£12,000 unsecured loan @ 9.8% 5 Years Good?

shaun1988

Hi,

I have just applied for a £12,000 loan through Tesco with an advertised headline rate of 6.1% APR.

I have been offered a rate of 9.8% over 5 years (£251 a month.) I am using this to consolidate unsecured university debt (about £7,000 yes bad I know!), pay off a car loan and buy a cheaper car so I can have one payment and know where I stand.

I am 23 years old. Live in the UK. My income is £18,000 a year before tax (about £14,500 after tax) (have had this job for 13 months,) and I have very little expenses (live at home paying £100 a month rent,) however I am looking at moving out and renting soon.

My question is, does this rate seem high, or is it about right considering my income is not particularly high and this is a hefty loan (almost a years take home after tax.) Probably going to try 1 or 2 more companies, but don't want to impact my credit score too much! Anybody in a similar situation as me!?

Your thoughts are much appreciated!!

CKhalvashi

shaun1988 wrote: »

Hi,

I have just applied for a £12,000 loan through Tesco with an advertised headline rate of 6.1% APR.

I have been offered a rate of 9.8% over 5 years (£251 a month.) I am using this to consolidate unsecured university debt (about £7,000 yes bad I know!), pay off a car loan and buy a cheaper car so I can have one payment and know where I stand.

I am 23 years old. Live in the UK. My income is £18,000 a year before tax (about £14,500 after tax) (have had this job for 13 months,) and I have very little expenses (live at home paying £100 a month rent,) however I am looking at moving out and renting soon.

My question is, does this rate seem high, or is it about right considering my income is not particularly high and this is a hefty loan (almost a years take home after tax.) Probably going to try 1 or 2 more companies, but don't want to impact my credit score too much! Anybody in a similar situation as me!?

Your thoughts are much appreciated!!

Go to your bank, see what the supermarkets have on offer and go from there. These are generally the cheapest places.

£12,000 seems a little high for the basic lending figures IMO (more than 50% of income), and whilst I’m not 100% sure of how it works, it would be a case of proving what you can.

Another thing to consider is selling the car and buying a MUCH cheaper one (I’m talking £1000 Skoda Octavia diesel territory), as they last forever and if anything does go wrong, it’s cheap enough to chuck them!

Outstanding finance and car make/model please?
Exactly what debt is where, plus minimum payments please?
Details of monthly income and expenditure please?
Check this out, make phonecalls. (Click ‘this’)

CK

Apples2

12k loan on a salary of 14k is not good so NO.

It's a remarkable offer though, looks like a return to the old days of lenders merrily guiding borrowers down the path of destruction.

What Apr is the student loan? Why would you swap that for this Apr?

Do you think this new car will last you until 2017?
Are you sure these monthly payments on this huge loan are something which isn't going to bother you every single month for five looooooong years?

What about saving for a house deposit, regular service bills, insurance etc? All still doable with this outgoing every month?

paulsad

The rate is good - but; as has been said 5 yrs is a long time.
- I'm half way through a 12k loan over 4yrs myself and you end up wishing your life away till its paid off - mine's £310 per month btw.
So don't rush in till you've thought it right through and weighed up any alternatives.

opinions4u

Surprised they'll do a consolidation over that term at that rate.

You might get better elsewhere, but I doubt it.

By "university debt" I'm assuming you don't mean Student Loan Company.

DCFC79

Dont you think you will struggle with the repayments plus wanting to move out plus the costs Apples2 suggested.

Glad the OP hasn't pointed out his credit score is such a good figure that he should be able to get a loan at a low rate.

shaun1988

Firstly thank you all for your valuable and speedy input!

Apples2 wrote: »

What Apr is the student loan? Why would you swap that for this Apr?

Do you think this new car will last you until 2017?
Are you sure these monthly payments on this huge loan are something which isn't going to bother you every single month for five looooooong years?

What about saving for a house deposit, regular service bills, insurance etc? All still doable with this outgoing every month?

