Loans for bad credit rating?

poppasmurf_bewdley

pheonixrising21 wrote: »

Good advice on checking your budgets and looking for places to cut costs/outgoings.

However, I have an issue with the statement that consolidation is rarely a good option. It depends on how disciplined you are. If you can resist the urge to spend the extra money on (i.e. not build up more debt on credit cards you clear, etc), then surely getting a loan at a lower APR is better?

However, the banks will see the loan as additional borrowing and will have to make a decision as to whether you can afford to maintain payments on BOTH your current debt and the new debt.

If banks worked more like car dealerships, maybe consolidation would be a better option, but they don't. let me explain what I mean by this.
if you have a car on finance and you decide to trade in for a new car before the finance is paid fully, the dealer makes you a part exhange offer. Instead of giving you this cash and assuming you will pay off the current loan, they pay it off for you, close the old loan down and give you the remainder (either as cash or in the form of the deposit for the new car).
Why can't consolidation loans work the same way? You have £8k worth of debt on 3 cards, 18% APR on all three. You have the opportunity for a loan of £8k at 7% APR. The new loan company DOES NOT give the money to you, instead it gives the money directly to the CC companies and closes down your accounts with them. This removes the temptation to re-spend on the cards as they no longer exist.
IMO, this is how consolidation should work and therefore would be a much better option. Banks do not have assume its additional lending as they can control how the loan is spent, i.e. forcing the payment of the old loans/cards. therefore they can offer lower rates and accept more loans. The consumer gets better rates and pays less interest in the long run.... oh yeah, that why banks don't do this, they get less interest in the long run!!!!

It's fine in theory, but the banks don't want you to close your credit card accounts. Imagine Barclays giving you a consolidation loan and then closing your Barclaycard account? I can't. They want you to continue spending on the card as well as paying off the loan.

Another reason consolidation loans aren't a good idea is that banks frequently charge a higher interest rate for this type of loan than they do for other types of loan. Certainly, Natwest do.

debtfreeby2013

poppasmurf_bewdley wrote: »

It's fine in theory, but the banks don't want you to close your credit card accounts. Imagine Barclays giving you a consolidation loan and then closing your Barclaycard account? I can't. They want you to continue spending on the card as well as paying off the loan.

Another reason consolidation loans aren't a good idea is that banks frequently charge a higher interest rate for this type of loan than they do for other types of loan. Certainly, Natwest do.

They actually kind of do this but only if the customer is in hardship so they get them onto a customer support loan which means no more lending from the bank for 5 years.

I was in massive amounts of trouble with my money, had 3 credit cards, 2 loans and a catalogue all with different banks. My bank offered me the customer support loan which would consolidate tw debt I owed them and told me that if I paid it for a year and didn't go over my overdraft then I could consolidate the test of my debts into one loan. After a year I asked and they said the borrowing cap would remain on my account for the duration of my loan do I couldn't consolidate.

Thankfully I've been sorting myself out on my own and have gone from £20,000 5 years ago to £6000 now. I would still like to change the £3500 on barclaycard to another credit card or something as the apr is 19% but with no credit rating with anyone outside the bank and my bank putting a cap on my borrowing I have to keep paying £150 a month just to clear £75 a month off the credit card.

mrsskimmo_2

Yesterday I received a call from a company called Bad Debt Loan Lender offering me a loan. I asked about APR etc but the lady was incredibly vague. I was told that in order to complete the loan I would have to make the first month repayment of the loan before the funds could be released to me. I was told to get a UKash voucher for the amount of £110 and call in with the reference number and the loan would be released to me. Needless to say I didn't get the UKash voucher!! the company has called again this morning demanding I make this payment, as the loan cannot be cancelled!! I was told that if I did not take this loan I would be "blacklisted" from applying for a loan anywhere. The lady got really shirty asking why I didn't want to take the loan. I suggested to her that it was a scam, so I asked her if the company is governed by the Financial Services Authority. Low and behold she didn't understand what I was asking her!! She then said if I didn't want the loan, I must not call her again (she called me, lol). I'm almost tempted now to call back just to annoy her All I can say is that if anyone gets a call from Bad Credit Loan Lender that you refuse their "kind" offer of a loan. Sure they will try and railroad you into taking the loan, but please stand your ground. If a company is giving you a loan, you shouldn't have to make any payments or fees, or first month instalments, prior to getting the loan.

Kirsty2010

Thanks for the advice, i wanted to clear off past debts in one go. I went to CAB years ago and they said to ignore them until they try to take me to court, this was 7years ago and still nothing, just letters from new debt collectors every so often that have renewed the default. So it keeps bringing down my credit score.

Kirsty2010

Oh and i don't have a 3k debt, i wanted to use the left over to fix my house roof, as house insurance won't as they say it's due to age.

DCFC79

Kirsty2010 wrote: »

Oh and i don't have a 3k debt, .

Apologies, yes that was me who said that, ill edit my post now.