Consoldation Loan - A little advice please.

rmas12

Due to the fact that my girlfriend and I have been pretty bad with money over the past few years, we've ended up with quite a bit of debt, totalling around £3000.

I'm looking into the possibility of bring all the different things together under a loan so that they are easier to manage.

At the moment, I have an £800 overdraft with lloyds TSB
She has a £400 overdraft with Lloyds TSB
we owe £900 on a credit card with Lloyds TSB
My previous job have just informed me that they over paid me £770 in one month, though I am looking to fight this as I believe it's wrong.
We also owe around £30 to studio catalogues, though I will be looking to reclaim admin fees etc once that is paid off.

Now at the moment, we're paying £50 a month on the the credit card by direct debit and more whenever we can, we pay £250 for rent and around £100 goes onto food/other shopping items.

My girlfriend is working part time at the moment though she is trying to increase her hours of work and get's around £550 a month, I am in the process of starting a new job in which my wage will be around £800 a month, this means we have a joint income of around £1350.

My credit rating is poor so I'm looking at a very high interest rate on a loan, however my girlfriend can get one for £106 over four years, is this a good idea to get all the outstanding debt paid and have just the loan to worry about or would it be better to try and pay off the debts slowly with the money we're earning.

Thanks for any advice.

CLAPTON

Why will a loan help?


It all depends upon the interest rates and repayments so tell us
for each debt

the amount, the APR, and the minimum monthly repayment

In your circumsatnces and without knowing the full details its likely a loan will be very expensive and over a long period of time.

Remember that an overdraft varies during the month and they only charge on a daily basis so you benefit when your income goes in whilst with a loan you pay all the time.

Better to try to find a liitle spare money and snowball the debts... that is pay the minimum on each debt except the one with the highest APR.. on that one pay the maximum you can afford until its paid off. Then start paying as much as you can on the one with the next highest APR... this way you clear your debts the quickest and with the least interest.

Both your incomes are very low, can you get a parttime job to increase your income and help pay off the debts faster.

Rafter

That looks like a pretty awful loan deal to me. The interest looks a lot higher than you will be paying on an overdraft or credit card.

Your best thing would seem to be to see if you can get a different credit card with a life of balance transfer deal to get the interest down on that.

You then just need to come up with a budget and cost cutting plan and stick to it to get everything paid off.

The danger of the loan route is that you end up building up a balance on your card and overdraft again and find yourself in £5000 of debt rather than £3000 now.

R.

iolanthe07

Most people here seem to regard consolidation loans as the primrose path to hell. This is because you fool yourself into thinking you have paid your debts off when really you're just moving them around. Consolidation loans only work when you have identified why you're in debt and have addressed the underlying causes. You then have to be really strict with your spending, otherwise you will find that you are consolidating the consolidation over and over until you end up in deep pooh. It might work for you, but do be aware than many people on these boards are in deep trouble by thinking they could borrow their way out of debt.