Loans - switching not extra credit - Please Help!

littlemissb

Hi folks,

Does anyone know if or how lenders distinguish between people applying to switch loans and people just applying for extra credit?

I'm being crippled with a loan balance of £8,200 at 16.79% and a £6,000 credit card debt at 29.9%. My salary is roughly £16,000 and it would help me so much with repayments if I could consolidate everything at a lower rate, but I don't know how to get lenders to see this!

Any advice appreciated!

Eonel

Generally they will not distinguish.

If you are applying to (re)consolidate loans with the same bank that originally issued your loans then they will not necessarily see it as "extra" credit. They will close the original loan(s) and move the balances to a new loan on your behalf.

But in most cases, a consolidation loan makes cash available to you. You can use it to settle your other debts - or take it on holiday to the Caribbean. There is no guarantee that you will make the right choice & hence you are credit checked as if it were extra credit.

DCFC79

You have debts of just 10.5k on a salary of 16k and your wanting another loan.

Eonel has made a good point about your bank.

The lenders see it as an extra loan and are worried that you wont repay the loan, probably think you would go out on a spending spree.

Im still amazed people borrow so much when they cant see how they would cope with the repayments.

Time to make some cutbacks, get on ebay and sell stuff, stop buying stuff that isnt required/needed, take your own packed lunch to work.

Create a spreadsheet with your outgoings and see where you can cutback, loads of tips on here what to do.

[Deleted User]

with debt of £14200 and an income of £16k i doubt anyone will lend you another penny

jonesMUFCforever

...........But it might be worth having a word with your current lender to see if their opinion of you risk wise is better or worse now.
It will do no harm.

Having said that how much do you think you can save per month by reducing the interest?
Could it be simply a question of over committing?

littlemissb

Thanks for the suggestions people. I am already making packed lunches, taking bus to work, ebaying, living with parents etc, very little else I can do at this stage!

Unfortunately my bank put a lending restriction on my account which wasn't removed when it should have been, this was only flagged when I went in and asked for a reconsolidation loan, was so disgusted by how I was treated in there (adviser spent the entire session talking about his personal problems etc etc) that I vowed never to set foot in the door again!! But maybe it's my only option!

27col

Zopa do lend for consolidation purposes so it might be worth applying. They can only say no. From what you have said, it is just possible that you might be approved. But don't bank on it.

jamesd

You're paying £3,170 a year or £264 a month in interest. Net pay of perhaps £1,200 a month. How much beyond the£264 are you reducing the debts by each month?

First thing to try to tackle is the card. If you can substantially reduce that balance it'll open up the chance of getting a 0% for purchases card. You can then spend on the 0% card and pay whatever you spend on the old one as extra payments.

There's no possibility at all of Zopa approving lending in this case. The loan will be treated as additional lending and at almost twice gross income it'll be an immediate rejection as soon as a human takes a look. If the application even gets past the automated initial checks.