My SOA No.2

angel31572

I posted something similar a few days ago and now have a little more info. Just wondered if there is any advice out there.

First time round people, quite rightly, voiced objections regarding secured loans. I now have the loan details and I still can't see any other way out.
This is my Statement of Affairs:

I work a 37.5 hr week.
Income after deductions: £1920
Overtime after deductions: £300-£700

The overtime is unusual. I have been doing it since November and it is guaranteed until June/July but could go on longer. When that stops, I have another alternative which is likely to amount to £300 per month.


Mortgage: £692
Insurances (car and house): £56
BT: £35
Union Fees: £11
Council Tax & water: £140
Gas/Electricity: £59
Sky/Setanta: £52
Car Finance: £95
Loan: £180
Gym: £35
Broadband: £16
Total: £1391

Other:

Food: £100
Petrol: £100
School Dinners: £60}16 year old at school full time
Miscellaneous household,car and living expenses: £150
Mobile phone: £25
Total: £410

Since coming on this site I have taken steps to reduce my outgoings and things are going well so far. So the figures above will change. My son, who is studying for A Levels has a part-time job interview on Saturday so he will need a lot less from me, all going well.

Credit Cards:
#1
Interest rate: 27.9%
Balance: £3900 I pay more than the minimum payment of around £120 per month (usually £200) but have to use the card again before the end of the month. Balance is not going down.

#2
Interest rate: 26.5%
Balance: £1750 I pay more than the minimum amount each month (usually £150-£200) but have to use the card again before the end of the month. Balance is not going down.

#3
Interest rate: 27.9%
Balance: £750. I pay more than the minimum amount of around £60 (usually £80-£90) but have to use the card again before the end of the month. Balance is not going down.

Total Credit Cards: £6450

Existing debt repayment: £530 - £670
Proposed Debt Repayment: £272.99

I have an existing loan which I have been repaying for around seven or eight months and have been offered a new loan (secured) from the same company to settle the debts. The new loan repayment would be £272.99 per month over 72 months. This is considerably less than my credit card and loan payments put together and this way I would see the balance going down. I have already cut the credit cards up in anticipation.

Am I doing the right thing?

Any advice will be gratefully received.

I do appreciate the risks with secured loans but and I now understand the benefits of snowballing (thanks to the good people on this site) but having the cards hanging over me is really getting me down. To cap it all, Vanquis announced they are increasing my credit card interest rate to 37%!!!! I have never missed a payment so this has really annoyed me.

CLAPTON

how much are you borrowing and what is the APR or the loan

angel31572

CLAPTON wrote: »

how much are you borrowing and what is the APR or the loan

Including the orginal loan with I have with them it totals £14 350 11.5% APR

The credit cards would be settled and cancelled. The repayment of debt would reduce from £670 to £272. Repaid in full in 72 mths although as long as OT continues, I will pay overpay each month.

angel31572

Any advice please? I was hoping to make my decision soon..sorry for being a pest...

mo1_2

i woudnt take out a secured loan to pay off your credit cards

angel31572

Thanks..apart from the obvious reason of not risking my home is there any other reason? I can afford to pay the £272. This is £400 less than I am paying now. My take home pay is £1900 and this month, I earned £600 OT after tax.

CLAPTON

lets just run through the situation in general terms first

A wide experience with consolidation loans is that people don't actually cut down their expenditure so within a fairly short time the credit card bills start to rise and you're back where you started with large CC debts but now with large loans as well.

Secured loans have the further bad feature that if you default, you will probably lose the house.

However if properly managed and spending habits are addressed then the reduction in interest and in the monthly payments means you can successfully pay back the debts and still have a life.

In your situation you clearly can't meet your current commitments as your monthly payments are too high so simply snowballing is not an option.

Now the deal isn't too bad (11.5%) and you're sure that you can make overpayments or settle early without large penalties?

Unless you have already tried unsuccessfully i would be tempted to try another lender to see whether you can get a better secured deal but otherwise i would go for it.
But do that spending diary and do monitor the spending and dont spend on those (soon to be empty ) CC.

best of luck and i hope your son does well with the A/Ls

mo1_2

well im no expert but i think 72 months is a long time off and who knows whats gonna happen,jobs health,it might seem like an easy way out but believe me its not,i would try and get you cards down some other way then replace them with a loan,is there any charges on them late payment or overlimit charges?

angel31572

mo1 wrote: »

well im no expert but i think 72 months is a long time off and who knows whats gonna happen,jobs health,it might seem like an easy way out but believe me its not,i would try and get you cards down some other way then replace them with a loan,is there any charges on them late payment or overlimit charges?

I have no charges but the interest is too high and the balance just keeps at the same level. I understand the concerns and I am not trying to convince myself that I am doing the right thing but I just feel the lower payment is so much more manageable.

LookingAhead

Hi angel, good to see you again

Whilst I was reading your SOA and noted the interest rates I was thinking "Ouch! They are HIGH rates!"

But that's stating the obvious of course.

I was thinking yo would be better off getting a low rate unsecured loan to pay them off but the cards MUST be cut up (if they aren't already) and you have to be honest about your spending habits and acknowledge that if you pay all the CCs off with the loan but then start spending again, you could be back at square one again within a year or so (I have done it many times, I know how easy it is!)

Do you think you would run up credit card bills again?

Also, have you tried other lenders for non secured loans? Sainsburys for instance offer a rate of about 6.9% at the moment I think.

There is a best buy loan rate matrix on this site somewhere.

Also, have you tried (or can you try) moving some debt to a 0% new credit card to reduce the amount you have to put on a loan and then get that paid off before the 0% rate ends?

Or a Life of Balance low rate card?

Sorry if you have stated before why you can't do these and if I have missed it.

mo1_2

the choice is yours,but not sounding too hard i think your burying you head taking on more debt,sorry if that sounds harsh,i know how despererat it can be ive been there,untill i saw the light lol and dont spend any more,sorry i cant be off any more help,the one thing i would say if its any use when i went to CAB they told me in no uncertain terms not to take out a secured loan,to cover other debits i was very tempted but i resisted,and can now see more light at the end of the tunnell.good luck