will pay off the rest of the cards.


Before waiting for a reply last night (parents eh), she applied to Egg. They initially said No, but we have since emailed them for a reconsideration explaining the circumstances.
She's had an Egg card for nearly three years now, and always used it well and carefully.

Donedoingdebt

A lot of people here will say don't go down the consolidation loan route, mostly for very sound reasons that I totally agree with. However, I wouldn't dismiss them totally as long as you can change the financial behaviour that led you into this situation. My wife has recently taken out a loan with an APR of 8.5% (Not brilliant, but the best she could get) This is to pay off in full the balances of 3 credit cards - My MBNA (Facility withdrawn), her Unison & Tesco cards, all with APRs of between 15 & 19%. These cards have now been chopped & the loan will be paid over 60 months. I don't believe we would ever have paid off the balances of all 3 cards in that period.

Gemmzie

That's the plan here hopefully.

I've sucessfully used shuffling to pay off £5.5k of card/overdraft debt, I'm now down to the final £1k, which if we could wrap up within the loan would be perfect.

Nothing has been spent on credit cards since September last year, which was my car insurance, and before that, it was even longer.

Dad's habits won't change, but his accounts are within his own name now and anything joint has been evened up to clear my mother and she's learnt to avoid credit.

Gemmzie

Okay, no luck so basic SOA...

Am using "Loan" money to pay off credit cards

£478 owed to "Loan" money =
* £37 - my brother cd's player
* £17 - glasses
* £70 - borrowed by myself for bank charges
* £300 - brother's moped (to be paid back 1st July from regular saving account)
* £54 - my driving lessons

Loan Money = £906.52

~~~~~~~~~~~~~~~~~~
CREDIT CARDS:

MBNA = £2,302.05 - 0% until October 05
£150 to come off in August / October / December - moving to my own card, life of balance card, as it is my debt not mothers

~~~~~~~~~~~~~~~~~~~~~~
GENERAL:

In -
Wages= 675.04

Out -
HSBC Loan = 166.58
Halifax Loan = 137.62
Prudential (pension) = £45.94
Specsavers (contact lenses) = 15.50 ( half comes back via health insurance )

Savings ...
Car Insurance = £15 (currently - 106.55)
Car Repairs = £30 (currently - 30.10)
Car Tax = £10 (currently - 30.63)
ISA = £25 (currently - 325)
Christmas Food = £30 (currently - 133.95)
Christmas & Birthday = £40 (currently - 42.08)

Two other D/D's go out but are paid for by myself.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Anything else needed?