Should I extend my personal loan to cover credit cards and overdraft?

awastedyouth

Good morning everyone.

I am seeking some advice.

I am battling back in my fight with my credit rating. A few years ago I was foolish and didn't realise that a default could have such an impact. I've got my credit rating back to 'fair' on experian.

A couple of years ago Lloyds offered me a credit card which is on 18.9%.. their 'Platinum' card. I also have a Vanquis gold at around 26% and a personal loan from Lloyds at 11% which I have paid back a years worth of.

They both seem happy with me.

I have £2k and 27 months left to run on the personal loan.

The Lloyds card runs at £3100 on a limit of £3250 and the Vanquis at £1600 on £2250. I also have an interest free overdraft of £850,

The monthly payments are £95 for Lloyds CC (£56 of which is interest!!), £75 for Vanquis and £89 for the loan. Monthly total of £259.

I am aware that hovering near my overdraft limit and my credit card limits will not be good for my credit rating.

Do you think it would be better for me to extend my loan at 18% with an extra £5000 to cover most of these costs? for 26 months the payment would be £266 and then the last 9 months of that would be £177.

My monthly income after tax is around £2500. I expect it to increase to around £3000 by the end of next year.

I am considering this because I can't see myself having the money every month to make significant dents into either credit card. I spend most of my income every month.

I would hope to get a mortgage within the next 3 years (when my default is gone). What would look better to the mortgage lenders?

Many thanks in advance.

HappyMJ

If you can apply to a different company and get a much lower rate (maybe 5-7%) and then use the money to repay everything then yes it can be a good idea.

However, at 18% interest rate I wouldn't do it. It's not worth it. It wouldn't make much difference at all. Your CC is 18.9%. I would make as many overpayments as you possibly can to the Vanquis card.

What are you spending £2,500 on each month? There's plenty of scope to reduce your expenditure if you say you are spending all of that each month.

A large deposit with no outstanding debt looks good to mortgage lenders.

[Deleted User]

Is this a special type of loan that you can take further borrowing on? I would expect you to need to make a new application for a larger loan, which may then be rejected or come with a higher rate due to the amount of credit you're looking for.

You're on a decent salary. Are you not able to make larger payments to the cards?

awastedyouth

Sorry I meant to say the lloyds cc is 25.8%

I live on my own and my bills come to roughly 1200 a month.

It may seem like I have disposable income However come the end of every month I am waiting for my next paycheque.

The loan calculator says further borrowing. So it's taking into account my current loan.

[Deleted User]

You really need to sit down and go through your finances. You could have the whole lot cleared within 6 months.

The DFW board is full of support for cutting costs.

HappyMJ

awastedyouth wrote: »

Sorry I meant to say the lloyds cc is 25.8%

I live on my own and my bills come to roughly 1200 a month.

It may seem like I have disposable income However come the end of every month I am waiting for my next paycheque.

The loan calculator says further borrowing. So it's taking into account my current loan.

£1,200 a month...on what? I live with my partner and the essential household bills don't come anywhere near that. If you actually are spending £1,200 on essentials then you have £1,300 to make loan and credit card repayments with. Where's all that money?

You really shouldn't be borrowing money to support a lifestyle that you can't afford. I would really cut back not completely but quite a bit and get those high interest debts paid off ASAP. I would not be applying for further personal loans to clear credit card debt.

awastedyouth

Sage advice

Time to make some lifestyle adjustments I think