Loan Settlement Offer

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Guys, I need some advice please. I posted this on my debt free diary but didn't get any replies. Any help would be appreciated.

I have just received a letter from one of the companies I owe money to. The loan was taken out in 2002 at the peak of my foolishness. It was £10000 to buy a car. Ridiculous... I handed the car back long ago and when I got the loan to £5000 I negotiated a 0% rate.

Anyway, it is now in the hands of a company called Bluestone Credit Management and stands at £1710. I have an agreement in place wereby I pay no interest and pay them £15 per month.

The letter is a special settlement offer of £1368 and is valid for 21 days. I don't have £1368 but could probably get a loan at this stage.

So, should I stick at paying £15 with no interest to repay £1710 or take a loan with interest to pay them £1368?

TonyMMM

Paying off one debt with another only makes sense if you can obtain better terms (e.g. a lower interest rate) so in this case it depends on what interest rate you can realistically get a loan , and the total amount payable, over what term you are looking to borrow and whether you can afford to pay more than the current £15.

Borrowing £1368 over 2 years at 10% (you may have to pay much higher than that) would be about £63 per month.

CLAPTON

what do you credit files say?
can you get a loan?

mcjordi

personally i wouldnt.. maybe increase the payments to this one if you can afford to pay to service a new loan.. dont get more debt to pay another debt. at least this one is no interest to pay

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Thanks for the replies. I can get a loan now, I'm just not sure I want to. I'm trying to get rid of debt and taking additional debt to repay an interest free debt doesn't really sit well with me. That's why I'm in two minds.

I could (just) afford repayments of about £70 per month.

Maybe I'd be better just keeping to the current arrangement and increase the monthly amount I pay to decrease this debt.

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mcjordi wrote: »

personally i wouldnt.. maybe increase the payments to this one if you can afford to pay to service a new loan.. dont get more debt to pay another debt. at least this one is no interest to pay

You posted as I was typing. That sums up what I am thinking.