Impartial advice needed!

xKazi

Hi everyone just posting to ask for some impartial advice!

I've been working full time for 2 years now, before that I was at university - as a result I still have plenty of debt. Approx £3600 - basically spread with £395 on a student credit card, £312 on store cards, and the rest split between two overdrafts. I make minimum payments on these but not enough to really dent them as obviously their interest rates aren't amazing!

My main problem is my current overdraft is £2000, but they want to reduce it to £1550 within the next 2 weeks. At the moment I'm £1300 in my overdraft and don't get paid till the 15th - and direct debits will come out between then and now, obviously sending me over the age of my overdraft limit and into my £5 a day charges.

I want to get rid of all my debts - so was thinking about trying to get a low rate loan to cover them all. My credit rating is 'good' (according to the free online check, and I've never been turned down for credit).

I've shopped around and I'm trying to be savvy but it's hard to know what's best. One option is to borrow 4k, over 4 yrs I would repay £5074 at £105 a month, or over 3yrs £133 a month repaying £4790. (Both at around 12.9%) This would be the basic option I guess as it would clear my debts, but would obviously only add to my outgoings.

The other option is to borrow more at a lower interest rate; eg 7.5k at 5.9% - over 5 years I would repay £8600 and my repayments would be £144. This would clear my debts and would mean I could pay 3k off my car as well?

My car is worth about 8.5k and I currently pay £195 a month? I've phoned my car finance company and they said they would email me how much the repayments would lower to if I did this.

To put everything else in context I earn about £1450 a month, and current outgoing are about £1100.

Any general advice is welcome, I'm trying to grow up and get a handle on my finances, but I am finding it tough!

Thanks!

DCFC79

xKazi wrote: »

Hi everyone just posting to ask for some impartial advice!

I've been working full time for 2 years now, before that I was at university - as a result I still have plenty of debt. Approx £3600 - basically spread with £395 on a student credit card, £312 on store cards, and the rest split between two overdrafts. I make minimum payments on these but not enough to really dent them as obviously their interest rates aren't amazing!

My main problem is my current overdraft is £2000, but they want to reduce it to £1550 within the next 2 weeks. At the moment I'm £1300 in my overdraft and don't get paid till the 15th - and direct debits will come out between then and now, obviously sending me over the age of my overdraft limit and into my £5 a day charges.

I want to get rid of all my debts - so was thinking about trying to get a low rate loan to cover them all. My credit rating is 'good' (according to the free online check, and I've never been turned down for credit).

I've shopped around and I'm trying to be savvy but it's hard to know what's best. One option is to borrow 4k, over 4 yrs I would repay £5074 at £105 a month, or over 3yrs £133 a month repaying £4790. (Both at around 12.9%) This would be the basic option I guess as it would clear my debts, but would obviously only add to my outgoings.

The other option is to borrow more at a lower interest rate; eg 7.5k at 5.9% - over 5 years I would repay £8600 and my repayments would be £144. This would clear my debts and would mean I could pay 3k off my car as well?

My car is worth about 8.5k and I currently pay £195 a month? I've phoned my car finance company and they said they would email me how much the repayments would lower to if I did this.

To put everything else in context I earn about £1450 a month, and current outgoing are about £1100.

Any general advice is welcome, I'm trying to grow up and get a handle on my finances, but I am finding it tough!

Thanks!

Well cut your outgoings down for a start
Cut up the store cards as well.

What you can borrow is dependant on your salary and what your current debts are like, income to debt ratio comes into play.

Maybe post an soa on the debt free board

DCFC79

^^ is a spammer i reckon, in his 2 posts he hasnt really said much,

malkyh

shahalam wrote: »

Thanks for sharing this information

No, thank YOU, just for being here.

xKazi

what would you suggest income/debt ratio should be? I want to get rid of the store cards defo; just wondering if the loan option and which loan is the better deal?

