Dealing With My Debt.....and now Facing It!

timelord_4

Guys n Gals

Its hard posting on here, but I'm facing up to dealing with my debt. I would like to know the best way of dealing with my current situation (I've juggled all sorts of figures to try and compare but couldn't do it!).

I currently have the following left to pay:

Egg Loan £2254 - 7.66% end payment date October 2008 (£155 payment each month)

Halifax Credit Card £1700 - 6.9% for the life of the balance (£100 currently paid each month)

RBS Credit Card £4600 - 0% for the next 12 months and then 13.9% (£100 currently paid each month)

I do however also require another £3000 for a car.

What is the best way of paying all this debt off. I would like everything to be paid off in 3 years. Do I get 1 big consolidating loan for the whole or part amount? I'm really not sure, can anybody please shed some helpful light?

I have already shifted the credit card amounts to the newer lower amount ones listed above (Goodbye Virgin - 15.9% and then you tried to raise to 24.9% Boooo!). To note, this was an existing card that had not been used in ages with no balance, so hopefully my credit rating score is not affected. I will also not be adding any more to these cards.


An £11000 loan over 3 years would roughly be approx £350 per month.

Whats best to do? Please help!

Regards
Timelord

Poppycat

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angelavdavis

timelord wrote: »

I do however also require another £3000 for a car.

What is the best way of paying all this debt off. I would like everything to be paid off in 3 years. Do I get 1 big consolidating loan for the whole or part amount? I'm really not sure, can anybody please shed some helpful light?

I really recommend against consolidating. You sound like you are doing quite a bit to help yourself already and it would be mad doing this at this stage.

A few questions:

- Why do you need £3k for a car? Surely it would be better off just getting one for half the price and then concentrating on paying off the credit cards?
- What other outgoings do you have, can you save on any of them to increase the debt payments? Might be worth reviewing your income and outgoings and posting a Statement of affairs on here for the good folk here to suggest ways of saving on the outgoings. More info on doing this here
- Do you know if the Egg loan allows early repayment or overpayments without penalty? Its worth checking.
- Have you tried using the snowball calculator? I would recommend it for pointing to the best method of paying off your debts in the shortest possible time. There is also a loan calculator on the same site that will help you work out the different figures. I used these tools to do the following:

Option 1 - Settling Debts as early as possible and don't buy new car yet:

Setting aside the car loan of £3k, entering your debt figures and assuming 3% minimum payment on the credit cards, it says your debt-free-date is October 2009 and you would pay £451.00 in interest overall.

This could of course be reduced by adding more money to the monthly payments.

Option 2 - Settling Debts as early as possible but also buy car:
Adding the £3k over 3 years at an assumed 7.4% loan rate (this is current Northern Rock unsecured loan rate) this would require additional repayments of £93.18 per month), and increase your debt free date to August 2010.

You would pay a total of £976.00 in interest.

Option 3 - Buy new car and consolidate debts:
- If you consolidated everything together, so you effectively get a debt of £11,554 (which is actually the total - not £11,000!), assuming a loan rate of 7.4% (as before), over 3 years, your monthly payments were decrease to 358.87 but you would pay a total interest of £1,365.35 which is almost £400 more for the same period! If you extended the borrowing to five years (reducing the repayments to £230.97 - could be very tempting), you would pay £2,304.19 interest!!!:eek:

Hope that helps!