Bit of advice needed

pootas

Hi,

Have always read these forums but decided to finally make a post for some advice. So here goes:

I currently earn circa £21,500 pa which works out after deductions at £1350 a month.

Debt wise I have the following:

circa £10,000 outstanding with Nationwide which is for my vehicle @ £190 per month with around 5 years remaining
£350 on Virgin Credit Card at their standard variable rate @ £50 per month
£2600 on Egg Card at 0% which expires May - I plan to move balance to another 0% card @ £100 per month
£7000 to Honda Finance @ £190 for a motorcycle which I sold at a loss earlier this year for £5200 so although on paper I owe £7000 I have £5200 from sale of bike.

So each month I pay £190 for car, £150 for both credit cards, and for the bike I have done this...

Put the £5200 into a seperate current account...Honda take £190 per month out of account and I pay £70 in. By doing this if I let loan run it's term ( 28 months remaining) then I will have paid enough money into this account to pay off loan.

What I'm wondering ...Is the above the best way of doing things? It seems to be
half sensible by my way of thinking but wondering what others think.

I was also considering selling my car an Audi A4 but I'm guessing in the current climate it would sell at less than I owe on loan. I was thinking even if it did sell at a loss I would simply just get a cheaper car to run and use the money I saved running a cheaper car to continue to pay the deficit on the loan... Without wanting to sound a complete idiot is there any logic in this? To me it seems to be sensible but my partner cannot see the point of doing it (If she is right I won't be admitting it though!)

Any advice would be very much appreciated....

jonnypren

Hi,

I'd focus on clearing the debt with the highest interest rates first i.e the virgin credit card. I'd also shop around for better deals on a loan/interest rate (as long as your get out clauses aren't to hefty) and look to consolidate it all under one roof with a better interest rate.

with regards the car - phew... not sure... depends on how much you'd lose on the sale versus how much you'd save on less insurance, fuel, loan payment and wether you'd actually use that money to pay it off...

well, thats my two pennies worth anyhow.

niccatw

What are the actual interests on the 2 loans and the Virgin card? And are you allowed to make overpayments on the 2 loans?

It might be that you wouls save a lot of money in interest if you paid the £5200 to the motorcycle loan just now.

The snowball calculator might help you play about with the different options available to you.

With regards to the car, if it were me, I'd make my decision based on how much I was paying out for the car at the moment, how much I'd be paying out with a cheaper car and what I was likely to get on selling the car, then make up my mind as to whether or not it was worthwhile. (And yes, I do understand your logic. That might say as much about me as it does about you though .)

niccatw

Sorry, meant to give you the link to the snowball calculator in my earlier post... http://www.whatsthecost.com/snowball.aspx

PNPSUKNET

you really need to clear the bike finance asap if it was on hp, as not sure the finance company would be too happy.

pootas

With regards to the bike....

It's a loan with Honda Finance, they know that I have sold the bike and I asked if I could pay the £5200 off the outstanding amount with them. They point blank refused stating I either pay it off in full or continue to make my monthly payments.

The Virgin card does have the highest interest rate although it only has £350 on it but I will endeavor to get this paid off by summer.

With regards to the car I reckon I would sell it for 8k...Meaning a loss of 2k. Bearing in mind its an Audi 2.0tdi A4 and I currently do 300 miles per week to work I would imagine getting say a 1.2 Corsa/Fiesta would represent a substantial saving in fuel/tyres/tax/insurance and running costs for me...

slummymummyof3

Without meaning to sound stupid......would it not make sense to use the money from the sale of the bike to pay off the 2 credit cards as one already has interest and the other will have interest from May? This would obviously remove £2950 from the balance you had towards the bike but free up £150 per month which you could add to the 'bike account' You could then cancel the 2 credit cards so that it does not look like you have too much available credit for if you need to apply for a new interest free one at some point.

With reference to the car, ok you could sell it at a loss but it will be registered as having outstanding finance on it if someone does a hpi check?????

niccatw

Slummymummy's sugggestion is sensible - but do cancel the cards in writing so the temptation isn't there.

Also, could you up the monthly payments to the bike? I know if I want to make overpayments to one of my loans, I can. But I need to cancel the d/d and set up a s/o. Also, if you are allowed to set up a s/o for regular overpayments, if you did it weekly rather than monthly, that might help reduce the interest more quickly (depnding on how/when they calculate the interest).

pootas

slummymummyof3 wrote: »

Without meaning to sound stupid......would it not make sense to use the money from the sale of the bike to pay off the 2 credit cards as one already has interest and the other will have interest from May? This would obviously remove £2950 from the balance you had towards the bike but free up £150 per month which you could add to the 'bike account' You could then cancel the 2 credit cards so that it does not look like you have too much available credit for if you need to apply for a new interest free one at some point.

With reference to the car, ok you could sell it at a loss but it will be registered as having outstanding finance on it if someone does a hpi check?????

That seems to make sense to me....And more annoyingly my partner agrees too!!

I think the idea of having less debt by paying off the cards is for the best for my credit rating and if I want 0% in the future.

My total payments at present are total £410 for the car, bike and cards but if I used your idea I would be spending £410 on just 2 debts which is obviously going to clear them more quickly...

With regards to the car it's an unsecured loan so no HPI etc on the car....

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Quick update just spoke to Honda Finance...I cannot increase the monthly amount I pay nor can I make a partial payment so it seems to make sense to use the cash I have to pay off the existing credit card debts