Debt consolidation loan

AlexDillon1

Evening all,

So recently I have been exploring loans for a holiday I am about to go on for spending money.

After careful consideration including other debts I owe I have decided to look at a larger loan to cover the holiday spending plus wipe my other debts.

So my other debts total £2600 from a student overdraft and a credit card.

I have been looking at taking around £4500 to pay over 5 years so would leave me paying roughly £120 a month based on some quotes so far, my income after tax etc is £1500 monthly so pretty covered, I'm mid 20s and not overly bad with money so deemed this the best approach.

I currently have a credit score on experian of 905 which I think is pretty good. How come so many companies on camprisons give me little chance of being accepted?

So far my own bank natwest have offered me 25% Apr on the loan I want with the advertised rate being 19%, this is still pending credit check.

I wanted to try tesco too due to have a club card and already a CC with them, if I applied for both Would this affect me pretty badly or not? Say I did one first then chose the other...

Further to that do any of you know any better companies where I am likely to be accepted and recieve a decent APR

Cheers

[Deleted User]

If Experian score you highly, you should ask them for a loan, as no one else will ever see the score.

What do your credit files show (not the score, obviously)?

AlexDillon1

They don't lend do they? Or do you mean run a check through them to find the best loan providers?

The things hampering my report are probably that my over draft and CC are maxed out hence the want to completely pay them off now, I've also only lived at my new address since December and only been employed for a year?
Only way I can see providers not liking me

[Deleted User]

Living in your overdraft and maxing out a card is a big sign that you have no spare money, which will lead lenders to think you can't afford a loan.

redpete

AlexDillon1 wrote: »

I'm mid 20s and not overly bad with money so deemed this the best approach.

If I were a lender I would give someone who owes £2600 on OD and CC and wants to borrow an additional £1900 for holiday spends a rating considerably worse than 'not overly bad'.

DCFC79

AlexDillon1 wrote: »

They don't lend do they? Or do you mean run a check through them to find the best loan providers?

The things hampering my report are probably that my over draft and CC are maxed out hence the want to completely pay them off now, I've also only lived at my new address since December and only been employed for a year?
Only way I can see providers not liking me

What Zx81 is trying to say is the score isnt seen by lenders, in any case lenders probably use a mix of 2 out of the 3 reference agencies or all 3.

Can you afford to go on holiday ?

You have some debt and your wanting to increase it.

Focus on cutting your debts, the holiday can wait.

marcarm

So you're going to turn a £2600 debt into a £4500 debt so you can go on holiday and you claim you are not overly bad with money? If this were the case you would have no debt and would have saved for your spending money, what is going to happen if you cant get a loan? Holiday with no spending money?

You are not wiping those debts, you are just moving them around. The companies have no guarantee you are going to pay your overdraft and cards so have to assume you are adding this debt to your current debt.

At the risk of sounding preachy, I'm going to say you cannot afford to go on this holiday if you have to borrow for it.

AlexDillon1

Thanks for the replies, I was more aiming to get myself out of a bad spot long term.

For the ones saying I can't afford it and am bad with money I've already saved £2200 of my own money for the holiday and paid that off, I just needed a boost for spending money.

My thought process is that I could get a small loan and then have to pay that off with the CC and overdraft all in the space of two years or get a larger loan to cover the debts instantly plus add spending money for my holiday, paying this off monthly over 5 years.

I appreciate I'm not in the greatest spot but with a score in the green on experian I wouldn't agree I'm bad with money, half of the debt is a student overdraft pretty sure many struggle to pay that off fresh out of uni (which I am) but surely thinking long term I'm doing the right thing as in completely paying them off closing both and just living with the £120 monthly payment for the next few years?

Arleen

The first thing you are doing wrong is thinking that score actually has any resemblance on how you handle your finances. It doesn't, it doesn't even reflect your credit worthiness in any way shape or form.

What does speak volumes about your finances is that you are on rather low income, in debt, with cash in hand and your decision is not to spend it on debt repayment. 2.2k toward 2.6k debt removes almost all of it, allowing you to very quickly repay it in full in just few more months. You heard it - debt free life in just few short months rather than 5 long years!
Did you even do the math how much that loan is going to cost you over 5 years? The interest alone will amount to just over 3k GBP! This doubles price for your dream vacation alone!

And then if you want to go on your dream vacations do what responsible people do - save up and/or look for cheaper alternative, as having to spend almost 4.5k on vacation is way outside of your budget. I'm sure this is not what you want to hear but that expense represents 4 months of your take-home salary BEFORE paying any bills.
This means that by going on vacation like this you are living way outside of your means, and unless you are happy to just take one vacation every 3.3 years (no one can go on streaks like that), you should find a much cheaper alternative.

tiger_eyes

I hate to say it, but this sounds like a disastrous move. A five-year loan at 25% APR will rack up a huge amount of interest compared to the original capital. The interest on your spending money alone will be painful. Is your current debt really at such a high interest rate that this will help you? Do you have a plan for what to do next time you need money? You'll be still be paying off the original debt, plus interest, plus spending money, plus interest on that. What if your car breaks down or you lose your job?

Arleen wrote: »

The first thing you are doing wrong is thinking that score actually has any resemblance on how you handle your finances. It doesn't, it doesn't even reflect your credit worthiness in any way shape or form.

What does speak volumes about your finances is that you are on rather low income, in debt, with cash in hand and your decision is not to spend it on debt repayment. 2.2k toward 2.6k debt removes almost all of it, allowing you to very quickly repay it in full in just few more months. You heard it - debt free life in just few short months rather than 5 long years!
Did you even do the math how much that loan is going to cost you over 5 years? The interest alone will amount to just over 3k GBP! This doubles price for your dream vacation alone!

And then if you want to go on your dream vacations do what responsible people do - save up and/or look for cheaper alternative, as having to spend almost 4.5k on vacation is way outside of your budget. I'm sure this is not what you want to hear but that expense represents 4 months of your take-home salary BEFORE paying any bills.
This means that by going on vacation like this you are living way outside of your means, and unless you are happy to just take one vacation every 3.3 years (no one can go on streaks like that), you should find a much cheaper alternative.

If I could thank this post more than once, I would.

bris

2 weeks in the sun for 5 years of debt, no your not bad with money right enough.