Best solution to credit card debt = Tesco loan? Any advice?

anyusernameleft

Owing to ill health and then unemployment after my business got destroyed by the credit crunch, I was unemployed for about two years and have £23,000 on my credit cards. I now have a good job and am trying to sort things out.

My Housing Association (I'm shared ownership - avoid) refuse to allow me to re-mortgage which would solve everything as I have a lot of equity and a small existing mortgage, so I'm having to look at other options.

£10,000 of the credit card debt is with Virgin/MBNA at 30% interest and about £3 of each month's £237 pound payment is paying off the Capitol, the rest is interest so that's the first lot I want to get shot of, I also want to get my monthly payments of £513 down because I am struggling even with a good wage coming in.

I've a good credit record because I've never missed a payment (robbed Peter to pay Paul while I was unemployed hence scale of current situation) and have today applied for Martin's recommendation of the best 0% card deal (waiting to hear) to swap Virgin to but while that will start denting the capital owed, the monthly payments are no better and it will cost £300 and I'm wondering if I should go down the loan road and the best one, theoretically, is Tesco. According to their website I can take out a loan at 8.3% - £358.33 a month - and be clear in 7 years.

But I was wondering if there was anyone here who had applied for a Tesco loan and what their experience was. Do you actually get 8.4% or do they up it to something worse? Does anyone have any better ideas?

Thank you.

USM

How good is your current salary? Short of £80-90K I seriously doubt you're going to get a loan to clear this debt due to current high exposure.

anyusernameleft

40K

If I get the credit card and put Virgin on that, would I have a better chance at the loan for the rest do you think? Any better ideas?

Thanks

USM

The issue you're likely to face is total exposure to debt in comparison to salary. No matter where the debt is shifted to, lenders will view your total exposure as the sum of all credit card debts PLUS the loan amount, regardless of the fact that you would use the loan to pay the cards.

anyusernameleft

Are you sure? The Tesco loan is offered for the purposes of debt consolidation on their site. What's the point of that if what you say is true? Can you give me your source for your info?
And what do you suggest I do then?
Thanks

USM

The source of my information is this site, and the experiences of hundreds in situations like yours. Regardless of how a loan is advertised, lenders still have a criteria and your level of debt vs. income is likely to blow it with the majority of high street lenders.

The only solution you really have is to try and get cheaper borrowing via 0% credit cards, although these may be hard to get due to the above reasons.

Apart from that its down to cutting down your outgoings and paying off the debt as quickly as you can starting with the highest interest first.

Emmzi

It doesn't look to me like you'll get a consilidation loan either - debt to income over 50%, someone who will lend under those circumastances is like hen's teeth. Maybe a credit union to get some smaller cards cleared at a lower rate is all I can think of.

I'd get yourself over to the debt free wannabe board who can gice advice on cutting back outgoinngs, raising income, and snowballing.

anyusernameleft

I'm perfectly well aware of the various cutting back on the expenses tricks after 2 years on the dole and I'm looking into trying to find a second job, but it's going to take very many years to pay off £10,000 at £237 a month when only £3 of that is going on the actual debt no matter how much I starve.

Is there anyone out there who has actually applied for a Tesco loan who can comment? Thank you.

USM

Listen to the advice being given - you owe almost 80% of your annual post-tax take home on credit cards, the financial world is a very cautious place these days and no mainstream lender with attractive interest rates is going to extend you further credit.. Sorry if it's not what you want to hear.

anyusernameleft

I was inspired to look at your previous posts USM and notice that your advice is universally negative no matter what people's questions or state of affairs. If your advice is based on experience of this site I'd be grateful if you could post links to the stories about how people faired applying for Tesco's loans because I did do a search and couldn't find anything.

Also you haven't given me any advice other than it's all useless and I might as well give up.

USM

If you're going to be rude and blinkered, use the search yourself to find similar stories. This isn't a tesco specific conversation - its a lending specific one.

Failing that, enjoy your credit cards.