how to best use £10,000?

glen70

hi
i have a loan with tesco,s for £11000 over 10 years total now £10,600 if i pay it off.£14,700 total

i have 3 cc,s totaling £6000 0%

i have just been given £10,000 to use to clear debts.
i have been thinking of the best way to use this.first i wanted to clear the cards then put the extra in an isa.
but after crunching all day i have come up with this idea.

payoff my loan with the 10,000 saving 4,000.
get a new loan to pay the cards off over 5 years and paying the same a month so the intrest a lot lower.
is this a good idea or any other advice please:question:

char_student

You should write to your creditors asking if they can make you a full and final offer - explain you have £10000 and can make pro rata offer to all creditors. Ask that they accept whatever the pro rata amount is and they may accept it

I-need-to-make-£

Hi there,

well great news for receiving the money from the kind person. this is a tricky one as you want to do the best thing. I would look at the amount your spending each month on your debts then work out which debts would be in your best interest to clear as if your paying more on the loan a month then it will be better to do that or if its the credit cards then them.

Then you need to look at how long you have 0% for on the credit cards as if the interest is going to shoot up soon then it would be best to do those.

the best advice i can give you is dont get another loan out to clear the credit cards.... thats just getting yourself back to square one... you can pay them off by some dedication, I myself have got one loan out to pay another and now i have just got a creditcard to focus on which I am doing by careful weekly and monthly budgeting and some good old fashion ebay and bootsale.

glen70

char_student wrote: »

You should write to your creditors asking if they can make you a full and final offer - explain you have £10000 and can make pro rata offer to all creditors. Ask that they accept whatever the pro rata amount is and they may accept it

thanks for the help.i dont really know what you mean about getting an offer from the companies would they settle early at a reduced rate?

LeeSouthEast

Pay off the most expensive debts first - by APR/term, and don't take on new debts unless you trust yourself not to simply rack up more debt with those nice empty cards!

glen70

thanks i- need- to-.after i have used the 10000 i would like to have just 1 payment a month so i know were i am.the credit card total £148 a month so is a big amount i know what you are saying about them being 0% so saving on intrest aposed to a loan.the cards are 0% for around 8-9 months.i just want to do the right thing and not loose money.lol.

fatbelly

glen70 wrote: »

thanks for the help.i dont really know what you mean about getting an offer from the companies would they settle early at a reduced rate?

If you're still meeting the minimum payments, no

If you've received a default notice because you have missed payments, maybe.

If you are still a 'player' (i.e. credit rating OK) and can get new credit cards, why not pay off loan and continue to juggle 0% deals or low life-of balance deals on the cards?

Oneday77

I would say check the loans conditions and see if they allow for over payment. If they do then Pay off the CCs, cancel them all, prevent any more spending. Then stick the remaining 4k against the loan. This will shorten the loan period and the amount of interest due anyway. That would leave 1 payment a month, shorter repayment time and it can't be increased if your tempted to over spend at anytime.

There are all the logical ways to look at a situation like this. Which would normally mean paying the least interest. This isn't an ideal world so go with the way you know you can stick to.

glen70

thats really good advice.but paying the loan off will save me 4,000 intrest.continuing to pay the cards for the remainder at 0% no intrest then get a loan to cover over 5 years halt the payments and term.would this work?

char_student

It does depend on what your situation is...have you recevied any defaults? You prob wont be able to balance transfer all of the £6k cr cards, so you should consider what the interest will be when the 0% runs out?

glen70

i have never missed a payment and when the 0% is over if i cant transfer the full amount to another card i will get a loan for the outstanding is this an idea.i am new to all this and the best ways to sort out my debt:D