Why are people so negative about consolidation loans?

~Jem~

I have just been reading a few posts about these and so many people say they are the bad thing to do because you end up paying more, yet in my case i would save a fortune.

Am i right in thinking that when you go on sites to get a quote and you pick the amount you want to borrow and then the months you want to spread it over then thats what you would get if you were accepted?

Because i pay nearly £400 a month on debts and nearly half of this is interest, yet i did a quote for a 10000 loan over 3 years which would be 374 a month and leave me a couple of grand to spare.

The only problem is i cant get a loan!

I personally think banks are stupid at the moment. Im tempted to go to my bank (halifax) and have a sit down and show that i can afford the loan as it will be my only payment, yet i know deep down they will just refuse me, but its stupid!

It just goes to show all this rubbish of making a decision based on personal circumstances is rubbish!

OK rant over!

andys15

the problem is that is the begining of the cycle. most people will end up maxing cards again.

bargainbetty

Agreeing with Andy15 - if you do not learn to manage your money, you'll end up with more debt.... trust me, done it twice. 'Hey look, I have credit again..... that one little purchase won't matter....'

Head over to the Debt Free Wannabe board, and they will give loads of help and advice on how to reduce your debts most effectively.

Good luck x

ShootTheMessenger

The people telling you the truth about consolidation loans are people that have been there done that.

I'm sure there are people who pay off the CC and cancel them, but its all too easy to keep the card there for rainy days. Slght drizzle causes unexpected purchases andd before you know it, you're in a doubly worse situation.

The banks are being so mch more careful who they let have loans. We;re not negative, only trying to be honest and helpful!

MarsdenCuckoo

For my 2p-worth, consolidation loans do have their place in the scheme of things i.e. if they help you out of a 'sticky patch'. Yes, if you pay less monthly for a longer term you will pay more interest but if that enables you to retain assets important to you then - to me - it's worth it. Of course, the temptation of 'borrowing a few extra £000' is tempting too (especially if the monthly outgoings are reduced) but not necessarily a good idea in that it simply encourages you to continue overspending.

As others have said, anyone in debt needs to figure out a workable budget. A consolidation loan may help but is not necessarily the answer.

Why not speak to the Halifax (and/or any other local bank) and see what they say? You never know, they may be able to help.

Good luck.

Phill_Anderson

Hi,
It is always necessary to tackle loan with responsibility and wisely. A payday loan or any loan can make life difficult if not handled properly.

A planning is always needed for loan repayment especially for payday loans as their interest rates are quite high. But it is very useful for consolidating a debt.

Regards

BLT_2

~Jem~ wrote: »

I have just been reading a few posts about these and so many people say they are the bad thing to do because you end up paying more, yet in my case i would save a fortune.

Am i right in thinking that when you go on sites to get a quote and you pick the amount you want to borrow and then the months you want to spread it over then thats what you would get if you were accepted?

Because i pay nearly £400 a month on debts and nearly half of this is interest, yet i did a quote for a 10000 loan over 3 years which would be 374 a month and leave me a couple of grand to spare.

The only problem is i cant get a loan!

I personally think banks are stupid at the moment. Im tempted to go to my bank (halifax) and have a sit down and show that i can afford the loan as it will be my only payment, yet i know deep down they will just refuse me, but its stupid!

It just goes to show all this rubbish of making a decision based on personal circumstances is rubbish!

OK rant over!

The answer is in the question. Your current debt level is around 5k, when looking at a consolidation loan you didn't look at 5k you looked at 10k, as this links to your current repayments and it occurs to you that you will have a couple of thousand free.

The problem is that your new debt level is not 10k, it 13.5k (36 x 374). So with one signature you have now almost tripled your debt. The interest alone on the 'consolidation' loan is almost as much as you currently owe.

As an aside, and this is not aimed at the OPs catalogue signature entry, purchases on catalogues astound me. Not only do people pay well over the odds for items they have never seen, and which are frequently shoddy, but they also pay huge interest on them. Its like a double whammy. That 10 pounds T shirt in the catalogue that you could have got for a fiver downtown ends up costing nearer 20

no_more_cards_for_me

Easy,

Borrow, consolidation - keep cards - borrow, consolidate- realise that won't work - face the debt and start paying it off. Don't borrow.

That's usually the cycle.

Agree with BLT - why catalogue shop, what advantage are you getting nil. It's a desire to spend money. Do you want it or do you NEED it - there is a big difference.

JasX

~Jem~ wrote: »

and leave me a couple of grand to spare.

the fact you regard signing up for an extra £10,000 loan (5k additional new debt, before interest) just so that you will end up with a 'spare couple of grand' indicates the bank's 100% right to refuse you.....

lol lol lol :rotfl:

TUS

I've re-consolidated twice and it's got me nowhere, except pushing my debt free date further back. I saw the light and will now rather scrape by and clear my debts quicker than have an extra £100 per month and be in debt for longer. That £100 will soon be swallowed up in something else which isn't strictly necessary.

DavidP24

Martin has said it before, it is a last resort and only to be considered when you can't tart to a new card. If you have the discipline to cut your cards in half then do it, but you will be paying the interest whether you pay it off or not.