DCFC79

xKazi wrote: »

what would you suggest income/debt ratio should be? I want to get rid of the store cards defo; just wondering if the loan option and which loan is the better deal?

Income to debt ratio is half of your salary. Generally lenders dont/wont like you taking out loans which would take you above half your income.

Your current outgoings are more than your monthly income, sound slike you can get rid of alot of stuff, defo get over the debt free board and post an soa ( entirely optional though )

Janie4Now

Hello, xKazi

First of all, well done for wanting to get your finances sorted out!

How much do you owe on your car? Is it worth adding that to the total and getting a loan that will cover everything? I'd be willing to bet that a loan over 3 years , or even 4, including the amount to pay off your car loan, would cost you less than you would be paying for that AND a loan.

You just need to decide how much you can reasonably afford each month - be sensible.....you need spending money - because that will define the length of your loan. Then have a look around. I always suggest people talk to their bank first (that way, the bank knows you are trying to sort things out) but I know that not everyone wants to do that.

And then cut the store cards up. They are the invention of the devil (trust me.....I know.....).

xKazi

Janie4Now wrote: »

Hello, xKazi

First of all, well done for wanting to get your finances sorted out!

How much do you owe on your car? Is it worth adding that to the total and getting a loan that will cover everything? I'd be willing to bet that a loan over 3 years , or even 4, including the amount to pay off your car loan, would cost you less than you would be paying for that AND a loan.

You just need to decide how much you can reasonably afford each month - be sensible.....you need spending money - because that will define the length of your loan. Then have a look around. I always suggest people talk to their bank first (that way, the bank knows you are trying to sort things out) but I know that not everyone wants to do that.

And then cut the store cards up. They are the invention of the devil (trust me.....I know.....).

My car is about 8.5k - not long since purchased as my last one died! So i'd need about 13k as a loan to cover both? Will defo look at rates and repayments though! I spoke to my bank and they recommended borrowing 7.5k on the lower APR - and to pay 3k off my car from that, they didn't suggest going upto 13k. I'm trying to cut down, for example when my contract runs out at the end of October I'll go on a sim only deal (etc) Well I'm paying £195 for my car, so could probably go upto £300 a month if it was covering my debts and car?

xKazi

So I've just got a quote for a loan for 13k from Derbyshire - 5.8% over 60 months = £249.22 a month (repaying a total of £14,953.00). My salary before tax is pretty much 24k if this helps. I've never applied for this much credit though, and don't know my chances so soon after purchasing the car on finance?

Janie4Now

xKazi wrote: »

My car is about 8.5k - not long since purchased as my last one died! So i'd need about 13k as a loan to cover both? Will defo look at rates and repayments though! I spoke to my bank and they recommended borrowing 7.5k on the lower APR - and to pay 3k off my car from that, they didn't suggest going upto 13k. I'm trying to cut down, for example when my contract runs out at the end of October I'll go on a sim only deal (etc) Well I'm paying £195 for my car, so could probably go upto £300 a month if it was covering my debts and car?

Sounds like you're on to all of this already . Your bank are clearly being helpful so it may be worth asking them about the higher loan to pay off everything, though they may have rules about how much you can borrow given age and income but if you're already paying the car loan then they know you can afford that level of payment!

Good luck!

Janie4Now

xKazi wrote: »

So I've just got a quote for a loan for 13k from Derbyshire - 5.8% over 60 months = £249.22 a month (repaying a total of £14,953.00). My salary before tax is pretty much 24k if this helps. I've never applied for this much credit though, and don't know my chances so soon after purchasing the car on finance?

I don't know the answer to that one - if you were clear on the quote request that it was to pay off debts then you may be fine but you can never be sure. I always suggest you speak to these people just to confirm all the details so that they know that you won't have your car finance to pay as well as the loan.

But now you know how much it is going to cost and over what period... your decision is how much interest you're prepared to pay on the loan as against how much you're paying at the moment.

Do speak to your bank again. They may well be able to do something about that rate!