My 1st Diary - SOA Done, Snowballing Ready

ecoverbee

Feeling a little stuck and keeps going through my head but not sure what to do, if it the right thing to do.

Basically when I log into my bank online it keeps saying that I can get a loan with the following details;

£16,500 - apr 15.3 - min payments 387.68 - 60 months

I'm not even sure if I can get the loan but it keeps messing with my head so I did the calculations in snowball spreadsheet and it worked out that I could clear my;

current loan £10,000
virgin credit card £6500

This new loan would bring my payments down from £418.87 - £387.68. Without the snowball the current loan has still got around 32 months to go, but the new one could be gone in 26 months.

This would leave £275 on virgin which would be wiped out next month. This would also save us over £2000 in interest over the snowball and also bring the end of the debt to Feb 2015 but October 2015 to clear our car.

I know that loans aren't the best way to clear things but I also think that when the virgin credit card is cleared they will probably offer us a 0% deal or very low apr. This would allow us to shift the other credit card debt which we would then close the account. This would stop us using the card.

What do you think? Should I stick to my original plan?

Thanks
andy

specialkaye

Definately something to think about. I know very little about loans but I would have a look at any early repayment fees or any restrictions on over-payments.

I would also have a look at eqifax/experian/noodle (the credit report companies) if you haven't already done so. You can even get paid to sign up via cash back site. Make sure all your details are correct and you haven't got any unused but still open credit lines eg. and old credit card as these can affect applications for new credit.

The scores themselves are pretty meaningless as every lender has its own score but you can increase your chances of getting the loan should you wish too by making sure all the dates for things tally up ie when you moved house, contact numbers etc.

If you haven't made any new applications for credit recently and there are no restrictions on over-payments it may well be worth applying for a loan with a lower APR, as you said its going to save you a lot in interest.

Id also have a quick look to see what other lenders are offering as that isn't necessarily the best deal.

What is your current loan APR?

ecoverbee

Thanks for the advice. Our current loan is 19.5%. I have already had a look at my credit score with all 3 and they are fair. We have applied to many credit cards but got rejected so cant really apply for them for a few months.

It's a TSB loan so we can make over payments and they charge 58 days interest if paying off the loan.

I went ahead and got the loan and was approved. 15.3% and £387.03 so nearly £30 saved from there plus Virgin will be gone freeing up £204 plus all the extra snowballing funds means we will have over £500 extra to throw at the debts.

Thanks
Andy

specialkaye

Well done for getting approved, is it covering your existing loan and the virgin credit card?

Make sure you close it/ reduce the credit limit so you don't spend on it again and end up worse off!!

And yeah id lay off any more credit applications for a while now.

Do you have the beginnings of an emergency fund for car repairs/flooding/ loss of job etc? Means then if anything does crop up you can pay cash instead of relying on credit you are trying to reduce.

Hope your OH isn't missing her monthly nails/hair sessions. Maybe you could treat her to some DIY treatments instead? Im sure hand/back/neck massages would go down very well

ecoverbee

Yes it covers the current loan and the virgin which will both be gone December when I make the last payment for the card.

We do have a little money left each month that goes towards emergency's.

DIY would be a great idea but I'm pretty lazy so maybe 1 a month, OH will love it.

Thank
Andy

ecoverbee

After getting the loan, I requested the settlement and it was a little higher than I expected. I managed to pay the loan off and also over £6000 to my credit card leaving a balance of just under £700. A payment in December will then leave the card with about £170 left. I did want to clear this but it's looking like it will be gone in January just in time as they sent me a letter putting the interest rates up in January. With the loan I got it was the best deal as it meant the payments were lower than the old loan and the new payments get taken on the 28th, the last loan was 17th which always left us struggling.

Once virgin has gone, I will then be snowballing £700 alone each month on to my other high credit card. This will be clear the debt around November next year, unless I can get 0%.

--

Work messed up again with my overtime as they always seem to do, so it means I only got around £86 extra but will be paid next week.

Thanks
andy

Igamogam

ecoverbee wrote: »

I went ahead and got the loan and was approved. 15.3% and £387.03 so nearly £30 saved from there plus Virgin will be gone freeing up £204 plus all the extra snowballing funds means we will have over £500 extra to throw at the debts.

Thanks
Andy

Errum ....the Virgin debt hasn't gone Ebee - you have shifted most of it onto a loan remember

specialkaye

Hey Ecoverbee how is it going?

ecoverbee

specialkaye wrote: »

Hey Ecoverbee how is it going?

Hi, nothing much been happening and just want to get Christmas over.

HSBC overdraft sent us a letter saying we need to pay £360 into the account this month as our wages go into our TSB account so we don't really use HSBC anymore.

This means that I can't get Virgin paid off in January like planned as HSBC need some funds but Virgin will be gone in Feb 2013. The HSBC will be gone in April 2013 which means we can close the account for good.

Worked out that in 6 months time we will have cleared;

Very, HSBC Overdraft, Next, TSB Overdraft and Virgin Credit Card.

This will leave us with;

TSB Credit Card (hopefully 6 months time we can get a 0% deal)
TSB Loan
Barclaycard (6.9% for life of debt)
Mini

Once the 6 months have gone we will be paying around £750 to the next highest debt.

Still have around 36 months left on the snowball, but if we take the car out of the debts it leaves us around 30 months.

Thanks
andy

specialkaye

Remind me what your original DFD was? Just to remind you how far you have come

Fingers crossed the next 6 months go as planned Make sure you know when all your renewal dates are for 2013 to help you get the best deal and also help you work out how to pay for it. Make sure you arent paying more for paper bills on anything (this could be up to 10% more!!!) and see what discount they offer for 100% payment upfront.