Do I keep applying for loans?

w60

Apologies in advance if this should be in the loans forum. I have through stupidity over the years got myself in to £40k worth of credit card debt, and a £2.5k overdraft. I earn £66k and with an annual bonus this take it up to £69k. I am married with children. I am not a homeowner. I should make it clear I am not struggling to make payments and try to avoid touching the cards as much as possible but there have been a couple of months where I have had due to unforseen bills (my car seems to have fallen in love with mechanic as it seems to be spending more time at the garage than with me) I have 7k on one card at 29.7%, 10k on another at 10.9% (card is closed), 14K at 18.9% (card is closed), and 9K split between other cards around the 16.9% mark. I am over paying most cards but generally over paying the 7k one and the 14k one as the highest interest rate - the 7k should be gone in 5 yrs. While I could carry on as, taking life events in to account I believe it will take me approx 10yrs to clear my debt, so it seems obvious that getting a loan at a preferable rate seems the answer, however I keep getting turned down by my bank (A&L) who dont even do a credit check looking at my file but turn me down in at the automated check stage. I have checked my credit file and I have no late payments CCJ's etc etc so presume this is solely my level of debt has hit a ceiling. My question to the group is should I 1) keep trying to apply for a loan to rework my finance to get debt free every six months? 2) should I be applying for a smaller loan than I need (last one was 7k) to see if I get accepted on this and maybe work under a debt ceiling? 3) Should I be looking to firms who deal with debt consolidation? Just not sure if constantly applying every six months is simply trashing my credit record with the bank. Thanks for any thoughts, and apologies once again if this is in the wrong forum!

beecher2

Consolidating debt is rarely a good idea. On your income there must be a way to pay off your debt in under 10 years - if you post a Statement of Affairs you will get advice on cutting down your bills and putting every spare penny towards paying off your debt.

Heffi1

The problem with getting a consolidation loan is that the lender does not know if you will clear the debt you have with the loan they give you, so they add the total amount you want to borrow to the amount you already owe and then if that adds up to more than half your salary they will in all likelihood decline as you will be seen to have too much credit. Even if you tell them you are going to pay off the CCs they cannot guarantee you will do this.

Also people have been known to run up the debts again on the CCs once they have been cleared, thinking it is an emergency, this is a one off I will pay it off in full at the end of the month and so on until they are back where they started, but with a huge new loan as well.

Post an SOA and let us have a look, we might be able to offer ideas to help you get this debt paid back in the time it would take to pay off a new loan.

Don't keep applying even with 6 months in between it will make you look desperate and then you will get declined.

Angry_Bear

I understand that your aim is to try to minimise the interest you're paying.
The advice above is good advice, but to add to it, I think that if you clear a credit card you can call up to close the account and ask them if (rather than you closing it) they will offer you a balance transfer deal. I'm not 100% sure, but I don't think this would be treated as "new" borrowing so may be the way to get those interest rates down.

Oh, and keep an eye on http://www.whatsthecost.com/snowball.aspx to see how much overpaying can save you. You definitely want to pay the minimum on all but the highest interest rate (7k card) - overpay that one as much as possible.

FireWyrm

Hmm...off the top of my head, without really going into details, you could probably find at least £1000 a month spare if you wanted to. If you cant, you're over-living and an SOA will most certainly highlight those areas for you. If you CAN find that 1000, then you debt (depending on how you snowball it) will take less than 40 months to pay off...or under 4years. I'm not sure where your 10 year estimate comes in. Is it a legitimate forecast, or just a finger in the air ball-park figure?

My guess though, is if you pay off a large chunk, say £12K in the next year, you'll be able to get your consolidation loan. A word of caution though, consolidation loans are notoriously difficult to maintain and they often end in tears. As a third timer, I can tell you from experience that it takes a will of iron to use that method of extricate yourself.