Should I take a loan

Gigiwissous

Hello,

I am leaving a post in the hope that I could receive some advise concerning my debt problems.
I have a personal loan of £4219.19 (that is including £610.17 Protection Insurance on the loan) + £2779.22 on credit card (that I have stopped using eventhough I haven't used everything) + I am always overdrawn (usually £400-500/month).
I pay £142.35/month for the loan (I still have 4 years to pay) + £90+interests of about £70/month for the credit card (variable) + interest for the overdraft (last month I paid £69). Therefore I pay in total each month around £300-350/month for my debts.
After paying all my bills, rent, etc, I have between £50-100 left for the month.
Recently I opened an account with Alliance & Leicester (my current bank is Lloyds TSB) because they offer 0% interest overdraft for the first 12 months, then £5/month after 12 months. I am now considering taking another loan with Alliance & Leicester of £7000 so I can cover all my debts with LLoyds and have 1 monthly payment of £172.42 per month over 4 years (without protection insurance).
However I am not keen on taking another loan but I don't see what else I can do to ease the payments. Can someone advise me please?
Ideally I would like to take action this week before the bank takes more money from my account for my loan and card, and overdraft...

Many thanks for your responses

Tixy

Hi

What are the APRs on all your debts?
What is the anticipated APR on the A&L loan?

Before making a decision to take out another loan I would draw up an income & expenditure account.
This will allow you to see if 1) there are any other changes you can make instead (such as reducing your outgoings by, for example, switching to cheaper providers, reducing your mobile or satellite tv tariff etc)
and 2) whether you can actually afford the repayments on the loan.

Borrowing more money (even if you intend to pay off old debts) often doesn't help people get out of debt as if you pay less each month because the loan is over a longer period you can actually end up in debt for longer.

Have you checked to see if you could get cheaper PPI on an independant policy (and could then cancel the PPI on the loan)? - see the guide within the insurance section of MSE.

Is your overdraft still with Lloyds? can you not move it to the A&L overdraft saving you £69 in interest?
Have you tried to get a new 0% credit card to transfer your card to? what is your credit rating like? Do you have any old credit card accounts still open but not used? have you tried to see if they would offer a 0% deal (without a credit check).

mrcow

Your Lloyds loan - why did you take out PPI?

Did they tell you that you had to in order to get the loan?

Gigiwissous

Mrcow, they did say it was more than advisable to take a PPI. Having not taken a loan before I thought it was the best thing to do. Believe me I regret that now!

I am not sure I can claim the PPI. I took it at the end of 2008. if I can do you know what i should do?
I did draw up an income vs expenses statement and I have reduced my expenses as little as possible. I don't have satellite, I pay £15/month for internet and I do my best to reduce the bills. My only problem is the accumulation of debts payments. I can afford to pay up to £170/month maximum but not £300!
I currently still have 4 years repayment for my loan. If I take a new loan i will take it for no more than 4 years.

mrcow

Gigiwissous wrote: »

Mrcow, they did say it was more than advisable to take a PPI. Having not taken a loan before I thought it was the best thing to do. Believe me I regret that now!

I am not sure I can claim the PPI. I took it at the end of 2008. if I can do you know what i should do?

If they told you that taking out PPI was a condition of taking the loan then claim it back. It's a simple letter.

http://www.moneysavingexpert.com/reclaim/ppi-loan-insurance#reclaim

Send Lloyds a letter telling them that you believe you were missold the insurance and that you want it all back including any interest.


With regards to getting a new loan - it depends on whether you're going to use it as an excuse to crank up your credit card balance or not. Many have done just that - consolidated onto a loan only to turn around in 3 years time with twice as much debt and many less options than you have now.

Gigiwissous

by the way Tixy, my APRs on my credit card is 15.9% and I do not have another credit card.

Gigiwissous

Thanks Mrcow.
If I take a loan to repay my 1st loan plus my credit card, I will close my credit card straight away! Credit cards are evil, I really don't want it anymore. It has caused me nothing but troubles. I am aware that I have to repay my debts and I am willing to, but I would like to repay it as low as possible and in the shortest period of time. I am scared that if I take another loan it would do no good to my credit history. I always have paid my bills on time and I never had problems with the bank though.
I will look into the letter and see if I am eligible for reclaiming PPI.