What are my chances?

inbetweener

I am looking at applying for the derbyshire loan of 5.8% and was wondering whether i would be accepted.

My debts are as follows

£2900 left to pay on my loan with lloyds paying back £167 a month (rate of just under 10%)

£5000 on lloyds credit card, latest payment minimum of £117 (17.9%)

Overdraft of £800 (never been over), usually around £600-£700 overdrawn every month

On my latest statement for credit card the interest stood at £68, now i have been tackling the debt head on by cutting our cloth accordingly and doing what i can (overtime when available and car boot sales etc) but feel i am not making big inroads.

I know it is not a good idea to consolidate existing loans with another one but if i was accepted for the derbyshire loan i would be paying back £191 a month on a 10k loan over 5 years, as opposed to £300 when you count up my payments of existing loan, credit card and overdraft usage fee!!

I have never missed a payment on the credit card, loan or been over my overdraft limit so hoping this would go in my favour, maybe i am missing something here but to me this seems like a no brainer, my wife returns to work in new year so we will be a lot better off and able to tackle the debts a lot better.

Any thoughts you can contribute would be great

Thanks in advance

thehappybutterfly

Good morning inbetweener!

Trust me when I say this that getting a consolidation loan will not help you in the long run. Trust me.

Everyone on this forum will tell you the same thing - consolidation loans are the start of a slippery slope into more debt. We've all said that once the debts are consolidated, I'll close the accounts. Well, maybe I'll just leave this one open 'for emergencies'. Uh huh. You say you're going to pay the other debt off but do you know how many thousands of times banks have heard this story? They certainly heard it from me half a dozen times......... and I meant it every single time.

For a start, getting another loan on top of your exisiting debt is not that simple. It depends on a lot of things - existing outgoings like rent, council tax etc. Then there's your income - the amount of credit you can get is worked out a % of your income - the exisiting debt will count towards that % whether or not you intend to clear it. And the chances of you getting the advertised 5.8% is unlikely - that's a 'typical' rate designed to lure you in and the only people who will get that rate are people with squeaky clean credit scores - considering you've never missed payments etc will probably mean that your credit score is fine - but you almost never get the rate advertised.

You can try for the loan - it will leave a footprint on your credit score for 6 months I believe and footprints are not good especially if you're leaving a lot of them in a short space of time.

My advice? Do a Statement of Affairs, get all your income and outgoings down in black and white, see where you can make cuts and throw as much money as you can at your debts. They're not too bad at all. And if your wife is due to start earning in a few months, just hang in there and wait until your income increases and throw even more money at the debt. You will get through this without taking another loan!

inbetweener

Hi happybutterfly, thanks for taking the time to reply.

I can kind of see what you are saying but looking at the interest charged on credit card this month kind made me really want rid of it.

That is why i thought it would be better to get a loan at a better rate than the others (assuming i was accepted), i thought i would be doing the right thing from looking at the APR's, maybe i was wrong.

thehappybutterfly

Dammit! I just spend 10 minutes typing you a reply and lost it. Ruddy laptop! Anyhoo.

I know it's not what you want to hear. My advice comes from experience and you only have to read the threads/posts on here and you will see that consolidation loan supporters are as rare as hen's teeth! Unless you have your spending under control, it will never work. My last consolidation loan - the lenders even sent my creditors cheques to clear my debt. Great! I thought. Problems solved. Nope - I hadn't addressed my issues and just ran up more debt in the form of store credit. Same thing with Balance Transfers - the limit on these introductory cards was never high enough so all I was doing was getting another card as I couldn't close the other ones because there was still a balance.

Don't do it. That's my advice.

Allypops

But if you look at snowballing your existing debts then you may be debt free sooner and save on interest overall.

I consolidated several times........end result owed 78k. That's not to say that it can't work but you have to then live to a sensible budget and close credit card accounts or else they tend to build up again.

Good luck with whatever you decide.

bargainbetty

Even if you do decide to go with the consolidation (I did, twice) you will still need to get your income and expenditure under control, or you will end up like the rest of us, having run the debts back up. If you are absolutely sure that you know what you need to have in the bank, can cut up the cards and close the accounts so you never use them again, you might have a chance!

It isn't a magic bullet, you might save some interest, but unless you have a reign on your life it will end up back out of control. If you prepare the statement of affairs, you will see where your money is going. Use the snowball calculator to work out which debt to throw all the spare money you can find at first.

Do that now, and then add the extra you can pay from your wife's income when she returns to work. If you plan things well, you might be able to close out the card more quickly that you anticipated, and reduce the interest you pay that way.

If you do anything, look at a low-life-of-balance or 0% card and switch the debt to that - but you must close the old account!

Good luck

minx1985

Hi inbetweener. I appreciate your position as I was in your situation at the start of the year. I owed £12k to 3 creditors and because of minimum payments etc I was really struggling. I applied to my bank HSBC with a good credit score for a loan at 6.9%- they offered me 13.5%! After arguing the toss and threatening to close my accounts they reduced the APR to 13%. I had to pay my mum off quickly so sucked it up and took the loan, which meant my debt went from £12k to £15k :-( but it felt like a lot of pressure off knowing I had only one creditor. So, do shop around before you apply but be prepared to not be offered the representative APR.

I must echo what other posters have said, you must be prepared to close all your other accounts to avoid slipping into bad habits, and do an SOA to see where you can make savings, budget for the odd treat (you'll go mad otherwise) and make overpayments where possible.

GOOD LUCK!

Walaboobah

thehappybutterfly wrote: »

Good morning inbetweener!

Trust me when I say this that getting a consolidation loan will not help you in the long run. Trust me.

Everyone on this forum will tell you the same thing - consolidation loans are the start of a slippery slope into more debt. We've all said that once the debts are consolidated, I'll close the accounts. Well, maybe I'll just leave this one open 'for emergencies'. Uh huh. You say you're going to pay the other debt off but do you know how many thousands of times banks have heard this story? They certainly heard it from me half a dozen times......... and I meant it every single time.

This 100% this!

inbetweener

Thanks everyone for taking time to reply which your advice and thoughts, will have to mull it over a bit more and decide what to do

eco_farmer

seriously don't do it. if it hepls work out the total interest on the loan verses what you will be able to pay off once you have 2 incomes again the difference will be huge and you will be debt free much quicker. All you have to do as a couple is work together to budget your way into the new year then use the extra income you will have to destroy the debt.
A loan now will be short term gain long term pain

Muscle750

Dont do it as stated weve all said when the lending was free and easy well not free anyway. I keep trying to tell myself its not going to be like this forever well with me another 2 years, and when i look back what have i actually got to show for it. Yes it can work but im just sick and tired of seeing everyone else with money having holidays and nice cars etc while im working 50 hours plus a week and havent got £3 at the end of it thats mine.