Loan advice - please help!

therandomsurfer

Hey MSE gurus,

I am scratching my head trying to decide how best to apply for a loan - have read a lot of the guides on MSE but am still a bit stuck on what route to take - any chance of some advice based on my circumstances below?

First, I have a very good salary, 55k as of 6 months ago and likely to rise over the next year.

However between my wife and I we have clocked up a fairly large amount of debt - around £18k between us on credit cards (I have around 5 and she has 4), all of which are now past their 0% intro rates. In addition we have a few other debts of around 5k from things like furniture / electrical purchases.

The missus is studying right now and for the next year so we're living off one income and I want to try and consolidate our debts into a lower interest loan to pay off over the next 3-5 years.

No mortgage or kids, we are renting and have just moved to London 3 months ago.

I'm looking at some of the best buy 7-15K loans eg Santander etc and looking to apply for a 14.5k to be paid over 5 years to help

My question is this - if I am trying to apply on the basis of consolidating debts which both of us hold but do not want to apply for a joint loan will they reject me on the basis that my debts on record don't really add up to the amount I'm trying to borrow? Basically my debts are around 8k and hers are about 10k but I'm reluctant to tie our credit histories together if possible.

Do you think I am likely to be rejected if I go ahead with this application - am hoping that my salary goes some way in helping me get accepted...

Thanks and sorry if this isn't clear! Happy to clarify any details if it helps.

thanks all

bouncydog1

Before applying for a loan you really need to address why you have racked up over £20k of debt on credit cards on a salary of £55k. Are there any offers available on any of your cards, where you could transfer the higher rate debt to a lower rate? Could you apply for another card and do this?

What are you going to do with the cards that you have if you successfully apply for a loan - cut them up and close the accounts or keep them? You currently have a debt to income ratio of nearly 50% which seems to me to be quite a lot (although I am sure others may have a different view).

I think the first place you should start is to post up a statement of affairs on the debt free board and let the experts over there pick over the information and make constructive suggestions. It would be far better to have a plan to pay off the existing cards over a period by proper budgeting rather than taking on more debt.

You only have one income for the next year and have only been in London 3 months so I don't think you really have a proper idea of the cost of living there. Although £55k is a reasonable income for one person, this is presumably before tax and deductions so the reality of the ratio of net income to debt is higher than 50%. I would be surprised if you could get a loan, but do your statement of affairs first to get a true picture of where your money is going and where you can cut back.

therandomsurfer

thanks so much bouncyd!!! (I said that with a straight face).

Well the reason quite simply is that salary hasn't always been that high and most of the debt has been accrued when we were living off much less. Right now we have enough to live on given london living costs and one income, but not enough to pay off any of the debts and I want to be able to save on interest so we can chip away at this.

Yes, the idea is absolutely to cut up the cards if the loan comes through; the last thing I want is to clock up more debt!

I have considered applying for new cards to transfer the debt to a lower rate, I guess I just figured given the amount I need a loan is a better bet. Thanks for your advice and I will definitely consider going over to the debt free board.