New Loan to Cover Current Loan and Credit Cards

newmoneyjedi

Hi Guys,

So here is the story, I currently have a career development loan and two credit cards. I am working full time and am more than comfortably able to meet my repayments.

However, I would like to take out a new loan to fully pay off my CDL and credit cards. This loan would have a lower interest rate, thus saving me money in the long run.

I am not sure how to go about applying for one though. If I simply apply for a loan would there not be a risk of being rejected beacuse of the amount of credit I already have, even though I intend to use the new loan to pay these off?

Do I need to apply for a certain type of loan? Can I go into some banks and talk to them? I am unsure about this though as I have heard that the banks can do credit searches even if you dont end up going with that bank that can stay on your credit report.

What is my best course of action? Any help would be greatly appreciated.

LovelyLeeds

newmoneyjedi wrote: »

Hi Guys,
I am working full time and am more than comfortably able to meet my repayments.

Stop right there, and take your own advice.

Why would you want to take on more debt to pay off existing debt?

Tixy

Hi

If you make a credit application then it will show on your credit file as a credit application search (it won't show if you are accepted or declined).

Yes if you apply for a loan then the new lender is likely to assess if you can afford to repay all your existing debts and the new loan on top (that is because they cannot be certain you will pay off the old debts or won't run up the cards again).
Whilst you can specify that a loan is for 'debt consolidation' when you make the application they still cannot ensure that you do this.

What interest rates are you paying now that you think a new loan will be at a cheaper rate? (are you aware that even if accepted for a new loan you may not be offered the advertised representative rate?)

If you do want to make an application then I would guess your best options would be your own bank (always a good idea assuming you run your account well as they know most about your finances) or possibly the bank where you have your existing CDL. The advantage with them is that the could insist you use some of the new loan to repay the older loan as they would both be with the same lender, therefore the only extra exposure for them is the extra part of the loan that you were intending to use to pay off your cards.

One other final option is to try a lender that offers a soft search application (nationwide building society is one of very few who offer this). These will do a soft search application of your credit file, not a full search and then will tell you if they are likely to accept you and at what APR.

opinions4u

Only consider doing this if there's no way on earth you'll build up the overdraft and credit card debt again.

National_Debtline

opinions4u wrote: »

Only consider doing this if there's no way on earth you'll build up the overdraft and credit card debt again.

Hello there,

This is really great advice. We often see clients consolidate only for them to then borrow on their overdrafts and cards again. Of course everyone, and every situation, is different - and consolidating can often be cheaper in the long term.

Best wishes,

David @ NDL.

savers99

hi im looking to do the exact same thing as my cc have run out of 0% interest i applied for a sainsbury loan but was refussed how long should i wait to apply for another loan

forgotmyname

6 months or longer. Applying for several in a short space of time will go against you until the only options left have high interest rates.