Student Loan APR: Pretty much 0%
Reason for switching: Sleepless nights!........I am currently moving my debt here there and everywhere. My biggest concern is the availability of these overdrafts and credit cards. Below is a breakdown of all my finances:

£4,500 on a £6,600 limit 0% barclaycard till October 2013.
£2,000 on a £3,000 limit 0% halifax student account (this should have ended June-2011 as I finished university June-2010 but still 0%, bit of worry!)
£1,000 on a £3,350 limit 0% rbs credit card which ends in 3 weeks.
£7,500 remaining on a secured car loan (car worth about £7,500 if sold privately) repayment on this was 33 months, £207.50 a month with a £3,350 final payment (have to put £100 a side for this) so essentially £307.50 a month.
Do also have a 0% RBS Graduate account with £1,500 o/d limit dropping to £1,000 in August-2012 and £0 August-2013.

As you can see things are very split and fairly well managed at 0%.

Problems with current situation:
1. Car too expensive to run (audi - insurance group 20, about 16mpg!)
2. What if I get refused for a credit card to 0% transfer in 18 months time???
3. Loan interest rates may increase over the next year, by locking in 9.8% now I have guaranteed peace of mind.
4. Even though I did a degree in Accounting and Finance and will be a qualified accountant in about 2 years I am useless at paying off this debt. By having a set payment a month it forces me to pay off the debt!

Now I know what you will say about how I should keep the 0% credit card it doesn't help with my long term concerns!!

My plan is:

£12,000 loan to

1. Pay off current car finance so I own my current car outright.
2. Sell my current car.
3. Use the £12,000:
...pay off £3,000 overdrafts and credit cards
...put £4,500 in savings account to cover my £4,500 credit card when payment is due in 2013.
...£3,500 on a reasonable 40-50mpg diesel car (had a nightmare with a cheap car once so don't really want to go down that road!) (This in itself should save me over £100 in petrol insurance and tax)
...£1,000 to one side as a buffer for any major expense they may pop up, (safety net)

As for deposit and service charges etc it is a good mates parents 2nd house so no contract no tie no deposit and reduced rent. Could move out in 6 months if it all gets too much!!

I haven't been out of my overdraft for nearly 4 years and it gets me down. With this loan I feel as though I will be able to control my finances better keep on budget and change my spending habits.

I also worked out the interest on this loan is £50 a month x 60 months = £3,000. £50 a month interest earning £1,200 is only 4% of my income. I think that's cheap for peace of mind and a step to being debt free in 2017 !!!

If your still reading this then god help you, I bet you wish you never asked. Any thoughts on the above (if your still there) much appreciated!!!:rotfl:

Btw I am currently 70:30 in favour of this loan at the moment!!

opinions4u wrote: »

Surprised they'll do a consolidation over that term at that rate.

You might get better elsewhere, but I doubt it.

By "university debt" I'm assuming you don't mean Student Loan Company.

Yes by debt I am talking about personal debt, not Student loan Company. Not worried about that!!!!

BugsyBrowne

Group 20 insurance for a 23 year old must be hitting 4k+ surely.

shaun1988

BugsyBrowne wrote: »

Group 20 insurance for a 23 year old must be hitting 4k+ surely.

Not too bad surprisingly!! Only just under £800 with Bell. On comparison websites it was only one of 3 cheap quotes around £800, all the other were in excess of £2,000 and the likes of directline were about £1,500 I belive. Do have 3 years no claims and full clean license since 12 weeks after my 17th birthday over 6 years ago tho

BugsyBrowne

shaun1988 wrote: »

Not too bad surprisingly!! Only just under £800 with Bell. On comparison websites it was only one of 3 cheap quotes around £800, all the other were in excess of £2,000 and the likes of directline were about £1,500 I belive. Do have 3 years no claims and full clean license since 12 weeks after my 17th birthday over 6years tho

What car do you drive?

shaun1988

BugsyBrowne wrote: »

What car do you drive?

Bit off topic lol but audi tt 3.2. Has been a lot of fun but I've had fun now and want a car with more than 2 seats!!