A little advice... PLEASE!

ALBA_4

Hello everyone,

I’m looking for some advice and would be very grateful for anything you can suggest to help with my problem.

To give you a little insight, I’m basically trying to sort out the debit my mother has got herself into and in the best way possible. Personally I’m not the kind of person who likes debt and therefore don’t know a lot about it. That being said I feel the need to help my mother out of this mess as best I can, and may need some advice along the way.

I’ve spent today reading a lot of websites and trying to organise and looking into the full extent of the debt and how to approach the problem.

Basically she has all the usual outgoing as most other people…

Rent
Council Tax
Electricity/Gas
Phone/cable bill
Television licence
Shopping

All of these have to be paid each month and they have been and are up to date. On top of these monthly outgoings we have to deal with 2 credit cards and 2 unsecured loans which brings me to my questions. At the moment she is basically breaking even with her income and outgoings but that is with only paying the minimum on the credit cards which aren’t going down any due to this fact.

As I’ve said breaking even is the way things stand at the moment but I need to do better than this, so have to work on a way to start making a dent in the loans and cc’s.

What I’ll do is list these to give you an idea of the situation…

Credit Card 1 (Capital One) Balance £200 APR 29.9%
Credit Card 2 (Lloyds TSB) Balance £1100 APR 17.9%

Now on to the loans…

Loan 1: £7900 with 42 payments of £222.75 with a single final payment for the remaining amount, APR of 11.5%.

The above loan has a remaining 25 payments to be made with a current balance of £5474.

Loan 2: £1000 with 1 initial payment of £89 followed by 48 instalments of £51.13, APR of 35.3%

This loan has a remaining balance of around £1600

Hope this is sufficient. Now I have to decide my best way to tackle these debts. I automatically assumed the credit cards would be the best bet to pay off first but loan2 is an absolute joke to be honest. She borrowed £1000 and in total is paying back £2543.24!

After reading over this website amongst others I feel my best course of action in the 1st instance is to contact the loan company’s to ask about repaying the loans early and finding out what the cost would be at this stage including any penalties for doing so. There after depending on the outcome look for a loan at a more competitive rate and clear all existing debts. My concern about this, with loan 2 a charge of £420.50 was made for PPI is it likely this will this be deductible from the total if paid early?

My last point… When contacting the loan company which I’ll do by letter what exactly should I ask? I don’t want any mis-understandings, would it just be a case of saying I want to know what the final balance would be including any penalties if the loan was to be paid back in full?

Hope I’ve not bored anyone to tears

deemy2004

Try calling the loan companies rather than writing to them.

As you have observed you need to pay off the higher APR debt first i.e.35.3%is high to say the least !

Maybe a sub 10% APR consolidation loan equal to the value of the outstanding debt would be somethign to consider.

ALBA_4

Thanks for the reply.

Problem is, with it not being my debt I wouldn't imagine they will entertain me on the phone will they?

nearlyrich

ALBA wrote:

Thanks for the reply.

Problem is, with it not being my debt I wouldn't imagine they will entertain me on the phone will they?

Your Mum can make the initial call and ask them to speak to you, I do this for my Mum if she needs to contact anyone official, she is a little hard of hearing and it is much easier for me to do the call and then explain things to her. Hope this helps, good luck and hope your Mum appreciates you helping with this.

nh

Tackling the loans is a good thing to do but make sure if you consolidate that you are actually saving money. Because of rule of 78 and all that nonsense, it is sometimes not worth paying loans off early.

What you should do as soon as poss is move the credit card debt onto a 0% card. As long as your mother hasn't missed any payments (and has an income) there is no reason why she wouldn't get one. Maybe as she is not a homeowner she may have a problem but try at least one application. Maybe try her bank? Or barclaycard or Egg if she doesn't already have these cards).

This won't bring the minimum payment down in the short term but at least the debt wouldn't be getting bigger. She would then need to apply for another 0% card in the future when the current deal ended.

