Consolidation Loan a good idea??

benevs

Thanks

The mimimum repayments are at the moment:
CC1: £83
CC2: £36
CC3: £45
off the top of my head...

I'm not sure about the rest of the figures? you kind of lost me.. I'll have a look at the link now.

So is it better to get the loan or not? from those figures

benevs

Been playing around with the figures on that site... it seems as though to me is to get the loan as I'll pay it off quicker and with less interest, using the same repayment figure for both?

Sanctioned_Parts_List

cmc's figures were a bit inflated - most CC companys want a 2.5% payment, not a 5% payment. But never mind.

Your best option is to see if you can get one of the various 32 month 0% balance transfer credit cards. On that basis:
£5,500 (sum of all your cards) + 3% transfer fee (this is high, most are <2%) = £5,665

32 months is actually 31 repayments (never trust a CC company), so £5,665 / 31 repayments is £183-ish per month. Saving you enough to start up a small emergency fund.

Of course, remember to close all existing CCs, and cut up your balance transfer card the day it arrives (and burn the PIN unopened).

All this being said, if you've been applying for loans, you might need to wait 3 months now for your credit report to settle down.

(And edit: Andyfrommotley's point is well-made - whatever you do, you need to deal with the overspending that caused you to have CCs in the first place)

cmc_entertainment

benevs wrote: »

Been playing around with the figures on that site... it seems as though to me is to get the loan as I'll pay it off quicker and with less interest, using the same repayment figure for both?

If you take the loan @£164.50 and payback £200 each month

Then

"It will take you 29 months to pay off these [Loan] debts if you snowball correctly. During that time, you'll pay £668.00 in interest."

IE knocks off 7 months in total

Keeping the cards at the newer figures and at the same APR rates

Then

It will take you 39 months to pay off these [Credit Cards] debts if you snowball correctly. During that time, you'll pay £2,179.00 in interest.


Taking the loan saves £1511 and extra 10 months less payments, as long as you are sensible with the emergency CC [Lower apr rate, or/and ask for a reducing in limit possibly as well?]

Brightspark87

Consolidating was honestly the biggest mistake I made too.

I got an £9,000 loan and paid off my credit cards. Later that year I split up with my long term boyfriend and used the cards again. Therefore, increasing my debt to over £15,000. Although I have luckily paid it off before then, I want to pay off my loan early by only a couple of months and am faced with HUGE repayment charges so not worth it.

However, I can see why it would be useful for you. Just check the terms and conditions of the loan as I cannot over pay without penalty too.

benevs

Sanctioned_Parts_List wrote: »

Your best option is to see if you can get one of the various 32 month 0% balance transfer credit cards. On that basis:
£5,500 (sum of all your cards) + 3% transfer fee (this is high, most are <2%) = £5,665

Thanks, i've tried looking for these balance transfer cards and it seems as though i can't get one. I signed up to credit expert to check my credit report. My credit is at its max apparently so can't lend any more... My score is currently at 530 odd, with a default from o2 on there that is due to come off on the 4th May so hoping it will improve then

@cmc_entertainment - I get it now thanks

One other question while i'm here.... I notice I can get £150 for switching banks... is that a good idea at the moment? its an extra £150 towards the debt...

andyfromotley

Could i just add that you do not need a CC for 'emergemcies'. You need an emergency fund for emergencies.

12_month_challenge

andyfromotley wrote: »

Could i just add that you do not need a CC for 'emergemcies'. You need an emergency fund for emergencies.

What he said

the_long_and_winding_road

^^^^^
Hot Fuzz?!!

Dandytf

I'm sure there will be lots more like myself.

I was used to consolidating very few years.

Decided late 2008my final 7.5k loan -36months was going to be my last.

2yrs later early 2011 I was unemployed for a few weeks, 'spent' to get car repaired/new worktravle costs -late 2012 I was in trouble.

I managed to finish the loan payments -with another few 1000 on various credit cards which were 0% interest a few years earlier.

There is nothing wrong with consolidation loans -though there should be no need to continue to use other credit methods until the loan is paid in full.