Loan for consolidation

type25

HI there, after a bit of impartial advice.
My partner and I are with HSBC, we have one current account each and one joint account.
Between both of us we have around £18,500 worth of debt, including credit cards, loans and overdrafts.
At the moment we pay back each month about £560 per month (that's just paying the minimum off everything).
Ideally we want to have a single payment over 3 years to clear it all, which is affordable. We've spoken to HSBC but unfortunately due to the fact one of our loans hasn't had 12 payments on it means we can't take out another loan with them until that has been paid off. The good news is that loan is only for £1000, so in theory we could up our credit card and pay that £1000 off and then apply for a debt consolidation loan, although it sounds a little bit pointless going through those steps.
What's the best thing we can do? We have a fair to poor credit rating i would say (no ccj or anything).
Many thanks

chalkie99

type25 wrote: »

Ideally we want to have a single payment over 3 years to clear it all, which is affordable.

On what basis are you working that out?

A quick check on the Marks and Spencer loans calculator shows you would be paying £592.40 a month for £18500 over 3 years.

That is more than you are paying off now and, if you could afford the higher figure, why are you not already paying that much?

Additionally, that rate is their best available and will not apply to any other than the most credit worthy customers.

What are your current earnings?

You have £18,500 debt between you at the moment and, if you borrow another £18,500 to "clear" it you would have a total of £37,000. Your lender has no guarantee you will actually pay down your existing loans.

You are looking at joint earnings of around £75,000 to be considered.

Tixy

I absolutely would not pay off your small loan with a credit card in order to be considered for a new loan. Its quite possible you would do this and still not be accepted for a large loan from HSBC. You might easily fail their affordability criteria for example.

type25

chalkie99 wrote: »

On what basis are you working that out?

A quick check on the Marks and Spencer loans calculator shows you would be paying £592.40 a month for £18500 over 3 years.

That is more than you are paying off now and, if you could afford the higher figure, why are you not already paying that much?

Additionally, that rate is their best available and will not apply to any other than the most credit worthy customers.

What are your current earnings?

You have £18,500 debt between you at the moment and, if you borrow another £18,500 to "clear" it you would have a total of £37,000. Your lender has no guarantee you will actually pay down your existing loans.

You are looking at joint earnings of around £75,000 to be considered.

We spend out £550 per month on paying back loans and credit cards & overdrafts (i can break this down if needed), these are min payments on the cards as well, but never seem to be paying them off because of the interest.

I'm self employed, we have a combined income of about 60k

I'm pretty sure we won't get accepted for 18k loan on top of all the other debt, but i guess that's the question for you guys, how can we put this into a single payment to 1) Pay off the debt and have a more resonable interest rate and 2) Make it more mangable

Tixy

type25 wrote: »

but i guess that's the question for you guys, how can we put this into a single payment to 1) Pay off the debt and have a more resonable interest rate and 2) Make it more mangable

What are your debts, balances, APRs, monthly repayments etc? (and limits on credit cards/overdrafts). If you could list these people might be able to help.

What is the maximum you can afford each month at the moment for debt repayments?

Apples2

Have you taken a radical step back and tried to find the real problem?

For whatever reason, you have spent over £18k more than you have been earning. This has to change. Something has been going wrong for a while now.

If it isn't addressed, no matter what loan you obtain now will simply be delaying another mess later on.

The alarm bell for me, reading your post, is that you had a loan less than a year ago but you are looking for another loan already.

If you can't reign in your outgoings, then further borrowing is going to lead to a much larger disaster later (there are thousands of posts on here as testament).

There is no simple solution but you have to be focussed and relentless in curbing your outgoings.

Tixy

You might want to consider popping over to the debt free wannabe section and posting up a statement of affairs on there. The posters on there should be able to find areas of expenditure where you can save money/get the same service cheaper/cut back etc which would free up more money for debt repayments, and help you start bringing the balances down.

type25

I'm not too worried about the debt as i know i can afford to pay it back. I run my own business which is doing pretty well at the moment (although there are reasons why i need to leave the money in the business at the moment) - If the entire debt isn't paid off by middle of next year i'd be very suprised.

The objective here is to create a more managable payment in the interim.

Quick breakdown of payments per month:

Credit cards: 210 (min payments)
Loans: 275
Overdraft Interest: 55

Totals

Credit cards: 7k limit on one of them, 1250 on other, both maxed out
Loans: One loan is 1000 over 1 year, the other is for 3900 with 2.5 years left

Our monthly income is 3.1k cleared and our total outgoings are 2k.

In theory we have around £500 quid disposable income we could be paying off some debt, however we do have a baby on the way.

It looks like i'm going to have to just wait till next year to pay the debt off in full from the business.

Tixy

Have you seen the snowball calculator?
If you put your debts, APRs in to that you can then have a look and see how much interest you will save by increasing your monthly payments a little. If you have £500 spare then ideally you could focus some of that on your most expensive debt each month.
http://www.whatsthecost.com/snowball.aspx

paddyrg

Just a note, 'manageable and convenient single payment' always sounds like the TV loan ads - they are false reasons for borrowing (direct debits remove all the hassle of different paydays), the only true one is cost, and unless there is a distinct cost advantage then it is just extra wasted effort.

As you would be unlikely to be able to get the full £18500 you are after, it wouldn't even simplify things! I'd say from your figures you might want to look at overpaying the loans - start with the ones with the higher APR's (probably the cards?)

type25

Thanks for all the advice, been very helpful.