Rock and Hard Place help!

Saint_2008

I'm trying to sort and manage my dept ATM, I've got about 6k in dept between 2 cards and a over draft.

I contacted my bank about a loan and they offered me 5k loan to clear all the dept with them so 1 card and my over draft leaving 1k on the other card, Over 4years.

But I'll have to pay back 8k on the loan and my monthly payment will be more than what I'm paying now on my credit card with them! So I'm thinking I may struggle paying extra out each month.

The way I look at it my current dept is 6k and if I accept it it will then be 9k all in all.

Does it make sence to accept it really?

downhillfast

You say the payments will be more than you're paying already... but are you paying any of the balance off the credit cards or just the minimum payment?

But, regardless of that, if you can't really afford what you are paying a the moment then there is surely no way you can afford to pay more!

It sounds like you need to assess exactly what your affordability of your debts are. If you post a SOA then I bet they'll be plenty of advice forthcoming...

Saint_2008

Thank you for your reply,

My current minimum payment on the main card is £105 and I'm paying £150 on the loan agreement they want £165. My other card minimum is £85 and I pay the same £150.

Sorry not sure exactly what a SOA is exactly?

ALIBOBSY

SOA is a statement of affairs, basically a budget list of everything you earn and pay out each month.

I think the other poster is suggesting have a good look at maximising your income and minimising outgoings so you can clear the cards without a loan.

In general as far as I am aware the advice from most debt charities and on here is not to borrow to pay of debt as in effect you end up paying interest on interest.

I would say stop spending on the cards (if you haven't already) and work out a tight budget to free up as much spare cash as you can to clear the debts. Then look at the interest rates on the cards. Pay the loan and the min on the lowest interest rate card and throw as much as possible at the highest rate card. One that is cleared hit the second card. Once both cards are gone stick the money in a savings account till you have enough to clear the loan.

I bet you will clear it all quicker than the "new" loan.

Good Luck

Ali x

jonesMUFCforever

Have I got this right - you have been offered a loan over 4 years?

If so ask for it over 5 to reduce monthly payments but you will obviously pay more overall.

Caz3121

Saint_2008 wrote: »

But I'll have to pay back 8k on the loan and my monthly payment will be more than what I'm paying now on my credit card with them! So I'm thinking I may struggle paying extra out each month.

The way I look at it my current dept is 6k and if I accept it it will then be 9k all in all.

Your current debt is only £6k if you pay it all now, the longer you take to pay it off, the more you will pay overall.
You have said that you will pay back an additional £3k in interest on the loan over 4 years which is around £62 per month in interest
How much interest are you currently paying on your credit card...your statement should the figure
How do the APRs compare with the card and the loan. I would expect you would end up paying far more interest on the credit card

[Deleted User]

If you are currently paying £105pm on one card, and £85pm on the other, how can £165pm on the loan be more :huh:

imoneyop

Saint_2008 wrote: »

The way I look at it my current dept is 6k and if I accept it it will then be 9k all in all.

If you carry on the way you are, you will be paying far more than the £9k that the loan will cost you (unless the loan offered by your bank has a higher APR than the card and overdraft).

[Deleted User]

I suggest the OP runs their current debts through the Snowball calculator, to see how much they will cost, and how long they will take to clear, if they continue
to pay them as they are now.

ALIBOBSY

I think just looking at interest rates can be misleading as the cards are more flexible as you can pay back about the minimum level and clear quicker so reducing the term and interest.

Ok so you can save up and clear a loan, but its a lot easier to use the money elsewhere and not get enough to settle early.

Plus the temptation is to clear the cards and slowly slide into using them again. I also feel you need to draw a line under the borrowing and work on paying off what's there. But at the end of the day its what the OP feels is better for them. Unfortunately having been there and bought the T-shirt in the past I think borrowing to clear debt is a slippery slope into more debt.

Good Luck to the OP whatever they decide.

Ali x

PS defo try the snowball calculator as per BB.

Saint_2008

I ran the sb on both cards the £4,600 card at 26.93% pa paying back £150 a month was over 11k taking a lot more years to pay it back so the loan wins on this front! The other card with £1,100 on it is 26.48% pa that I'm also paying £150 back. So I think the loan kinda wins out in this case!