Consolidation loan

jodenice

Hi!

i did actually post something about this on debt free wannabe but was on wrong forum thread I think!

Basically, my boyfriend has 2 unsecured loans, 1 credit card, 1 store card, & 1 car loan and they are for varying amounts and end at varying times (one loan ends in 22 months, the other in 4.5 years). The credit cards are not paid off in full every month but they are paid more than the minimum payment. However, they have just gone past their good interest rates and we'll be paying more. (We have just been approved for a mortgage and didn't want to muck around with changing cards or loans before as we didn't want it to affect our credit score)

i know that there must be a better way than just paying bits & bobs off one loan (we are paying out quite a lot per month) but have heard bad things about consolidation loans. What are our options and what should we be looking out for. I can display figures and monthly payments if anyone can help.

Yours hopefully
Jo

iolanthe07

A consolidation loan might be OK if you have the discipline to reign back your borrowing. The problem is that many DFW's go on consolidating over and over again. You think you have cut your debt, but actually you have only cut the amount you pay back each month - the debt is still there, often for years and years ahead. But because you seem to have a bit more spare cash, you go on borrowing. Unless you address the fundamental reasons for being in debt in the first place, you might end up much worse off than you are now.

jodenice

Well we are looking at being completely debt free from all loans, cards and car loans within the next four years and this is something we will still want to aim for.

I am definitely sure that that there will be no further borrowing - we have spare cash now but I just think we are paying an awful lot out a month.

iolanthe07

(Just checked my last post. Before any pedants have a go at me, of course it should have been rein, not reign - sorry!)

If you are definitely sure you've got your finances under control, then go for a condolidation loan, but do be careful of the interest rates and terms & conditions and don't take on payment protection insurance without good advice.

AMILLIONDOLLARS

Why not snowball, it would work out a lot cheaper in the end

http://www.whatsthecost.co.uk/snowball.aspx

This link will show you how, with a lot more advice as well!


AMD

jodenice

OK I shall check it out and check out some rates. Anybody got any recommendations or a link to a good site for loan rates? Thank you both very much.

kenshaz

back.Problem Debts? Where to start and what to do Debt is more than a financial problem, it impacts your entire life. The best thing to do is take a deep breath and start dealing with it; this is a step-by-step guide to help you do just that.

jodenice

i filled in the snowballing site, I'm not sure how much it could work for me really as several of the loans are fixed rate per month, it was only the credti card and one store card that would have been paid off quicker ...

lynzpower

Yes that may be so, however, what many DFWs do who have fixed loans is that once theyhave cleared all the other debts, they save all extra "snowballing" money in a bank account seperately then phone the loan companyies and pay it off early, plus sometimes make a saving as they dont have to py all the interest IYSWIM