Student - after a debt consolidation loan... Realistic?

Determined89

Hi everyone,

I am currently in my first year if university and looking for a loan to help with debt consolidation. I am receiving my student loan each month, which is giving me about £80 leeway each month after paying all my bills. This includes 2 credit cards with quite high outstanding balances. I am paying above the minimum each month, but this is making a very small dent in what feels like a life time of suffering (which I take full responsibility for).

I have checked my credit rating, which is scored at around 860 - which I believe is fairly decent?* - but have been refused for 2 loans which I have applied for. I stopped trying as I didn't want too many hits against my name by them checking the credit record each time.

I am just wondering - has anyone been in this situation before, and how did you go about it? Is it even possible? Any pointers towards lenders who are generous and willing to give students money towards debt consolidation? If I were to get a loan, based on the monthly repayments for say £8k, I would be paying a quarter of what I do now. Having done some quick checks online, it is estimated that I will get them paid off in 4 years' time from now!

Please be gentle with me. I understand that I should have attempted to get more cleared before I started University, but current situation meant that this was the best time for me to get my degree. It's kinda been an all or nothing job!

Thank you all kindly in advance for any replies/help/guidance! It is appreciated muchly

*Before anyone asks, I am not doing a degree in any way, shape or form related to finance! I am not quite sure how this all works! :rotfl:

PeacefulWaters

Most mainstream lenders would automatically decline a student application.

If you have an earned income, perhaps from part-time work, things may be different.

Your problem is that even if you can find a lender the rate on a loan may well be no cheaper than you're paying on the cards.

So my suggestion is to find work that fits with your study and use all the money earned to pay down the debt on the card with the highest rate of interest - while paying minimum payment plus £1 on the cheapest card.

Apples2

Determined89 wrote: »

If I were to get a loan, based on the monthly repayments for say £8k, I would be paying a quarter of what I do now.

The lenders know that doesn't happen.

There is a reason you have amassed so much debt so they already know if you had a loan to clear that amount, you would pile it all back on the cards again.
Your outgoings are significantly higher that your income, which is totally unsustainable, hence the declines.
You need to curb the outgoings.

To emphasise peacefulwaters point, make minimum payments plus £1 to the card with the lowest APR and put everything you can spare toward the card with the highest APR.

It is kind of self perpatuating in a way, as you drive down the first one, you have a lot more to put toward the second, and so on.

The real options are spending less or earning more. Not more borrowing. Many have tried and many have ended up far worse later on.

Determined89

Thank you both for your replies.

My current situation is that all of my outgoings are aimed towards clearing the debt (plus a phone contract alongside this). I get £443 per month, and spend approx £370 a month chipping away at the debt. I have attempted to work, but being on a zero hours contract, I am struggling to get the hours to suit around my days at Uni. I am pretty much in university 5x weekly, somedays between 09:00 and 18:00. My degree is extremely full on, and I wish I had as much free time as some of the other students get! My only free time to get uni work done is at weekends, which leaves free hours to work very limited. During Christmas I managed to work a few shifts. That money was saved up and then put towards the debt.

My ideas were that IF I was able to get a consolidation loan, I was going to shut down my credit card accounts. I have high interest CC's as I had no lending previous to these, so they were initially to get myself on the credit score ladder, as such. I do not want my credit cards anymore, I do want to get them paid off and shut down, and I am willing to take the hit of having £0 to myself (I am too busy at university to worry about spending money elsewhere) and try to get them gone for good!

I have moved around for the past 5/6 years and struggled to find work initially which meant odd little grocery shops spending £10 here and £20 there which has racked up the cost on the cards. When I worked, I got them back down, then moved again which set off the cycle once again. My husband pays for all the other bills within the house, so I don't need to worry about that side of things. As he picks up the cost of the bills, that consumes his entire wage (as I am unable to contribute), meaning there is no free money to chip away at my credit cards/debt. He can't take extra hours at work, nor get a second job due to the nature of his work.

I am trying to do the best I can, I am just trying to find the light at he end of tunnel... somewhere, somehow!

GoldenShadow

When do you graduate? Lots of places seem to offer grad loans. I got a few emails and letters about them but was only a few hundred £s into my overdraft so thankfully didn't need one.

One of my friends got a loan whilst at uni. 5K it was for, but she works part time 16 hours a week earning about 6.5K a year. I was surprised she got one, didn't imagine she would, but she did.

Determined89

Unfortunately, it's a little while before I graduate as I am only in my first year! I will be graduating in 2017.

I wish I could get some shifts, although it would appear that the company has their select favourites, leaving me with no phone calls for work! That is whole other debate though! I have looked for other jobs which I may be able to apply for, but as I am in uni for so much of the week, I am unable to commit to any hours. Plus my degree consists of placements, meaning I am away from the area for 5 weeks at a time.

PeacefulWaters

Is the degree course really going to give you a qualification that will improve your quality of life?

Or would you be better seeking a full time job and jacking in the course?

Determined89

PeacefulWaters wrote: »

Is the degree course really going to give you a qualification that will improve your quality of life?

Or would you be better seeking a full time job and jacking in the course?

Yeah, it will be worth it. It's an allied health professions degree. So luckily the degree is paid for by the government and my monthly bursary doesn't need to be paid back either. Just my maintenance loan, which came in at £2,400 for the year. Although I cannot presume that this will stay the same for the next two years, I will more than likely come away with less than 10k debt after a 3 year degree.

Tixy

Is your husband in a position and willing to try to get cheaper credit in his name (such as a loan or credit card with 0% on balance transfers) which you could move some of the debt across to?

Whilst you are studying I would think you will find it almost impossible to get a loan to consolidate your existing debt.

Have you worked out how long it will take to repay the credit cards based on the £370/month and current interest rates? (if not it would be worth doing this - using the calculator at http://www.whatsthecost.com/snowball.aspx)

Do you have a student overdraft and is that account maxed out?

If you are unable to move the debt elsewhere and if these are subprime level interest rates then the other alternative may be to consider a debt management plan with one of the debt advice charities.

sevendials

If you are in good standing with paying your credit cards it might be possible too get a credit card that offers a balance transfer. You could work out if this would be a helpful way too reduce the cost of borrowing.

CrisAdams

Suggestions:
1. Do you have any relatives that would lend you money to pay off the CC?
2. Make a budget and incorporate how much money can go against debt and stick to it.
2. Try getting online part-time jobs on eLance, Guru, etc., to go against paying off debt. Hours are very flexible.
3. Sell what you no longer use and put that against debt.
4. Purchase only what you need and not what you want. Instead save up for what you want.