Or, she could apply for a Texaco life of balance card which is 3.9% for the life of the balance, as long as you transfer the balance in the first month. Then it would still be accruing some interest but she wouldn't have to bother with moving the debt. The minimum payment would probably be the same though as the debt is the same (the minimum payment should get smaller as more is paid off though)

Also, Buy Martin's book as it has loads of tips on getting cheaper gas/elec (go to https://www.uswitch.com or is it https://www.uswitch.co.uk?). Does you mum have a water meter? This can save her money if she lives alone. Does she have the cheapest phone/cable she could have? Phone is tricky cos best provider depends on usage but if you register with https://www.18866.com she can make free phone calls (subject to 1p connection charge) to UK landlines at any time of the day if she pre-dials 18866 when making calls (calls to mobiles are also cheaper using 18866 I believe) If a pre-dial is no good (can be tricky as you have to remember!) then I think One-tel do good packages at the mo with lots of free calls at evenings and weekends. Try the telephones board for more tips.

GET MARTIN'S BOOK!

ALBA_4

Thanks for all the advice everyone. I've since been in contact with the loan company and will in fact be saving over £500 if it gets paid back now. So with this in mind I'm looking at alternatives to raising the cash.

Keeping in line with the board, where is the cheapest place to purchase Martin's book?

nh

Try https://www.kelkoo.co.uk, a price comparison website.

elona

Try thebookpeople.co.uk

BAILIFFCHASER

ALBA wrote: »

Hello everyone,

I’m looking for some advice and would be very grateful for anything you can suggest to help with my problem.

To give you a little insight, I’m basically trying to sort out the debit my mother has got herself into and in the best way possible. Personally I’m not the kind of person who likes debt and therefore don’t know a lot about it. That being said I feel the need to help my mother out of this mess as best I can, and may need some advice along the way.

I’ve spent today reading a lot of websites and trying to organise and looking into the full extent of the debt and how to approach the problem.

Basically she has all the usual outgoing as most other people…

Rent
Council Tax
Electricity/Gas
Phone/cable bill
Television licence
Shopping

All of these have to be paid each month and they have been and are up to date. On top of these monthly outgoings we have to deal with 2 credit cards and 2 unsecured loans which brings me to my questions. At the moment she is basically breaking even with her income and outgoings but that is with only paying the minimum on the credit cards which aren’t going down any due to this fact.

As I’ve said breaking even is the way things stand at the moment but I need to do better than this, so have to work on a way to start making a dent in the loans and cc’s.

What I’ll do is list these to give you an idea of the situation…

Credit Card 1 (Capital One) Balance £200 APR 29.9%
Credit Card 2 (Lloyds TSB) Balance £1100 APR 17.9%

Now on to the loans…

Loan 1: £7900 with 42 payments of £222.75 with a single final payment for the remaining amount, APR of 11.5%.

The above loan has a remaining 25 payments to be made with a current balance of £5474.

Loan 2: £1000 with 1 initial payment of £89 followed by 48 instalments of £51.13, APR of 35.3%

This loan has a remaining balance of around £1600

Hope this is sufficient. Now I have to decide my best way to tackle these debts. I automatically assumed the credit cards would be the best bet to pay off first but loan2 is an absolute joke to be honest. She borrowed £1000 and in total is paying back £2543.24!

After reading over this website amongst others I feel my best course of action in the 1st instance is to contact the loan company’s to ask about repaying the loans early and finding out what the cost would be at this stage including any penalties for doing so. There after depending on the outcome look for a loan at a more competitive rate and clear all existing debts. My concern about this, with loan 2 a charge of £420.50 was made for PPI is it likely this will this be deductible from the total if paid early?

My last point… When contacting the loan company which I’ll do by letter what exactly should I ask? I don’t want any mis-understandings, would it just be a case of saying I want to know what the final balance would be including any penalties if the loan was to be paid back in full?

Hope I’ve not bored anyone to tears

How are you getting on now ?