Loans to consollidat debt

dickiesplitz

I have been trying for sometime to obtain a loan that I can then use to consolidate my debt. Unfortunately, due to credit scoring I am always refused. Why it it that companies do not seem to understand that loans will be used to clear debt rather than to increase debt? Or am I just being naive here?

debtcutter

Because they could pay the money into your account and then you could decide to either:

a) Pay off the debt that you said you wanted to pay off

b) spend it on one of the infinite number of other things you could possible spend it on.

Lenders choose to look at your credit score and usually decide that if you've got a good score, you're less likely to do the 2nd thing and more likely to intend on paying the money back.

DCFC79

dickiesplitz wrote: »

I have been trying for sometime to obtain a loan that I can then use to consolidate my debt. Unfortunately, due to credit scoring I am always refused. Why it it that companies do not seem to understand that loans will be used to clear debt rather than to increase debt? Or am I just being naive here?

Because the lenders cant make you use the loan to consolidate, for all they know is you will go and blow the new loan on gadgetsm, a car, holidays, clothes etc.

Forget the loan and concentrate on paying the debts off.

bargainbetty

Add up the total of your debt, and then add the total of the loan you want to get to it. The total, despite your promises to pay off the old debt, is what the lenders would have to consider your total debt committment might be if you don't pay it off.

If that is an unsustainable amount, or more than half of your income, then they would be irresponsible to give it to you.

Sorry, the old 'consolidation' loans aren't as easy to come by these days!

CLAPTON

banks only want to lend to people they are confident will repay them

if you are struggling to pay your current lenders then why would anyone else want to take on that debt?

pheonixrising21

CLAPTON wrote: »

banks only want to lend to people they are confident will repay them

if you are struggling to pay your current lenders then why would anyone else want to take on that debt?

Where does the OP state they are struggling to pay?

Many people (myself included) can comfortably pay more than required each month on their debts, but would love to move all their debt to one place at a lower interest rate, meaning that more of the money they pay each month is on capital repayment and less on interest.

It makes perfect sense to want to pay less interest overall... unless I am missing the point of MSE (that's Money SAVING Expert) entirely?

"Total" debt affordability is the only thing stopping me consolidating, i.e. banks not being sure I will actually pay off the old debts if they lend me the money to do that. Often it has nothing to do with "struggling to pay".

CLAPTON

pheonixrising21 wrote: »

Where does the OP state they are struggling to pay?

Many people (myself included) can comfortably pay more than required each month on their debts, but would love to move all their debt to one place at a lower interest rate, meaning that more of the money they pay each month is on capital repayment and less on interest.

It makes perfect sense to want to pay less interest overall... unless I am missing the point of MSE (that's Money SAVING Expert) entirely?

"Total" debt affordability is the only thing stopping me consolidating, i.e. banks not being sure I will actually pay off the old debts if they lend me the money to do that. Often it has nothing to do with "struggling to pay".

indeed so

where does he say he can comfortably pay his debts but just wants to reduce the interest he pays?

where does he say that he is looking for a lower interest rate loan?

your specific circumstances are not relevant to this thread

Bravehearted_2

dickiesplitz wrote: »

I have been trying for sometime to obtain a loan that I can then use to consolidate my debt. Unfortunately, due to credit scoring I am always refused. Why it it that companies do not seem to understand that loans will be used to clear debt rather than to increase debt? Or am I just being naive here?

And how are they supposed to trust you to use the loan to clear the debt?

Yes you are being naive.

Banks refuse to lend because their experience has shown them that most "consolidation" borrowers don't clear the debt. So now they rightly refuse.

Keep paying the individual debts down - and it'll do just that - go down. Forget a loan.

pheonixrising21

CLAPTON wrote: »

indeed so

where does he say he can comfortably pay his debts but just wants to reduce the interest he pays?

where does he say that he is looking for a lower interest rate loan?

your specific circumstances are not relevant to this thread

The OP doesn't state either way whether they can comfortably pay their debts or not, which is why I used the phrase "many people". I have not made an assumption either way. You made an assumption and I was merely pointing out that it is just that, purely an assumption.

You may, of course, be correct in your assumption and the OP is struggling to pay their debts, but until the OP states such as a fact, its purely an assumption on your part.

I have to disagree, in that my specific circumstances are relevant here, as I am in a similar situation to the OP in wanting to consolidate but unable to due to total affordability. My specific circumstances prove my point that the assumption you made may not be correct (i.e if I had been the OP and posted that message as my first ever post, your assumption would be entirely wrong).

kaya

Because the very nature of recieving an interest accumulating loan can not have any other effect than to increase the total amount of debt you are in , its not rocket science is it .

debtcutter

pheonixrising21 wrote: »

The OP doesn't state either way whether they can comfortably pay their debts or not, which is why I used the phrase "many people". I have not made an assumption either way. You made an assumption and I was merely pointing out that it is just that, purely an assumption.

You may, of course, be correct in your assumption and the OP is struggling to pay their debts, but until the OP states such as a fact, its purely an assumption on your part.

I have to disagree, in that my specific circumstances are relevant here, as I am in a similar situation to the OP in wanting to consolidate but unable to due to total affordability. My specific circumstances prove my point that the assumption you made may not be correct (i.e if I had been the OP and posted that message as my first ever post, your assumption would be entirely wrong).

If statistically, someone that looks like you (in terms of comparing data fields available e.g. fields in credit report, your income, area you live, job title etc etc) isn't worth lending £XXX to, for consolidation (or any other reason), as stats suggest it won't make them money, for whatever reason, why would anyone lend it to you?

If, statistically, someone "like" you (someone that on paper, appears similar to you) was likely to make them more money than the next person, they'd be doing it.

Your idea would be good if the incorrect assumptions being made were correct.

The fact that you might not be what you appear to be, statistically, is totally irrelevant to a decision being made on statistics, unfortunately.