Debt Consolidation Loan - Who to go to?

mpc1

Hi all,
I've decided that a loan is the only way forward for me. It won't be huge - circa £3500 will cover my credit cards and get them paid off then I can concentrate on paying that loan off.
I'd like some thoughts on who to go to for a loan when I have poor credit rating? There are sooo many loan companies out there now I dont know who to trust and do not want to be bombarded by calls trying to sell me more loan products!
Thanks
:embarasse

Tixy

With a poor rating you will really struggle to get anything competative. Also at that level of borrowing the APRs don't tend to be good.

If your cards have really high APRs and then it might be worth trying your own bank to see whether they would lend to you and at what rate.

However generally consolidation is not recommended on here. Before you choose that route have you worked out a monthly income & expenditure account to see how much you have spare for debt repayments and whether you would be better off sticking with the cards, which allow for more flexible overpayments and can often therefore result in less interest being paid overall, and therefore you becoming debt free much quicker.

EDIT - just seen your other posts, if you are not on the electoral roll then you almost certainly won't get a loan anywhere.

Before you try this I really would suggest you complete and post a statement of affairs to see if there are other ways round this. http://www.makesenseofcards.com/soacalc.html

DarkConvict

Consolidation is a bad idea, lower repayments mean you end up spending more money and very quickly end up with getting more credit and making min payments again, take it from people who have consolidated more than 3-4 times, they do not work.

I agree with tixy, get an SOA posted up, it is best to work on paying the debts yourself than taking a loan to cover them. Payday loans are the only exception to consolidation as payday loans apr are 1000%+

mpc1

sooo... what do I do? The bank are on my case. Is consolidation really that bad?

Tixy

If you have a poor credit rating it might not be an option (whether or not it is a good idea).

Have you worked out a monthly budget and looked through all outgoings to see if you can save money (either by switching suppliers/changing tariffs) or by cutting back?
Until you have done this you won't know how much you can afford to repay a month anyway (regardless of whether you stick with your existing debts or manage to find a consolidation). It would be a really really bad idea to consolidate and find you couldn't afford the monthly loan repayments.

DarkConvict

Generally loans are front loaded, so here is an example.

£10,000 of credit card debt at @ 25%, paying back £500 a month
It will take you 26 months to pay off these debts. During that time, you'll pay £2,732.00 in interest.

£10,000 loan to consolidate at @ 15%, you will be asked to pay back at 5 years. So 5x12 = 60 months. £10,000 at 15% over 5 years is roughly £17,500 to repay.
Making monthly repayment to be £292

This shows a consolidation loan takes longer to pay back, you pay more in interest, and worse of all it bring down repayments. Lower repayments is bad for a big reason if you are in debt to the point of wanting another loan, if you have more money per month than when making the min payments on cards you end up spending again. But that £206 just isn't enough so you get a credit card, end up making min payments and then bang 12-24 months later you need another loan and have a whack load more debt.
Mentally consolidation looks good but it really just turns you over and gets you from behind much harder... is one way to put it.
Avoid at all costs!