Debt consolidation loans

Tixy

pheonixrising21 wrote: »

Depends on if banks change the way they offer consolidation loans to make them work like motor finance. I know they don't, and probably never will...

I know this is slightly off topic to the original post - but you know there did used to be a few lenders who would pay the new loan to the applicant's existing debtors.

However there were also problems with this - such as the correct amount not being paid leaving a small balance on the old debt - and then sometimes the debtor not paying this and ending up with a default on their original loan.

And of issues with paperwork and allocation of payments. And of loan companies denying ever having received the pay off loan and so continuing to take DDs - so that the debtor ended up paying out 2 lots of DDs for months - or being unable to and so then defaulting on one and having that screw up your file.

Whilst I am sure it used to work fine in some cases, there also used to be a good few posts on these boards and similar forums where it didn't exactly go smoothly.

DCFC79

pheonixrising21 wrote: »

No offense taken, I have all my address info in order and have been on the electoral register since a month after I moved in nearly two years ago...

I was just having a pop at Santander as they really did my head in :mad:

Oh I wasnt apologising to you, it was meant for the OP

pheonixrising21

Tixy wrote: »

I know this is slightly off topic to the original post - but you know there did used to be a few lenders who would pay the new loan to the applicant's existing debtors.

However there were also problems with this - such as the correct amount not being paid leaving a small balance on the old debt - and then sometimes the debtor not paying this and ending up with a default on their original loan.

And of issues with paperwork and allocation of payments. And of loan companies denying ever having received the pay off loan and so continuing to take DDs - so that the debtor ended up paying out 2 lots of DDs for months - or being unable to and so then defaulting on one and having that screw up your file.

Whilst I am sure it used to work fine in some cases, there also used to be a good few posts on these boards and similar forums where it didn't exactly go smoothly.

That's interesting! I didn't know some lenders did this in the past.

I can see that there would be additional challenges surrounding paperwork over and above those dealt with in the motor trade, probably due to the motor finance being attached to an asset and so more easily traceable. But surely these can be overcome?

Also, banks seem to manage well enough with their current account switching services so they do have some lines of communications with other financial institutions...

Tixy

pheonixrising21 wrote: »

That's interesting! I didn't know some lenders did this in the past.

I can see that there would be additional challenges surrounding paperwork over and above those dealt with in the motor trade, probably due to the motor finance being attached to an asset and so more easily traceable. But surely these can be overcome?

Also, banks seem to manage well enough with their current account switching services so they do have some lines of communications with other financial institutions...

I'm not sure if the mainstream banks ever did it, but I know there were some specialist unsecured debt consolidation lenders who did, I cannot recollect who (although I'm half thinking one of them was someone like welcome).

kyleda86

Yes I have got a secure job, I am paying back the debts easy enough and could pay more but the charges and interest at the problem

I have done the math and this is how I see the calculations working and why I thought getting a low rate loan would be better

This is my debt and charges

£2000 O/D with £30 a month fee
£1000 O/D with £17 a month fee
£725 C/C with £25 a month payback but £11 interest (rough est.)
£690 C/C with £25 a month payback but £11 interest (rough est.)
£580 C/C with £25 a month payback but £11 interest (rough est.)

So thats around £80 a month in interest charges and my debt is not really going anywhere.

However a 7.0% APR £5000 (total £5382) paid pack in 3 years

3 years of £80 = £2880 (obviously the £80 will decrease month by month)
3 years of interest = £382

Please tell me my maths ain't right?

Onto the address thing,

I lived in 3 different houses through uni, then 2 after grad and now I am in my 3rd house after getting a new job in a new town. (house shares suck) so I would have changed my address 8 times in 5 years... See why I keep all my bills to my family address?

All this debt was accumulated before and throughout uni. I haven't even touched a C/C or extending an O/D in 2 years so I am deadset on just paying it all over without the risk of increasing my debt.

Tixy

A 7% loan might be nice - but it might not be possible for you to get one.

If you can pay off more than you are doing currently then it would make sense to do so. That is the way that will get the interest & charges to reduce.

I would get the address issue sorted first - get everything at the address you actuall live at. And in the meantime increase your debt repayments each month - make sure you are paying more than the minimum payment on all your debts (which looks better on your credit file). At the moment it looks like you are only paying £122 (assuming the overdrafts are remaining level) - and yet it looks like you can certainly afford £150 if that it the loan repayments you have been considering. Better still can you afford £200? £250?

Then in a couple of months or so when you are showing as on the electoral roll at your real address you could possibly try a loan application - but you may well find that even if you are accepted it is not at a much cheaper APR than you are paying now - you may not get an APR of 7%

DCFC79

kyleda86 wrote: »

Yes I have got a secure job, I am paying back the debts easy enough and could pay more but the charges and interest at the problem

I have done the math and this is how I see the calculations working and why I thought getting a low rate loan would be better

This is my debt and charges

£2000 O/D with £30 a month fee
£1000 O/D with £17 a month fee
£725 C/C with £25 a month payback but £11 interest (rough est.)
£690 C/C with £25 a month payback but £11 interest (rough est.)
£580 C/C with £25 a month payback but £11 interest (rough est.)

So thats around £80 a month in interest charges and my debt is not really going anywhere.

However a 7.0% APR £5000 (total £5382) paid pack in 3 years

3 years of £80 = £2880 (obviously the £80 will decrease month by month)
3 years of interest = £382

Please tell me my maths ain't right?

Onto the address thing,

I lived in 3 different houses through uni, then 2 after grad and now I am in my 3rd house after getting a new job in a new town. (house shares suck) so I would have changed my address 8 times in 5 years... See why I keep all my bills to my family address?

All this debt was accumulated before and throughout uni. I haven't even touched a C/C or extending an O/D in 2 years so I am deadset on just paying it all over without the risk of increasing my debt.

Can you not see that the address aspect needs to be sorted first ?

Yes you have move around alot in the past 5 years but if you want to get a loan at the 7% then change your address or dont change it and plod along as you are.

MrDebtWarrior

kaya wrote: »

Consolidation loans are just a rip off getting you into more debt, how can increasing the amount you owe by obtaining another loan which will require interest and Increase the total payable be a solution? Use you common sense ! Loans , credit and interest payments are the reason you are already in a pickle and you want to get another one?

I agree with you - getting more debt to pay debt is the opposite of what this site promotes but....

It depends on the person.

*IF* they use the new loan to pay off ALL other debts.
*IF* they close credit cards when the balance is cleared to avoid further spending, same as reducing overdraft allowance.
*IF* they make all of their payments on the new loan.

Then they will be in a much better place, with no debt.

I am doing exactly this, I had 3 CCs and an overdraft all with different lenders. I was feeling stressed from managing them and doing balance transfers for interest free periods etc. I took a loan, paid all of these debts off and have closed all credit cards and took my OD to £300 (maximum interest free amount my bank gives). Now I'm in the position where I have one payment, from one lender and I know exactly when I'll be debt free.

Now it's up to me to make sure I don't overspend.