Loans

Loans

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Unsure about next move...

Hi everyone.

Just after some advice on my next move regarding my current situation.
I currently have 20k of unsecured debt and, although I am by no means struggling, I didn't exactly get the best rate on my loan as you will see.

Loan £7500 - 60 months - 20% APR
CC1 £4200 0% ends in 18 months
CC2 £3700 0% ends in 18 months
CC3 £1300 0% ends in 12 months
CC4 £1800 28%
CC5 £550 30%
CC6 £1700 30%

I know, crazy right. This is all costing me around £600 a month.

I just don't know what the best route is to deal with this debt. The high interest is costing me a small fortune and my credit file is in the high "fair" category.

My salary is between £45-50k a year so I'm not struggling with it but it's annoying me how much interest I'm paying. I bank with barclays and they have no offers for me at present. Would it be worth me going in branch and speaking to the manager or are them days over??

Should I try for a consolidation loan at a much more agreeable rate (if I can get it) or try for another BT card so shift the high interest card debt.

Don't know what to do???

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Comments

  • Posts: 559 Forumite
    Part of the Furniture 500 Posts Name Dropper
    You are on a decent salary but dont say how much slack you have in your spending but I assume you could make cut backs in your expenditure to provide the funds to sort this lot out.

    The simplest approach is to throw everything at the highest APR loans so do the following in this order;

    1. close then pay off CC5 with everything you can throw at it
    2. close then pay off CC6 ditto
    3. close then pay off CC4 ditto

    Aim to do the above within 12 months you should then be in a good position to get a new BT card to shift the CC3 debt onto.

    Once CC4, 5 and 6 are paid off SAVE as much as you can. The day will eventually come when the BT offers dry up and you may be hit with interest on CC1 2 or 3. You need to have funds put aside to pay these off if necessary.

    I would take the hit on the long term loan and just pay it off over the 60 month term, its unlikely you would get a better deal and you may have early repayment penalties to consider.

    Consolidation loans are rarely a good idea, far better to dump the debt than keep recycling it (unless you can find future 0% BT deals indefinitely .

    good luck.
  • Posts: 4,821 Forumite
    1,000 Posts Combo Breaker Newshound!
    edited 12 November 2015 at 4:15AM
    It would help if you could advise the credit limits on each card, the remaining term of the loan, how you make your purchases each month (if by cc which one?) and how much you could spend on a credit card in an average month if you decided to put every purchase you possibly could through a credit card.
    The most probable cause of the high interest rate on the loan was high level of credit card debt and high utilisation % of the credit limits. Also don't forget the loan extends beyond any current 0% offer that you could realistically have and the loan company are aware of how much your cc repayments could increase if the 0% debt is not transferred or repaid.
    I think it is very unlikely at this point that you would get another loan at a lower APR (or at all) so I think you are stuck with the loan for the moment. But at least the capital is being repaid and at the end of the loan it will be PAID OFF.
    With regards to the credit cards, why on earth are carrying a £550 interest bearing balance on a 30% APR card (card 5)? Taking you at your word when you say you are not struggling, you should be easily able to repay this in full and use the card for purchases, paying in full each month thereby avoiding any interest on this card.
  • I would aim to clear C5, C6 and C4 in the next 4 to 6 months
    Then concentrate on the £7500 loan for the next 6 months and towards the end of those 6 months put some money towards C3.
    Then start with the other C1 or C2/ look for another deal etc
  • Posts: 14,515 Forumite
    10,000 Posts Eighth Anniversary Name Dropper Photogenic
    What was the £7,500 loan for?

    I think if you're now at the stage of being offered £7,500 loans with APRs of 20% then that looks as though lenders are starting to see you as high risk so the chances of you getting offered what I would consider decent rates are slim to none.

    You need to stop borrowing money and start looking at your spending. Putting together a statement of affairs is a good place to start. You could even post it on the Debt Free Wannabe forum for advice on how to reduce your expenditure.

    Then once you know how much spare money you have each month and start snowballing your debts.
  • Thanks so much for the advice guys.

    It sometimes helps to have a third party's input as I was looking at the high interest CC's and thinking "God they need to go".
    The cards are all at around 75% utilisation at present and they all were 0% at one stage.
    Will be honest, most of this debt isn't mine,it's my wife's but her credit file is in tatters so I stepped in and did what I could. She tried to hide it but I'm familiar with debt so knew the signs. I sat her down and it all came out!! We have a very stable home life with a little 3 year old girl and one on the way :) so we are very happy.
    I just want to hit these debts in the best way possible.
    I do have spare cash every month but I like to have money in my account in case the boiler breaks down or washing machine packs in so am reluctant to touch that spare money....

    Keep looking at loans @ 3.6% knowingvthe chances of getting that would be nigh on impossible as it would save me a small fortune!!
  • I used to be the sort to get the latest gadgets when they came out but I no longer do that. Have a tattered old phone but it does the job so I am trying....LOL
  • Loan has 4 years left BTW..
  • Posts: 14,515 Forumite
    10,000 Posts Eighth Anniversary Name Dropper Photogenic
    Certainly have a decent emergency fund (say £1,000) put aside is a good idea but to continue saving more than that whilst you have these debts is going to costly for you.

    You cannot borrow your way out of debt. By all means try applying for a loan with a headline rate of 3.6% APR but I think it's unlikely you will get it. Overspending is what got you into this mess and unless you seriously address that (cutting out the latest must-have gadgets was a step in the right direction) borrowing more money won't help you. Try joining in some of the challenges on the Debt Free Wannabe board and really examine your spending. Do you waste money on Sky TV or expensive mobile contracts? Could your grocery bill be reduced? Can you get your utilities cheaper elsewhere.
  • Hi pixie.

    Yeah, having money in my account whilst having high interest CC's on the go is counterproductive I guess.
    I have recently cut back a fair bit....cancelled sky in favour of freesat, stopped smoking and drinking (only on occasions now).
    I have an O2 contract that is quite expensive and I am due an upgrade but I am not going to, im going to keep the phone I have and switch to BT mobile as it is over half the price per month.
    I'm heading in the right direction I think....

    Just been into barclays and they can't offer me anything at present but what I have to is get them to remove the overdraft completely as it has a negative impact on your credit worthiness (so the advisor said) as It is classed as a form of credit.
    If I could just get a better loan rate it would help massively....

    Need to chew away at the high interest CC's definitely..
  • Posts: 14,515 Forumite
    10,000 Posts Eighth Anniversary Name Dropper Photogenic
    But you're not going to get a significantly better loan rate....
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