Advice on applying for a new loan.

fat-pudding

I've got about £10k of unsecured debt on 4 different credit cards and 1 loan account. The loan is down to about £1100 remaining and will be paid off in about 9 months time.

Anyhow, I earn 28k a year, the interest rates on the cards have kept sneaking up so that I'm not managing to pay back much more than the minimum payments each month as I'm having to cover so much on the interest. Interest rates on the cards are currently around 20%.

What I'd like to do is take out a loan to cover the cards and then close the credit card accounts down, I've taken a look and if I can get a good loan then it would really reduce the payments and mean I could pay back more quickly which would help me. It's not that I can't service the debt, I can and have been but I want to improve the situation so I can pay back the money more quickly.

So, does anyone have any suggestions on how to get a loan under these circumstances, I already applied for one and was rejected as the bank hold the opinion that as the total amount of borrowing would take me to a limit I can't afford to repay. Obviously this isn't really the case as I'm trying to consolidate down and get rid of the cards (with the intention to keep one with a limit of perhaps £1k-£1.5k) and repay the debt (I learned my lesson!). The crazy thing is that with the interest rates creeping up it means I could be in a situation before long that I can't afford the repayments.

If anyone has any advice over how to get a loan that will allow me to get rid of the cards I'd really like to know. I don't want to try and apply for everything now and have a load of searches on my credit file as I realise this can make getting hold of credit even more difficult.

Caz3121

Unfortunately, as you have found out, when looking for a loan, they will consider this additional borrowing as you are not duty bound to pay off the cards, so they would £11k existing debt plus a new £10k(?) loan which would take your debt to £21k, which against a salary of £28k is very unlikely to happen.
Have you looked at 0% cards that you could do a balance transfer to and they you could pay a lower amount to this and throw as much as you can at the higher interest cards.

fat-pudding

I tried applying for a card with a 0% balance transfer but again was declined as this would take my total borrowing over what I can service with my salary which is annoying as I don't want to borrow more I want to pay off the debt! I did 1 application for the card and 1 for a loan and then decided to come here for some advice as I don't want to have lots of applications sitting on my file.

I'm trying to pay off some more off the cards for the time being but it's only another £50 a month over the minimum payments. As for the loan that's a repayment of £150 a month. In the worst case I was going to go back to the company I have the current loan with in March next year when it's paid off and ask them for another loan with the same terms and interest rate. Just If I could have peace of mind before then I'd be much happier as I'm feeling stressed knowing that if I have a big expense one month then it could put me back a few months!

I also want to reduce the number of debts down as If the interest rates go up more and I get into a point where I make defaults I'd rather have 1 or 2 default fees a month to pay instead of 5!

I should have mentioned one other thing on this, I recently moved house as I took a new job that pays more, so hopefully I'll be getting a salary increase soon which may help me pay off a bit more each month and get me into a position I can borrow again. Just if I can parcel up the payments now it'd really help.

jonesMUFCforever

Your own bank where your salary goes into would be my best bet.

DCFC79

Cant really add anything that hasn't already been said, why not go here,
its a calculator that tells you the order to pay off the cards. Maybe do an SOA as well, cut back on stuff to put more towards the cards.

You tried you won bank yet ? If you did and they were the bank who said no then generally other banks would say no.

fat-pudding

The existing loan is with my current bank, I've not spoken to them though. I suppose they might consider to refinance the existing loan and roll some of the debts into it?

I'm already snowballing the debts and cutting back a reasonable amount. I'm not fully tightening the belt but then I've got a long way to go before I get into trouble!

I think part of what may not be helping is that I've changed job recently and moved house? Checking my credit file shows I'm not showing as being on the electoral register at this address but that's because it's not been updated yet. I think the thing to do is carry on as I have been for the next 3 months and try to pay off as much as possible. Make sure I'm on the electoral register have hopefully had a pay rise and to just try again?

DCFC79

fat-pudding wrote: »

The existing loan is with my current bank, I've not spoken to them though. I suppose they might consider to refinance the existing loan and roll some of the debts into it?

I'm already snowballing the debts and cutting back a reasonable amount. I'm not fully tightening the belt but then I've got a long way to go before I get into trouble!

I think part of what may not be helping is that I've changed job recently and moved house? Checking my credit file shows I'm not showing as being on the electoral register at this address but that's because it's not been updated yet. I think the thing to do is carry on as I have been for the next 3 months and try to pay off as much as possible. Make sure I'm on the electoral register have hopefully had a pay rise and to just try again?

Yes the address might have something to do with it.

Yes speak to your bank as they know your finances more than any other bank.

zaffyro

Your first priority right now is to cut back on your credit card exposure and indeed, you are right - you are not getting anywhere when you pay only the minimum monthly payment for your credit card. It will only cover the interest of your CC loan and will not be applied on the principal. Consolidating is the logical option, but you have to work out the numbers and make sure that you are not taking out a more expensive loan to pay off your debts. I would say that your bank is in the best position to assess your financial situation and come up with the best option.

bigadaj

zaffyro wrote: »

Your first priority right now is to cut back on your credit card exposure and indeed, you are right - you are not getting anywhere when you pay only the minimum monthly payment for your credit card. It will only cover the interest of your CC loan and will not be applied on the principal. Consolidating is the logical option, but you have to work out the numbers and make sure that you are not taking out a more expensive loan to pay off your debts. I would say that your bank is in the best position to assess your financial situation and come up with the best option.

Generally good advic e apart from that last sentence, always remember that the banks primary responsibility is to it's shareholders and maximising profit, the number of threads on here complaining that people can't swap cards or loans for lower rates, when surely tis common sense to see that everyone is in business to maximise profit.