Debt Consolidation Loan

MoneyMagic01273

rising_from_the_ashes wrote: »

mmmmm well I do hope you're one of the paltry 15% that consolidation loans work for ... however, that statistic speaks for itself IMHO.

You have to be iron willed not to buy anything you shouldn't and not be tempted to take out ANY more credit .... unfortunately life often has a habit of getting in the was as xxx years to clear the loan is a long time.

Arguably whatever approach you choose to do to address your debt you have to be iron willed.

Also, interesting statistic - where does that come from, exactly?

rising_from_the_ashes

MoneyMagic01273 wrote: »

Also, interesting statistic - where does that come from, exactly?

http://www.creditaction.org.uk/assets/PDF/statistics/2007/september-2007.pdf states that 3/5 people who consolidate end up with more debts .....

MoneyMagic01273

rising_from_the_ashes wrote: »

http://www.creditaction.org.uk/assets/PDF/statistics/2007/september-2007.pdf states that 3/5 people who consolidate end up with more debts .....

Thanks... so could I ask again where the "debt consolidation only works for 15%" statistic comes from? If 3 out of 5 people increase their debts after consolidating then that would suggest that 2 out of 5 stay at the same level or lower their debt. 2 out of 5 is 40%...

The article also says that 25% of people who consolidate go on to pay their debts of earlier.

Hardly sounds like the "OMG DON'T DO IT!" option that everyone on these boards makes it out to be.

Yes, I understand the flip side of these stats is that it doesn't work for many people. But the fact is that it does seem to work for a significant number of people.

I do accept you have to be disciplined if you decide to take this approach to getting control of your debt. But actually, that is true to most debt management solutions.

rising_from_the_ashes

The 15% figure was in a link someone gave me - unfortunately as my pc packed in & I had to get a new one, I lost all my saved links with stats/useful links in that I used to have ..... I'll try to find it again when I have a chance.

Personally, I don't think a stat of 25% of people paying off their debts earlier is anything to be excited about .... 75% of people don't!

MoneyMagic01273

rising_from_the_ashes wrote: »

The 15% figure was in a link someone gave me - unfortunately as my pc packed in & I had to get a new one, I lost all my saved links with stats/useful links in that I used to have ..... I'll try to find it again when I have a chance.

Personally, I don't think a stat of 25% of people paying off their debts earlier is anything to be excited about .... 75% of people don't!

Like I said - I accept that the flip side of these stats is that it doesn't work for everyone - or even the majority.

But if you want to be someone that focuses on statistics (and it appears that you do) then a 25% success rate is statistically very significant. If it is a solution that works for 1 in 4 people, to me that makes it a perfectly viable approach for some people to consider.

Besides, clearly these statistics themslves can't always be trusted. Even you have just quoted that it only works for "15%" and then provided something which seems to indicate it potentially works for between 25-40% of people.

rising_from_the_ashes

I'm not going to get into a big debate about it - I explained why I don't have the link and I will try to find it again when I have a few hours spare.

We will have to agree to disagree on the 25% figure - personally I think a 1 in 4 chance is very bad....

MoneyMagic01273

rising_from_the_ashes wrote: »

I'm not going to get into a big debate about it - I explained why I don't have the link and I will try to find it again when I have a few hours spare.

We will have to agree to disagree on the 25% figure - personally I think a 1 in 4 chance is very bad....

Eeek, sorry... I mistook this for a discussion board . Debate is normally what happens.

Just to clarify, I didn't call you liar and I didn't doubt you had a link. I was just making point, the same way you were.

Anyway yes, we can agree to disagree. I'll do my best to avoid getting into a discussion with you next time...

triticale

Erm, I might have missed it with all the 'consolidation is good/bad' discussion, but has anyone actually answered the OP's actual question?

RickMave wrote: »

However I'm a bit concerned that the lender might look at my credit situation and be concerned that I'm actually trying to add further to my overall deficit (as they wouldn't be aware of my plan to use this new loan for consolidation purposes).

Am I worrying unnecessarily? Not a new feature in my life....

Yes, lenders will look at any consolidation loan as additional borrowing on top of the debt you already have, as they cannot force you to use the loan to pay off the other debts.

MoneyMagic01273

Although many lenders will ask the purpose of the loan and some accept "debt consolidation" and will take that in to account when scoring the application. So it *can* sometimes slightly increase your chances of being accepted if you state this is the reason for the loan.

But generally yes, they certainly will consider all your existing credit and its likely they will assess with the worst case scenario in mind (ie. you potentially consolidate and run up your other credit facilities again)...

geoffky

smallblueplanet wrote: »

I'm not a fan of tough love. I'm a fan of 'what works for you'. I've recently taken out a consolidation loan from my bank (at 6.2% APR) and before I did I looked through some of the posts on this board.

Nearly everytime 'consolidation' was mentioned there was a wailing and a gnashing of teeth. Normally followed by it'll never work sort comments and stick to paying off the debts as they are now type comments.

What a load of tosh that is for financial advice. How does comments that lead to people paying higher than necessary interest rates help them 'save' money?

Anyway I'll probably stop reading the loans section now as I was just lured back in from habit when previously looking for loan advice, the best bit was 'try your own bank'.

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SEE you in a few years...and i mean that..