Is a loan the best option?

Jules81_2

Pretty new to this but just wanting a bit of advice as debts are starting to become hard to manage.

I live with my husband and 2 children.

We have the following debts:
£5500 on a credit card (paying £125 per month)
£5200 outstanding on a car loan (paying £165 per month)
£1000 overdraft (approx £12 charges per month)
£1470 husbands overdraft (approx £15 charges per month)

We have cut bills as far as possible through switching etc and we are managing to meet our payments each month, but some months we really struggle and I spend every other night on online banking shuffling money to make sure it's where it needs to be. I am therefore dreading christmas this year!

We have looked at getting a loan of approx £13000 (subject to the balance to clear the car loan) to consolidate all of these debts. I have used the link from this site for the Nationwide quote so that it hasn't been registered on my credit file yet and we would be looking at repayments of approx £260 per month over 6 years, saving us about £50 a month overall. This would give the added benefit of having a date to clear the debt (the credit card is going nowhere with all the interest) and the loan we were considering gives a 3 month holiday before the first payment meaning less stress over christmas. However, I'm worried that saving just £50 a month overall will mean that we may still struggle and I don't want to sign up to 6 years of something we're going to find hard to meet.

I'm not really sure what our alternatives are though and this is where I would appreciate some advice.

We looked at shifting credit card debt to the low interest MBNA card but I don't want to apply and have it on my credit file if we're unlikely to be able to transfer the whole balance.

Debt advisors that we were put in touch with through CAB suggested a charity that will deal with creditors on our behalf - we would pay them a set amount and they pass it on without any charges. However, I didn't think to ask if this would be a problem for my car loan and again it's a big dent to our credit file.

A friend told me that she had arranged with her credit card company to stop interest on her card and let her pay off the balance as she could. Although this would mean lower monthly payments overall I'm not sure if it would be possible in our case or worth the bad credit?

Any advice will be greatly appreciated

Firewalker

Depends. Consolidating your debt (getting a loan) is OK if: a) you really get very favourable interest; b) if you have the psyche of a long distance runner - and are able to just keep paying it off without feeling down and needing boosts. If, on the other hand you are a 'sprinter' keep your debt across the different cards/loans. Choose one and focus on it - pay it off; celebrate. Than move to the other one...and by the time you know it it will all be paid off.

Overpaying small amount regularly is really worth it.

Firewalker

DevCoder

Consolidation debts very rarely work, its better to post a SoA here and get the nice and supportive people on this forum to help you out.