Advice Wanted on Debt Situation

willyboy104

Hi all,

I just wanted a little advice on my current financial situation.

I have a person loan which I took out just under a year ago, I took it out at quite a high monthly payment rate because I could handle it back then as my living expenses were quite low. I have now moved flats and my living expenses have risen dramatically and I am looking to reduce the payment rate, but what is the best way of doing so?

The loan is with Natwest & I am under the assumption that I can re-finance, but when I look to do this, they are offering me a 22% APR which seems ridiculous!

Would I be better off taking out a new loan else where and paying off my current loan with the new one?

If so, how would I do this and where is the best place to do so?

Thanks, any help would be massively appreciated!

[Deleted User]

I know hindsight isn't very helpful now, but you might have been better off taking it over a longer repayment period, and overpaying each month, to shorten the term.

That way, if/when finances got a bit tight, you could cut out the overpayments, until the situation improved again.

As to the refinancing, I suspect you will struggle to get a comparable APR to the original loan (actually, I'm surprised you were offered a loan at all), now that you have a lot less disposable income.

jalebi

Step 1: do a personal budget sheet. I recommend that you google 'my money steps' for a site with a good budgeting section. The budget sheet will help you realise what you can realistically afford each month.

Step 2: contact the money advice service on 0300 500 5000. They are set up by the government, and will be able to cover what your options are.

Step 3: if you are considering trying to refinance to lower your repayment still, then you need financial advice. Google 'unbiased' for a website to find an independent financial adviser

Points to consider:

- remember, a search will be registered on your credit reference every time you apply for credit. Several of these in a short pace of time has a negative impact as it makes you look desperate. Only apply for credit if you think there is a good chance of success and you know the new loan will reduce your repayment to affordable rate.

- if refinancing is not an option, look t your budget sheet to see if there are any cutbacks you can make such that your existing repayments are affordable.

- if refinancing is not an option, but your loan is not affordable despite cut backs - seek debt advice asap. I'd recommend national debtline on 0808 808 4000

willyboy104

Thanks both.

I will check out that budget sheet, as I was actually just putting my own together right now, so this should save me some time!

I was also looking at using Ratesetter as the APR seems much less and using the loan to pay off my current loan and any outstanding debt to help consolidate everything in to one easy to manage loan, has anyone used Ratesetter before as I don't know much about it!

Thanks again!

dancingfairy

Trouble is, if you owe say 10k and apply for another loan for 10k then the lender will look at the total and a potential risk of you owing 20k altogether. They have no guarantee that you will use the 10k to pay off the first 10k. I think given your spare income for repaying debts has gone down then you will struggle to get anything sensible. Sorry.
Have you got a credit card? If it is clear/unused then you could ask if they will offer you any deals to move debts to them (although I'm not too sure how it would work). Another option is to use your overdraft potentially.
I would research as much as possible upfront about what rates are about before applying as if you get declined the first time you will then have a mark on your credit file which will make any subsequent applications harder.
Hope you can think of something.
df