To Borrow or not to borrow? That is the question!

Kerrylou_3

I posted my SOA yesterday and have really taken on board all of your advice.

Today, i have been offered a loan from Virgin at a rate of 12.9%APR for 72 months. (I know it's a bad rate but i have a bad-ish credit history )

Would i be best to take this loan and pay off all my CC's that are above this APR? This would mean a loan of about £18,500. And then pay as much of the others as i possibly can each month?

Help....I am so confused

On a positive note...i didn't spend a single penny today and made some money on ebay! :T

Dolly_Smith

I've fallen into the consolidation trap a few times but this time I'm not going to do it! the problem is that you're likely to extend the period you're paying over and therefore the amount of interest. Which cards would you pay off with that amount and what would be left?

Kerrylou_3

I'd be paying off £2600 which will turn into 40% APR in 2 weeks time.
£5000 on a FD cc at 15.8%
£5000 on a Cahoot cc at 13.8%
£3000 on Bcard at 19.9%

Ooh thanks for getting me to list that. Just realised that I only need to pay £3000 off the b'card as the rest of the balance is at 6.9%! Which means i would need £15,500 for the loan and not £18,500.

That would leave me owing £7000 on Virgin cc at 10.9%, £3000 on IF at 12.9% and £3500 on Bcard at 6.9%

CLAPTON

presumably the loan isn't secured? is it flexible ...i.e. can you pay off early without any charges or excess interest.

check Barclaycards T&Cs...usually payments go towards the low APR debts before the high APRs debts (well they would wouldn't they)

i think you ought to review the costs and benefits of owning your second property and see whether selling it is the best thing to do as you could then clear all your debts and leave you with cash in the bank.

Kerrylou_3

Grrrr...thanks Clapton. I just checked and you're right. The 6.9% has to be paid off before the 19.9%...the toads.

I have decided to sell th BTL (I think) but am tied into a contract with the council for another 18 months so can't do anything until then.

Meanwhile, i am feeling more positive since my first post on here. It has made me sit down and look at every penny i have coming in and out.

This week i have cancelled my gym membership saving £66 a month, reduced my internet and sky and made some money on ebay.

I still think that accepting this loan from Virgin to consolidtae my higher APR rate cards is probably best for me and then pay as much as i an afford off the others each month (not the minimum payments i have been paying!).

Thank you thank you thank you to everyone for their advice and support so far.

tyllwyd

You can play around with the figures here
http://www.fsa.gov.uk/consumer/04_CREDIT_DEBT/loan_calculator.html

Bestthingsinlifearefree

Keep up the good work Kerry Lou :beer:

If you are shifting debt from a high interest rate e.g 15% to a lower interest rate e.g 7%.(and keeping the term of the debt the same) That can be good, as you are saving money on interest and can throw this spare cash at your debts.

BUT: :eek:

1) if you are increasing the term of the debt, even though the rate is lower you maybe pay more interest overall. That is not good.

2)If you are converting unsecured debt into secured debt e.g a loan secured on your house / 2nd mortgage. That is not good.

3) Most people who "consolidate" then think the problem is solved and run up new debt. Consolidation IS NOT PAYING OF DEBT but simply moving it.That is not good.

Your main strategy needs to be reducing your overhead or / and increasing your income.

Keep posting.

I wish you well.

Kerrylou_3

I agree with everything! For me consolodating the debt will have to mean the cancellation of those CCs not just cutting them up!

CLAPTON

presumably you will only need the loan for 18 months or so until the BTL is sold...so make sure there are no problems/costs about paying it off early otherwise you mught be better off jsut keeping the cards.
Are you sure you could get a Life oF Balance card instead?

leon103

CLAPTON wrote:

presumably you will only need the loan for 18 months or so until the BTL is sold...so make sure there are no problems/costs about paying it off early otherwise you mught be better off jsut keeping the cards.
Are you sure you could get a Life oF Balance card instead?

I was just going to mention life of Balance cards.

Kerry have a look at M&S for a life of balance card. People are getting high limits and it will knock loads of the interest.

Also did you speak to your OH about more money towards the house?

Kerrylou_3

MY credit rating seems to be pants at the mo. I tried M&S but was turned down.
Yes i did speak to the OH about his contribution. It didn't go too well - his argument is always that he has no financial interest in the house so y should he contribute towards the mortgage! For the first time ever, thanks to the advice i have had on this site, i was able to answer him! I told him to go and research how much even a bed-sit would cost per week. He claims to be skint too but I have told him that TOGETHER we need to look at OUR finances and see where WE can make cutbacks. Otherwise the only outcome will be that we are both looking for somewhere else to live!!!!:eek: