Advice needed please

kirsten66g

Hi all. First off, i am a newbie! I've been scanning these forums a lot recently and have decided it's about time i get some much needed advice.

My partner and I would like to get our debts organised and paid off as quick as poss but obviously it has to be manageable.

We currently have a loan, hire purchase for a car and a credit card.

The loan was £8800 for 86 months at a rate of 10.9% APR (£7170.93 left)
The HP was 3100 for 48 months at a rate of 19.4% APR (£2668.93 left if paid now)
The credit card currently has £4361 and has a rate of 17.9% APR

Basically, we want to combine all these debts into one lump sum and one APR. We were originally going to take out one big loan to pay off our existing loan and HP but after thinking about it, the credit card has too big an APR to ignore.

We can only afford to make the minimum payments on the credit card so therefore it's obviously a big issue for us.

If we pay off the HP just now it will be £2668.93 but if we pay it off after the term it will be £7363.20 so it just makes sense to us to pay it off now.

OH has an overdraft (currently at £900) with a rate of 12.9% EAR and we have considered increasing it to pay off the credit card but not sure if this is a good idea?


Would just like to get people's opinions on what we should do.

Thanks.

Happytogetdebtfree

Hi and welcome if you could post a statement of affairs to show income and outgoings we can help you with paying debts , I don't understand the car finance for paying it of now it's 3k but if you don't pay it off you pay 7k? Look forwTd to the soa and good luck with becoming debt free :-)

3Dogs

Use this to post you SOA (Statement of Affairs) and then people can advise you better http://makesenseofcards.com/soacalc.html

kirsten66g

Happytogetdebtfree - If we leave the HP and pay it off at the end it's 7k because of the interest.



[tt]Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 2
Number of children in household......... 1
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 1900
Partners monthly income after tax....... 0
Benefits................................ 121
Other income............................ 0
Total monthly income.................... 2021

Monthly Expense Details
Mortgage................................ 612
Secured/HP loan repayments.............. 240
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 153
Electricity............................. 35
Gas..................................... 35
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 24
Mobile phone............................ 18
TV Licence.............................. 15
Satellite/Cable TV...................... 0
Internet Services....................... 14.99
Groceries etc. ......................... 200
Clothing................................ 20
Petrol/diesel........................... 150
Road tax................................ 0
Car Insurance........................... 18
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 30
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 13
Contents insurance...................... 0
Life assurance ......................... 6
Other insurance......................... 0
Presents (birthday, christmas etc)...... 10
Haircuts................................ 0
Entertainment........................... 100
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 1693.99


Assets
Cash.................................... 0
House value (Gross)..................... 214000
Shares and bonds........................ 0
Car(s).................................. 4000
Other assets............................ 0
Total Assets............................ 218000


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 0........(612)......0
Secured Debt.................. 7170.....(150)......10.9
Hire Purchase (HP) debt ...... 2668.....(90).......19.4
Total secured & HP debts...... 9838......-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Credit Card....................4361......70........17.9
Total unsecured debts..........4361......70........-


Monthly Budget Summary
Total monthly income.................... 2,021
Expenses (including HP & secured debts). 1,693.99
Available for debt repayments........... 327.01
Monthly UNsecured debt repayments....... 70
Amount left after debt repayments....... 257.01

Personal Balance Sheet Summary
Total assets (things you own)........... 218,000
Total HP & Secured debt................. -9,838
Total Unsecured debt.................... -4,361
Net Assets.............................. 203,801

[/tt]

Not sure i did the assets bit right?

Thrifty_Pixie

You need to include your outstanding mortgage debt under 'Secured & HP Debts'

dancingfairy

According to your SOA - you appear to have 250 a month spare. As you have included your min monthly payments for the secured/hp debts in your monthly expenses.
You need to try and track down where this extra money is going - have you thought about doing a spending diary at all?
Can you reduce your entertainment at all - try and do cheap/free family things?
Anything to sell - ebay/car boot?

Obviously if you can reduce the loan rate of interest by moving it to an overdraft then this will help in the long run but it still isn't exactly a great rate of interest and you might find it harder to keep track of how much money you have in the account with the overdraft to take account of - although you could get the loan turned into an overdraft and then ask the bank to reduce it by x amount each month so there's no temptation.
df

kirsten66g

Thats a good idea about the overdraft dancingfairy - thank you

Has nobody else got any opinions/advice on what we should do?

Thinking about getting one big loan to pay them all off as then one payment will be coming out each month plus one APR. Is this a good idea?

jwil

I would be wary about getting a loan to consolidate unless you are sure that you are disciplined not to spend again on the credit card or take out anything else. I did this and then doubled my debt by re-spending.

Can you definitely get a loan for that amount with a lower APR?

Are there any penalties for paying off the loan and HP early?

Perhaps you could increase the overdraft to pay off the HP, get a 0% CC for the CC balance, and make overpayments on the existing loan if you are able to?

kirsten66g

Well, i mean we only used the credit card to buy a tv as our other one broke and stuff for our new house so i don't think we'd ever spend that much on it again!

I have found a loan rate cheaper yes so it just seems like a good option to me. We took out that loan for 86 months which is just far too long, meaning more interest. There are penalties but these are included in the early settlement payment and its still alot cheaper paying it off early.

I like the idea about increasing the overdraft for the HP, that is definately an option to think about.

Thanks for your reply.