Secured loan

Lennylegs

Hi
My husband and I have been actively trying to sort out our debt for the last year, we owe a lot but are concentrating on the most expensive debts first - the beastly credit cards. We now budget & keep spreasheets showing income & expenses etc however over the last few months all the aprs on our credit cards (we have 12,000 on various credit cards) have spiralled, the cheapest is now 17.9 and the most expensive has raised to 29.9! most are round the 23% mark. We have poor credit scores which hopefully will eventually improve but right now we cant get a personal loan or balance transfer or even a 15.9% credit card etc. I did want to avoid a secured loan but since the aprs have raised so drasically over the last few months I am coming to the realisation that at this rate we are never going to pay it off unless we can get it cheaper.
However the only lender that seems okay to lend it is welcome finance - the interest is still high - 17%, however they say we can overpay (which i fully intend on doing) and we have set the figure we can pay back per month £300 rather than let them talk us into a 25 year term. Payrises are in april so i think that as well as any extra could be 'thrown' at this debt. What do people think ?

Thank you very much
Lennylegs

mjdh1957

Advice on here normally is to avoid securing and consolidation where possible as if you default then your home is at risk.

However, if you are very disciplined (and cut up your credit cards immediately then you might be OK. The boards have lots of stories of people (me included, though not with secured loans) who then end up back in worse debt than they started.

At first glance, the interest seems high at 17%, but obviously it is a lot less than your high-rate cards. And it's a good idea to overpay as you will save £££££s in interest

Have you gone through your spending and made savings where you can?

Good luck!

Lennylegs

Hi

Yeah we've been through all our income and expenses and made cutbacks on everything except our contact lenses.

I just cant see how we can ever pay off the credit cards now !

Thanks

mjdh1957

Have you tried the snowball calculator http://www.whatsthecost.co.uk/snowball.aspx ?

Input your credit card debts and see what your debt free date and interest paid is, then do it for the secured loan. If you get a big saving and an earlier debt-free date (and as above if you are disciplined) then it might be worth securing.

AMILLIONDOLLARS

How much were you thinking of borrowing, and over what term? You must be very carefull with companies such as Welcome Finance, Ocean, First Plus. First of all they front load the interest, so your firstly paying off the interest before you even begin with the loan, secondly you may be only allowed to over pay a certain amount and sometimes you are charged an Admin fee each time you do so, before you sign anything, read the terms and conditions very very carefully or you could end up owing more than you borrowed.

Good luck

AMD

Lennylegs

Hi

I had enquired about 12,000 over 5 years= about 300 per month.

Just run through the snowball calculator -

12000 @ 17% paying 300 per month = 59 months so its pretty close.

When i put in 12,000 @ 23% (the average interest rate of the credit cards) and paying 300 per month = 74 months
I dont have the individual rates etc to hand right now.

RE: the front loading of loan interest - was that not stopped ? or am i confused with some other practice surrounding the interest on loans that was stopped ?

I will check the t&c's about overpayments if we go ahead because i am hoping to pay it off a lot quicker but wanted to be cautious with the amount that we can afford to pay back.

Thanks

Thanks

Lennylegs

Hi

I had enquired about 12,000 over 5 years= about 300 per month.

Just run through the snowball calculator -

12000 @ 17% paying 300 per month = 59 months so its pretty close.

When i put in 12,000 @ 23% (the average interest rate of the credit cards) and paying 300 per month = 74 months
I dont have the individual rates etc to hand right now.

RE: the front loading of loan interest - was that not stopped ? or am i confused with some other practice surrounding the interest on loans that was stopped ?

I will check the t&c's about overpayments if we go ahead because i am hoping to pay it off a lot quicker but wanted to be cautious with the amount that we can afford to pay back.

Thanks

Thanks

AMILLIONDOLLARS

Best bet is to go over to the Loan Board and someone there will be able to clarify things for you.

AMD