Getting a loan to clear debt

Beynonz

Hello,
Myself and my partner bought a property in June 2014. We are still feeling the effect of raising the deposit. We are both 1500 into our overdraft and I also have a 1500 credit card bill. We are both getting our wages every month and then spending them and unable to save anything due to our reasonable wages.

I have been offered a 5000 loan to cover and get rid of all of the debt that we have with payment returns of approx. £120.00 which is more than manageable.

Do you guys think this is a good way to get rid of all our debt and then being in a position to start saving?

Cheers in advance.

Tixy

If you currently owe £4500 over the 3 debts but take out a new loan of £5000 you will increase your debts by £500.

If you are currently spending all your wages then how will you afford the £120 repayments?

What APR is the £5000 loan you have been offered? Is this an unsecured loan?

What interest/charges are you paying on the current overdrafts and credit card?

Candyapple

Who is the loan with? What will the final amount payable be and over how long?

Your debt of £4.5k is very small. You and your partner need to sit down and work out a budget, trim off any unnecessary expenditure and luxuries and use the money to pay off your debts.

MallyGirl

Hi - you aren't getting rid of your debt by doing this, you are just moving it.
what interest/charges are the ODs and CC incurring? What APR would the loan be? for how long?

enjoyyourshoes

Sorry but you are spending more than you bring in.


Don't blame the wages.


Look at your joint life objectives and discuss how your financial envelope can meet these.


You probably will have to come to the joint conclusion that you need to reduce your expenditure.


This is both difficult (as you are overspending £1 at a time , bit her bit there, coffees, lattes, mags, cigs, booze, eating out, snaking, lunch at work, burgers etc) But its also easy if you both agree what your futute strategy looks like.


Start benefiting from compound interest on savings rather than suffering compound interest on debts.


Review all your other costs and come up with a plan to reduce, eliminate, or pay smartly (pay insurances up front not incurring pesky debt charges)


Do it together, do it often and keep on the charge as its difficult

CLAPTON

Beynonz wrote: »

Hello,
Myself and my partner bought a property in June 2014. We are still feeling the effect of raising the deposit. We are both 1500 into our overdraft and I also have a 1500 credit card bill. We are both getting our wages every month and then spending them and unable to save anything due to our reasonable wages.

I have been offered a 5000 loan to cover and get rid of all of the debt that we have with payment returns of approx. £120.00 which is more than manageable.

Do you guys think this is a good way to get rid of all our debt and then being in a position to start saving?

Cheers in advance.

what are they APRs and/or fees on each debt?

what is the APR of the proposed loan?

Beynonz

Hi all, thanks for the quick responses.

We are getting a loan with M & S for 12% APR. Over 5 years.

We are cutting our expenses and have calculated that we can pay the 120 towards getting rid of our debt.

I forgot to mention that as we are at the limit of our overdrafts each month, we are on occasion paying unnecessary fines and interest when we dip over the overdraft.

We have cut our expenses, but with a little girl, it can be difficult.

iolanthe07

get rid of all of the debt that we have

This is the problem with consolidation. People think they are getting rid of debt, whereas in reality they are just adding to it, maybe with lower monthly payments, but usually at a higher interest rate over a much longer periodo they end up paying back a lot more. Pop over to the debtfreewannabe board for help on cutting your expenses.

Beynonz

Would you then suggest that setting up a standing order for say £50 into each of the accounts, and not to touch them- would be a better idea than to wipe it all out in one?

Tixy

Beynonz wrote: »

Would you then suggest that setting up a standing order for say £50 into each of the accounts, and not to touch them- would be a better idea than to wipe it all out in one?

Depends on the interest charges you are incurring currently.

You want to pay off the debt as quickly as possible while paying the least amount in interest & charges possible.

I definitely wouldn't borrow £500 extra on consolidation.

macman

If you can pay £120pm on a consolidation loan, then why can't you pay £120pm towards the current debts? Consolidating 3 loans into one does not reduce the debt one penny, it simply makes it seem tidier. In this case it increases your debt by £500.
Pay off the most expensive debt first (presumably the credit card), and move it onto an interest free card. Sell some stuff on eBay and raise a few hundred quid that way?