Debt consolidation - good or bad idea?

boomboom123

Hi all. This is my situation, I've been a bit of an idiot throughout my student life (which ended a year ago). Any advice appreciated.....


I've a personal loan of about £9000 left to pay.

I've a credit card of £3500 left to pay.

My car has 2 years of finance left to pay at approx £3500.

All in all my outgoings are around the £600 p/m mark. The credit card balance is decreasing at any extremely slow pace. I don't have any bad credit or anything, I always make payments. But the thing is my partner wants to get a flat within the next year. Would I be best consolidating my loans into a single payment which would dramatically reduce my outgoings p/m but over the longer period? Or is there an even bigger risk in doing so?

GAH

To be honest you are unlikely to get another loan and debt consolidating is rarely a great option.

The best thing is looking at other options where you can cut back and certainly wouldn't be looking at purchasing a property with the debts so high, as this would affect what mortgage you'd be offer.

I would suggest posting on the Debt Free wannabee page and providing an SOA and you will get some good advice.

koloko

deleted deleted deleted

boomboom123

Thanks for the advice.

I am in a stable job at the moment earning £22k per year. Hopefully there is a wage rise on the horizon. I think I would be able to take the hit in the longer term so that I have just one smaller debt.

I will do the SOA you talk of and give it some serious thought. There's no rush for me to do anything anyway.

Thanks again.

Tixy

Hi

If you are earning £22k and already have debts of £16k you are unlikely to get a consolidation loan or any new credit. Your debt to income ratio is already high and lenders will view a new loan as additional borrowing regardless that you want to consolidate - as they will not be able to force you to consolidate or you may run the original debts back up again. So they assess your affordability on the worst case.
You already have debt in excess of 50% of your income and generally its hard to get any new credit once you hit that point.

Are you only paying the minimum on your credit card? have a look at the snowball calculator to see what a difference you can make to how quick you will clear the debt if you can pay extra every month - and the amount of interest you will save as well. http://www.whatsthecost.com/snowball.aspx
Ideally you want to pay everything you possibly can against the debt each month, but even a small additional payment will make a difference.

paddyrg

Off topic, and going to be honest, and sorry to say it, but 'stable job' and 'wage rise on the horizon' are huge risk factors - there are many people with 'stable' jobs who don't realise if their company is in trouble. The last thing anyone wants is for you to increase your debt load then find the job you thought you had faltered. Sorry if that sounds negative, but just look up and down the high street for signs of everything being a bit in the air just now.

boomboom123

paddyrg wrote: »

Off topic, and going to be honest, and sorry to say it, but 'stable job' and 'wage rise on the horizon' are huge risk factors - there are many people with 'stable' jobs who don't realise if their company is in trouble. The last thing anyone wants is for you to increase your debt load then find the job you thought you had faltered. Sorry if that sounds negative, but just look up and down the high street for signs of everything being a bit in the air just now.

No you're OK, I understand.