Loan advice

Shack_attack

Hi all,

Just looking for a bit of advise for my girlfriend.

She has a debt of 8100 with a credit card and is paying around £150-£200 per month satisfying the minimum payment.

She wants to get rid of this ASAP and is looking at getting a loan for the amount at a low percentage to pay it off in monthly installments of around £350-400 depending on the APR rate for two years.

Would this be the best option for her and is there anything else you could recommend? Any help is greatly appreciated.

Thanks,

bargainbetty

Without knowing her income or other debt levels, it is very hard to say. Any application she makes would take into account both her existing debt, and the amount she wants to borrow, and add them together (they can't stop her filling up the card again) so unless she is on a very good income she may be rejected.

She could look into other cards with low life-of-balance transfers, but again, she may not get enough credit to clear it. Her best bet is to speak to her own bank first. And if she can afford to pay off £350-400 per month on a loan, why isn't she paying that off her card already?

Shack_attack

Thanks for the reply.

She has realised that she can't go paying interest only and is looking to wipe the slate clean and start saving asap.

She could afford to pay that amount off the card but the interest on the loan (assuming she gets a good rate) would be a lot less than what she pays on the card. I have done an SOA with her and the £350-400 is a realistic amount taking into account her current spending and outgoings etc.

I suppose it comes down to making a few applications and seeing what sort of amount a reputable lender would provide if any.

gb12345

Shack_attack wrote: »

Thanks for the reply.

She has realised that she can't go paying interest only and is looking to wipe the slate clean and start saving asap.

She could afford to pay that amount off the card but the interest on the loan (assuming she gets a good rate) would be a lot less than what she pays on the card. I have done an SOA with her and the £350-400 is a realistic amount taking into account her current spending and outgoings etc.

I suppose it comes down to making a few applications and seeing what sort of amount a reputable lender would provide if any.

Before she starts wrecking her credit history with failed applications, is she earning over £32k (assuming no other credit and that her card is maxed out), what is her credit history like and is she on the electoral roll?

Shack_attack

gb12345 wrote: »

Before she starts wrecking her credit history with failed applications, is she earning over £32k (assuming no other credit and that her card is maxed out), what is her credit history like and is she on the electoral roll?

She has a strong credit history.
Earns around £30k per year so just less
Is on the electoral roll
She has around 800 left on this card up to her limit
She has another credit card with £3100 on it but is paying that off in full in March when her bonus comes through

I suppose it may be that she'd have to cancel that card and then apply?

I've never had a CC so don't know the ins and outs of balance transfers / payments etc

Tixy

What is the APR on the credit card?

Who is the card with? (and is that who she banks with?)

She may want to get a nationwide soft search quote forst, which will give her an indication, and doesn't show as a visible credit search on her credit files.

Shack_attack

Tixy wrote: »

What is the APR on the credit card?

Who is the card with? (and is that who she banks with?)

She may want to get a nationwide soft search quote forst, which will give her an indication, and doesn't show as a visible credit search on her credit files.

The card is now with MBNA, it was with Virgin before changeover.

I need to sit down and see exactly the split between balance transfers and how much was for purchases.

She has 0% on balance transfers until July and it works out around 1.15% on purchases per month so I'm guessing it's 13.9% APR

Tixy

Based on how the banks would perceive her affordability she may struggle to be accepted for a new loan on top of these 2 existing credit cards on her salary.

She could try applying for a loan (not lots of application but try a single one) - but she may find even if accepted it isn't at a much better APR than she is paying now.

If she is declined then I would suggest she starts paying off more than the minimum on each card for the next couple of months and then once she has cleared the other credit card so her overall debt level is much lower then try again - either for a loan or for a new 0% card.
Also once the second card is cleared she could also see if they will offer her any 0% balance transfer promos - if so she could move some of the debt to that card (depending on the credit limit of that card).

Shack_attack

Tixy wrote: »

Based on how the banks would perceive her affordability she may struggle to be accepted for a new loan on top of these 2 existing credit cards on her salary.

She could try applying for a loan (not lots of application but try a single one) - but she may find even if accepted it isn't at a much better APR than she is paying now.

If she is declined then I would suggest she starts paying off more than the minimum on each card for the next couple of months and then once she has cleared the other credit card so her overall debt level is much lower then try again - either for a loan or for a new 0% card.
Also once the second card is cleared she could also see if they will offer her any 0% balance transfer promos - if so she could move some of the debt to that card (depending on the credit limit of that card).

Thanks for the info.

I think that's probably the best option, put one application through after one credit card is paid off and assess the situation then. Just keen to get this done ASAP and avoid any further interest charges.

Do you know if the credit scoring is done in real time? I.e if the card is cancelled, then the overall credit score is updated straight away to make the application stronger

CLAPTON

Shack_attack wrote: »

Thanks for the info.

I think that's probably the best option, put one application through after one credit card is paid off and assess the situation then. Just keen to get this done ASAP and avoid any further interest charges.

Do you know if the credit scoring is done in real time? I.e if the card is cancelled, then the overall credit score is updated straight away to make the application stronger

there is no such thing as a credit score: when you apply for credit that particular lender evaluates your info (from credit agency reports and your application info) and matches you against their own lending criteria.


If you cancel cards or pay off debt, that generally takes a month or so to show up on your credit reports

Tixy

Generally lenders update the credit reference agencies once a month, so depending on the day they update it could take around a month before the balance shows as being paid off. And if she closes the card down after that then it could take another month to show that the account is closed.