Debt consolidation help

Mickey_G23

Hi

I am new to MSE and would like some advice from people who have successfully achieved what I describe.

I have large debts, approx £40k, around half of this is at 14% APR and lower so I am fairly happy that it is being paid off. The rest is on credit cards with APR far too high for my liking 25%+.

I am covering the debt every month and have not missed a payment in the last year. But I am left with nothing by the 3rd week of every month and have no savings. The repayments are £1000 pcm. My annual income is around £35k.

My credit expert score is 911, in Good category.

I do not feel I am at the debt management stage yet or IVA. But this is what all the charities recommend.

I would like to consolidate the "bad" half into a loan.

Using MAS loan calculator, a 8 year £17k loan at 9% APR is £246. This would work for me.

The big question I am asking is how do I go about approaching a bank or private lender with these terms?

I don't want to risk damaging my credit score by aimlessly applying for loans I wont get.

Thanks in advance.

19lottie82

I'm sorry but it ain't going to happen.

You already have almost 115% of your annual salary in debt. As a rule of the thumb the affordability calculator lenders will use is 50% of your annual salary, minus any existing debts, and that's IF you have no missed payments or defaults on your record.

Consolidating half of this will mean you have 60k (!!!) worth of debt.

You say you haven't missed a payment in over a year? So you have missed payments previously to that, in the last 6 years?

You already have a horrendous amount of debt as well as (I'm guessing), a history of missed payments.

I'm sorry but you're living in cloud cuckoo land if you think anyone is going to lend you £20k. Your credit score is irrelevant.

You really need to look at other options rather than taking out more debt here. Have you thought of a DMP / bankruptcy?

Mara_uk7

19lottie ... Consolidating would mean he still has £40k in debt , hes using the loan to pay off the high interest cards.

Granted OP , you will find it nigh impossible to get a loan at any kind of reasonable rate. A DMP with someone like CAP or stepchange would probably be your best bet, they may be able to get interest rates frozen on the high cards.

Dont panic in the meantime, look for ways to top up your income, anything to sell on fb pages or evilbay ? Can you do overtime at work ? How about posting a statement of affairs which may highlight areas you could make savings, and show you where your cash is really going.

Good luck, and most of all, dont panic, youre far from dire straits yet.

Mickey_G23

19lottie82 wrote: »

I'm sorry but it ain't going to happen.

You already have almost 115% of your annual salary in debt. As a rule of the thumb the affordability calculator lenders will use is 50% of your annual salary, minus any existing debts, and that's IF you have no missed payments or defaults on your record.

Consolidating half of this will mean you have 60k (!!!) worth of debt.

You say you haven't missed a payment in over a year? So you have missed payments previously to that, in the last 6 years?

You already have a horrendous amount of debt as well as (I'm guessing), a history of missed payments.

I'm sorry but you're living in cloud cuckoo land if you think anyone is going to lend you £20k. Your credit score is irrelevant.

You really need to look at other options rather than taking out more debt here. Have you thought of a DMP / bankruptcy?

You haven't told me how you dealt with a very similar situation. Did your partner get a DMP or declare bankcruptcy?

19lottie82

Mara_uk7 wrote: »

19lottie ... Consolidating would mean he still has £40k in debt , hes using the loan to pay off the high interest cards.

Nope, It doesn't work like that. As far as the bank would see it, it would total his existing debt, PLUS the amount borrowed for consolidation.

They have no proof he will use the funds to consolidate his debts. He could take it and blow it all on fast cars and loose women as far as they know.

ellesbellesxxx

"19lottie ... Consolidating would mean he still has £40k in debt , hes using the loan to pay off the high interest cards. "

I think what Lottie means is that the credit will still be available to him...the lenders see it that the loan is additional credit, not paying credit off... so effectively 60k of credit.

Unless you can cut back to make bigger payments, then I would agree that a DMP is best option.

19lottie82

Mickey_G23 wrote: »

You haven't told me how you dealt with a very similar situation. Did your partner get a DMP or declare bankcruptcy?

I haven't been in a similar situation, just based on my knowledge from using this forum for a few years.

Mickey_G23

Mara_uk7 wrote: »

19lottie ... Consolidating would mean he still has £40k in debt , hes using the loan to pay off the high interest cards.

Granted OP , you will find it nigh impossible to get a loan at any kind of reasonable rate. A DMP with someone like CAP or stepchange would probably be your best bet, they may be able to get interest rates frozen on the high cards.

Dont panic in the meantime, look for ways to top up your income, anything to sell on fb pages or evilbay ? Can you do overtime at work ? How about posting a statement of affairs which may highlight areas you could make savings, and show you where your cash is really going.

Good luck, and most of all, dont panic, you're far from dire straits yet.

Yes I agree, still £40k.I would pay off and cancel all cards.

I am simply looking for a way to reduce monthly payments to a more comfortable level even if this means paying off more in the long run. Afterall mortgages cost nearly double what is borrowed but are seen as "good" debt. (I know they are secured against a house)

I would have thought with base rate at 0.5% for the foreseeable, If I am offering 9% people would see this as fair.

Perhaps I need to speak to zopa or similar.

I am not at the DMP bankruptcy stage yet, but have read through these.

Mickey_G23

19lottie82 wrote: »

I haven't been in a similar situation, just based on my knowledge from using this forum for a few years.

19lottie82 Old 23-10-2012, 10:55 AM
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Default How to handle finances when cohabiting with OH with a TERRIBLE credit rating?
Hello! I’m after some advice, and I was hoping someone on the famous DFW board might be able to help?

Basically the situation is this…… I’ve been with my partner for almost 3 years and we are hoping to move in together in the New Year...............

Lottie, I am new to MSE but know how to use a search engine. I wanted to check to see if you had experience in this before taking your life changing advice of going down DMP route.

So what did you do? I would really appreciate your help.

DCFC79

You mention zopa but whats your credit history like ?

I could be wrong but you might need a clean history to borrow from them, in fact I dont like your chnaces with getting a loan from zopa.

Mickey_G23

DCFC79 wrote: »

You mention zopa but whats your credit history like ?

I could be wrong but you might need a clean history to borrow from them, in fact I dont like your chnaces with getting a loan from zopa.

My recent history is very clean. No missed payments in 18 months. Do you have any experience of zopa or similar?