Advice on a loan for consolidation

applefann

hello forum

im after some advise please.

im looking for a loan to consolidate my debts, but i dont know which companies to try and what there scoring is etc.

my equifax file is Fair, almost good @ 398.

i earn approx £21000 a year

2 years ago, my credit was low and i took a car out on loan with very high interest, stupid i know, but my credit is allot better now and i feel i can save allot of money.

here is what i want to consolidate

car finance @ £3000 - i pay £170 a month
bank loan @ 1000 - i pay £94 month
DFS sofa @ 1000 - i pay £40 a month

so im paying approx £310 a onth on these
im looking for a loan around £6000 and i think i can save money each month and it will be easier for me.

the bank have already refused me

can anyone recommend any to me?

thank you in advance

skintandscared_2

My first observation is that the new loan you are seeking, for £6k, added to the existing debt of £5k totals £11k. This is 52% of your salary of £21k. Lenders have to assume that you will NOT pay off your existing debt, and calculate affordability based on the entire debt. Over 50% seems to be a no-no in the current financial climate.

Secondly, can you actually pay off all the current loans early? For instance, I know that DFS USED to charge a penalty for repaying their finance early, which made it far more expensive than just carrying on with the usual payments.

chalkie99

Looks like you are paying £304 a month and, if the loan amounts you list are current balances, you will be all paid off in 16 months time.

However, the reality is that you want to turn an existing £5k debt into a new £6k one. In other words you want to borrow "a bit extra".

If you want to borrow 6k now then, even if someone gave you a loan, you will be paying that back a lot longer than 16 months.

Best advice is to keep your head down and keep paying off your existing amounts with a clear target of when it will all be paid off.

Maybe post on the Debt Free Wanabe board where you can list your current incomings and outgoings (Search "SOA") and see if you can save money in other ways.

fatbelly

Why do you want a 6k loan to consolidate 5k of debt?

Tixy

What are the APRs on all your debts?

If its the car finance thats a particularly high APR maybe it would be worth looking into whether you can get a cheaper APR loan for £3k to pay that off.

Do you have any other debts aside from those listed? Do you have an overdraft or credit card?

What is on your credit file that is negative (not the score thats not the important bit, what is on the main body of the report, ie missed payments, defaults etc)?

poppasmurf_bewdley

You say you have a credit score of 398! Considering, firstly, that credit scores are completely worthless, we have people on here claiming they have a credit score of 999 and can't get a loan. A score of 398 would indicate you have several problems with your credit record.

And why do you want to borrow £6k to repay £5k?

Follow the advice to keep paying things as they are and you will be clear of these debts much quicker than if you consolidate.

Incidentally, banks and loan companies do not really like consolidation loans and always charge top dollar for them.

iolanthe07

the bank have already refused me

TBH, if your bank has refused you, then you are unlikely to get a loan at a decent rate from anywhere else.

dantheman2010

skintandscared wrote: »

My first observation is that the new loan you are seeking, for £6k, added to the existing debt of £5k totals £11k. This is 52% of your salary of £21k. Lenders have to assume that you will NOT pay off your existing debt, and calculate affordability based on the entire debt. Over 50% seems to be a no-no in the current financial climate.

This is not always the case, I had £16,000 outstanding on my loan with Tesco and was accepted for a £13,000 loan with Nationwide and I only earn £26,000 per year, so if I hadnt cleared the Tesco loan I would have outstanding debt totalling more than 100% of my salary.

iolanthe07

dantheman2010 wrote: »

This is not always the case, I had £16,000 outstanding on my loan with Tesco and was accepted for a £13,000 loan with Nationwide and I only earn £26,000 per year, so if I hadnt cleared the Tesco loan I would have outstanding debt totalling more than 100% of my salary.

Was that recently, though? Banks have tightened up a lot since the credit crunch.

dantheman2010

This month.

I enquired with tesco on my £16k balance for an early settlement figure, was just over £13k. Applied for Nationwide loan for the £13k a couple of weeks ago. Got accepted at 9.4% (better than the 11%+ with Tesco) and cleared the tesco loan off.

Cash_Flow

poppasmurf_bewdley wrote: »

You say you have a credit score of 398! Considering, firstly, that credit scores are completely worthless, we have people on here claiming they have a credit score of 999 and can't get a loan. A score of 398 would indicate you have several problems with your credit record.

And why do you want to borrow £6k to repay £5k?

Follow the advice to keep paying things as they are and you will be clear of these debts much quicker than if you consolidate.

Incidentally, banks and loan companies do not really like consolidation loans and always charge top dollar for them.

Where are your statistics to prove this?

This week I was approved for a Tesco Loan of £7500 @ 8% this loan is to pay off my Creation Loan.

On my application form Tesco asked what the money for.

Also my existing debt combined with my available credit amounts to more than my annual salary even before you take into consideration the new Tesco loan.