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Loans for debt consolidation

I am in the unfortunate position of having about £20k in credit card debts, primarily leftovers from my university days about 10 years ago (and the 2 years of job searching afterwards).

I am, however, fortunate in that I've had a steady income for about 7 years, am able to meet the monthly minimum payments (and sometimes a little more).

At the current rate, I'm paying a small fortune in interest each month, and the balances are going to take many years to clear at this rate. So I applied for a few loans, making sure to tell the lender that I wanted to use it for debt consolidation. Every one has refused me, and when prompted, cited credit checks showing a 'high level of existing debt'. Well, quite. That's why I want the loan!

I must admit if I were the bank and someone in my position asked for an extra £20k of finance, I'd probably tell them to go away as well, but I'm *not* looking for additional debt - I'm simply trying to refinance what I already have. I'd even be happy to provide proof to the lender that I'd used the loan to pay off the cards. Even at an APR of, say, 12%, I could still pay off the whole lot in full within 5 years.

I specifically don't want to go down the IVA route: I'm a company director, and whilst IVAs (unlike bankruptcy) don't preclude directorship, it would certainly make for a difficult explanation if it should arise at work.

Has anyone else found themselves in a similar position? Are there any lenders that are especially good at dealing with this scenario?

Thanks in advance.

Comments

  • BugsyBrowne
    BugsyBrowne Posts: 5,697 Forumite
    So your 20k in debt want consolidation loan for 20k Which means you will then be 40k in debt, unless your on mega money your chances are zilch I am afraid.
  • DCFC79
    DCFC79 Posts: 40,611 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    I am in the unfortunate position of having about £20k in credit card debts, primarily leftovers from my university days about 10 years ago (and the 2 years of job searching afterwards).

    I am, however, fortunate in that I've had a steady income for about 7 years, am able to meet the monthly minimum payments (and sometimes a little more).

    At the current rate, I'm paying a small fortune in interest each month, and the balances are going to take many years to clear at this rate. So I applied for a few loans, making sure to tell the lender that I wanted to use it for debt consolidation. Every one has refused me, and when prompted, cited credit checks showing a 'high level of existing debt'. Well, quite. That's why I want the loan!

    I must admit if I were the bank and someone in my position asked for an extra £20k of finance, I'd probably tell them to go away as well, but I'm *not* looking for additional debt - I'm simply trying to refinance what I already have. I'd even be happy to provide proof to the lender that I'd used the loan to pay off the cards. Even at an APR of, say, 12%, I could still pay off the whole lot in full within 5 years.

    I specifically don't want to go down the IVA route: I'm a company director, and whilst IVAs (unlike bankruptcy) don't preclude directorship, it would certainly make for a difficult explanation if it should arise at work.

    Has anyone else found themselves in a similar position? Are there any lenders that are especially good at dealing with this scenario?

    Thanks in advance.

    So how much do you earn then ?

    They're probably saying no because you wouldnt be obliged to pay off the debts with the loan.

    You need to look at what your spending money on and only buy what you actually need.

    Post up a SOA and post it on the debt free board so others can see where the money is going and where to cut back.
  • zxspeccy
    zxspeccy Posts: 180 Forumite
    Part of the Furniture 100 Posts Combo Breaker
    edited 12 June 2012 at 10:40AM
    Unfortunately you will find it very difficult to get any type of borrowing at the moment. From the banks position you are saying that I have the large amount of debt that I want to move to your bank. Although you have very good reasons for moving the debt, as ultimately you should be able to clear your borrowing quicker and cheaper, the banks do not look at it like this. The banks would much prefer the debt stays where it is and is therefore the other lender's problem. Also it has been mentioned that if the loan was agreed then you have no obligation to repay the original debt and could therefore be sitting on a total debt of £40K.

    Credit cards are an extremely bad way of borrowing money, there are designed for short term/cashflow borrowing and should never be used for long term loans.

    It is your best interest to clear this debt as soon as possible, so if you post up your SOA on here I am sure you will get great advice from some of the other forum members on here.
  • As above, I'd suggest doing an SOA to see where you can make some savings each month to allow you to pay more off the debt - also have a look into 'snowballing' it.

    Then once it's down to a more manageable level, you could maybe apply again, hopefully with more success, to polish off the remaining amount a little quicker.

    I assume you've also looked into the possibility of doing a balance transfer for some of the debt across to a 0% or lower interest card? There's some useful info on that on this site under the 'Cards|Loans' menu.
    “In any moment of decision the best thing you can do is the right thing, the next best thing is the wrong thing, and the worst thing you can do is nothing at all.” - Roosevelt
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