Loan dilemma - advice needed please!!

Moominmamma

Hi

Firstly I guess I should say I've already posted on the Loans Forum but haven't had much advice on there (I appreciate that my post hasn't been on there very long but sadly patience has never been one of my virtues and the whole situation is worrying me - I can feel my blood pressure rising by the minute!) apart from a suggestion that I post on here, so I hope that's okay and that some of you DFWs can offer me some advice...Here's the gist of my post:

DH recently applied for a loan of £12k over 5 years with A&L, well given our other commitments we simply wouldn't be able to afford the repayments and so it would just exacerbate the situation we're already in, sinking us ever deeper into debt rather than enabling us to slowly dig our way out. Having belatedly realised this, a few days later he applied for £11k over 10 years with Northern Rock.

NR rang and said they would let us have £10k and we agreed to this. A fortnight down the line and no paperwork from NR had arrived so DH rang them to query this this morning and was told that the loan had been declined!!! Bit mystified by this as we were under the impression they'd already approved it and according to Experian Dh's credit rating is very good, anyway they obviously won't enlighten us at all.

In the meantime A&L have offered us the loan we can't afford :rolleyes:. So what I want to know is this:

1) Is there any guarantee (or even likelyhood) that they would be willing to spread the loan over 10 years instead of 5?

If they were willing to do this I think the loan would become secure as as far as I'm aware they only do unsecure ones over 5 years or less. If at all possible we would really prefer a flexible loan as it appears increasingly likely that our circumstances will change (for the better thank goodness!) over the next 6 -12 months, which leads us to my next question

2) Is it worth approaching another lender for a flexible loan (and if so then who?) or will so many applications (particuarly with one being declined) in a short time span have a really detrimental effect on Dh's credit rating?

I have gone from feeling positive and back in control of our finances thinking we'd got the NR loan to stressed and back to square one, so any words of wisdom would be hugely appreciated!

Thanks in advance

Moomin

tyllwyd

Sorry it's a nosey question - but why do you need the loan? Its just that if it is a consolidation loan, there may be other options that would avoid you having to take out such a big loan and that would be more flexible. If you are happy to, it might be worth posting details of the amounts and aprs etc on your other borrowing, because people might be able to suggest other ways of going about things.

LookingAhead

Hi there.

I would just echo tyllwyds question really.

If it's consolidation - would you be be willing to seek help (from us on this forum) on how to beat down existing debts so a consolidation is not needed?

It might be tough at first but it would be better in the long run.

I'm Queen of Consolidation loans and they just aren't the answer if there are outstanding issues to be dealt with at all.

If possible - post a little bit more information and I am sure lots of people will offer some words of wisdom.

LA xx

Moominmamma

Hi

Yep, it's a consolidation loan we're after. I finally dug my head out of the sand a couple weeks ago and totted up all our outstanding debts which added up to a rather frightening £16717.40 :eek:.

We've been more or less getting by up until now (only making very slightly over minimum payments though), but for the last 4 months DH's salary has been £300 down as he was apparently on the wrong tax code for quite a while and also his HR department had taxed his benefits-in-kind all wrong :mad: he's written to the IR to query it all but they seem to be taking forever (and then some) to get back to him.

Basically while all this is going on by the time we've paid all our direct debits and made minimum payments on all the cards we're only left with about £300 for food for 4 of us (and a dog!) and absolutely everything else (water, oil, nappies, clothes, toiletries, etc etc) I have been on the O/S board and cut our food budget right down - it was about £600 a month which I now see was obviously completely extortionate, we're also selling our car (DH has a company one), Ebaying a ton of stuff and doing everything we possibly can to save some dosh. The thing is I really can't see a light at the end of the tunnel because while we're only paying the minimum balance on the c/cs they're barely going down at all! In fact because we really can't afford to live on £300 p/m I can only anticipate our debts going up instead!!

It really isn't going to be one of those consolidate the debt...and then get into even more debt stories, we have both realised (albeit somewhat belatedly) the error of our ways and really want to get our finances sorted. I realise a consolidation loan isn't ideal but it would at least give us a bit of room for manoeuvre while DH's tax saga gets sorted.

It also seems likely that we'll be relocating within the next 6 months or so, so if we got a flexible loan we would be able to pay it off with equity from the house, and it'd also mean that I'd be able to go back to work as we'd be near our families who would help with the children, so obviously that would be good financially too...

Anyway, that's our situation - as I've said, any advice would be fab!

Thanks

M x

madmoney_2

hi there, have you heard of cccs? or payplan? these are registered charities who help you pay off your debts in manageable monthly payments, and charge you ABSOLUTELY NOTHING!!! would u be willing to give it a go rather than getting another loan? xxx

tyllwyd

Can you maybe go for a half-way house - get a loan for only half the amount over 5 years, and carry on paying the minimum amounts for the others. Then if your circumstances improve you still have flexibility for the amount you haven't consolidated (and chances are if it is a decent deal you may as well carry on with paying the other loan until it runs out). Ten years is a long time to be stuck paying a loan, especially if you think there might be a chance of paying it off within the year - you are likely to lose out financially with penalty payments etc if you try to pay it back early, so don't sign anything unless you are happy to see it through to the bitter end if need be.

Oh, and I don't know anything much about the procedure for approving loans, but I wonder if Northern Rock did a check and saw that you'd been approved for the A&L loan, so the problem was that it thought you were planning to take both loans ?

smudgemanc26

I agree with MM i would talk to one of the debt charities on here before even considering consolidation as myself and most people know its not a magic wand to clear your debts and can lead to you getting further into debt without realising, especially if you pay everything off and then end up spending on your cards again.

CCCS, payplan or even the CAB (citizens advice) can help you work out an payment plan to your creditors for the amount you can afford and might even be able to help with freezing interest for a while until you get back on the straight and narrow or until your circumstances improve.

Please look at all options before just deciding on taking out another loan.

Seaxwyn

hi moominmamma

I'd echo others on here that consolidation loads are not a good idea. I have a mahoosive loan which really does feel like a millstone round my neck. Since taking it out I've been able to switch other debts to lower interest rates and with hindsight the loan feels like such the wrong decision.

Anyway, it's for you to decide, and to answer one of your questions on detail, 7 years is the longest that A&L will do a loan over