Refused debt consolidation loan

frazerdewey

Alliance & Leicester have just refused a £20,000 loan to pay off 2 credit cards because of my existing debt - that is, the £20,000 on 2 credit cards and 1 other card. Does anyone know how to get round this problem, I thought they would pay off the credit cards directly to avoid this problem but apparently Alliance & Leicester don't do this.:(

Tixy

Hi

A lot of people have this problem in trying to get new consolidation loans, they already have too much debt relative to their income to get any additional finance.

Even if the new lender did pay off your existing cards it wouldn't stop you being able to run up the cards again (assuming they were not santander credit cards). And as a rough general guide lenders are not willing to lend to people if it would take their total potential debt exposure to over 50% of their income.

There isn't a way round this other than paying everything you can off your debts to bring your overall debt down. As you 3 cards then it might be worth having a look at the snowball calculator to make sure you are paying your debts off in the most efficent manner to pay the least in interest. http://www.whatsthecost.co.uk/snowball.aspx

Are you near the limits on all 3 cards? if not do the APRs vary by such a lot that it could be worth considering doing balance transfers between the cards?