Advice required - consolodating loan

davep1982

Hi everyone,

Im new to the forum and Im looking for a bit of advice from everyone!

I currently have an Egg loan remaining of £7000, this was £10000 when I started but I have not missed any payments although I have taken agreed Egg "payment breaks" around Christmas time.
I pay £256 p/m at the moment on my Egg loan.

I have an Egg Credit card with £400 on it, which I pay the minimum of £12.

I also have a Capital One Card with a balance of £8600 which I pay around £260 p/m on.

So in total thats £528 per month on the 3.

I was thinking if it might be a good idea to get a top-up loan from Egg, (which I thin is actually just a new loan ?!) of the amount left on my Capital One card and Egg Card so I only have one monthly payment and one intrest rate.

I would need to get £16,000 - £7,000 to pay off current Egg loan + £8600 for Credit Card + £400 on my Egg Credit Card.

I looked on the Egg site for monthly payments:-

£16,000 over 60 months = £321.86 per month
£16,000 over 48 months = £388.09 per month
£16,000 over 36 months = £498.91 per month
£16,000 over 24 months = £721.19 per month

I would like to get it paid off asap, and Im also moving home in 2 months which will save me £300 - £400 per month in rent and bills etc. I was thinking I could get one of the above loans and when I move home make additional payments to pay it off quicker.

I earn £1,150 per month on average.

I was wondering if anyone knows how likely Egg are to let me do this, what do you think is the best option? or anything Im missing as to why this might be a bad idea?

Thanks for your help,

Dave (new debt free wannabee!!) :rolleyes:

immoral_angeluk

CLAPTON

perhaps if you would like to tells us
the APRs of the loans and the number of payments remaining
and the APR of the CC

and the APRs of the proposed new loan

then it might be possible to make some observations on the matter

immoral_angeluk

Have you looked at the reasons why you got into debt in the first place? too many people on here will tell you how they consolidated only to run up the cards again because they hadn't gotten to the root of the problem in the first place!

angelavdavis

A lot of us on here aren't happy recommending consolidation as we have suffered and our debt has grown as a result of consolidation. All it does is adds interest onto your original debt, extends the debt free date and allows you to spend elsewhere.

- What was the original £7000 loan for?
- Have you checked in your loan terms and conditions whether you are able to pay the loan off early (by refinancing) without penalty?

In response to your question, no I don't think Egg will allow you to do this, I think they will want to sell you another loan - at a less attractive rate - so I think you will be no better off as you will still have multiple payments to make.

Think about it - I am assuming that the Egg card is attracting interest? Egg would only change the circumstances if it meant they would earn more interest from you in the long term. Another lender might to attract the new business but as your existing debt level exceeds your take-home annual salary, I think you would be lucky getting a loan of this level without it being either secured (bad idea) or a rubbish interest rate. Just my opinion, take or leave it.

IA is right - very often (as happened in my case), people take out loans to pay off debts and then a year or so later, they start spending on the credit cards again and end up in a worse mess.

Post up your SOA on here. SouthernScousers post here goes through how to do this. By posting up the SOA, the good folk on here can suggest ways of you reducing your other costs so you have more money to reduce your debts.

davep1982

Thanks for the advice so far guys!!
Here are things in a bit more detail:-

Remaining Egg Loan - £7,067.59 (This was taken out to buy a car)
Rate of 6.73% pa
Currently paying £256.70 p/m
Current end date of December 2009

Egg Credit Card - £482.51
Pay off minimum each month - £12
Rate of 17.9% pa

Capital One No hassle Platinum Card - £8600
(This has just mounted up - im paying £260 p/m off this)
Rate of APR 1.039 p/m purchase intrest
I pay about £80 p/m just in intrest! :-(

My other main outgoings relate to the rent of my flat, but I only have one month left on this then I am moving home to avoid rent so I can sort this debt out before looking at buying a house. (Im 24)

My rent is £300 p/m
My other bills (council tax, water etc) add up to another £100 p/m
But as I say these are only until 31st July.

Others -

Mobile Phone - £30 p/m

Im usually left with about £100 per month to live on at the moment. :-(

Im trying to be posititve tho!

So I will be £400 better off when I move home. I was going to use this to pay my new Egg loan I was looking at off faster, as its possible to make additional payments.
My new Egg loan would be a higher APR of 7.9%, but I think I could get it paid off in 2 years.

Ive already given my Girlfriend my cards (dont worry lol) so I cant spend anything more on them and told her not to let me use them unless Im totally in the s**t!

The Egg loan over 2 years is £721.19 per month and £498.91 per month over 3. My outgoings now just on loans and CC's are £528 so I could pay the 2 year one off if im at home or the 3 year one and make additional payments.
As I say I dont know if Egg would let me do this but they gave me the inital loan of £10,000 so Im not sure.

Im commited to doing this so I can buy a house with my g.f, renting is over for me now.

Thanks for all your help!!!!

davep1982

BUMP

lynzpower

dave,
whats your income?

Lucy1982_2

I personally wouldn't do this. I tried it and as you can see from my sig it didn't change anything and I still found ways of using credit. Fortunately I don't have credit cards, but everything else is just as bad. You need to think about everything.

Have you looked at Snowballing? http://www.whatsthecost.co.uk/snowball.aspx
Put in your current debts and interest rates (i would use the payment amount for the new loan) and see how long it would take you to pay it off and what interest you would be paying and then do the same with the new egg loan.

That way you can make a slightly better informed decision, you might find that there is nothing in and and not need to take out another loan.

Let us know how you get on.

CLAPTON

well once you are back home you can clear the EGG credit card in the first month or two which leaves you with the egg loan at 6.73% and the capital one CC at 13.2%apr.

I would leave the egg loan as it is and concentrate on the Cap1 CC... try getting a low life of balance card and BT the balance and also of course paying the absolute max you can to the CC.

davep1982

My income at the moment is about 17.5k a year.
When I move home I will have 2 new jobs, one fill-time and one part-time so this should go to around 20k.

Im applying to join the police as well so that would help :-)