Consolidation loan?

lala4506

I have debt of approx £9.5k on credit cards and overdraft, I am considering getting a loan with Sainsbury's Bank, so that I have just one payment to make every month, instead of paying money (two direct debits) on two credit cards (both 0%). I regularly just do balance transfers, and I never come out of my overdraft because never feel that I can save to pay it off.

Sainsbury's Bank have quoted a loan of £9.5k over 3 years at £277 a month and I've worked out my outgoings per month to left with around £800, this isn't much different with the above, is this a better way of doing it? Having one payment to clear 3 different debts? I believe it is. But within those three years I will also be moving out of my parents place and into a flat so my outgoings will most certainly go up, albeit the fact I will be sharing.

Just after some advice really to get debt free asap.

Thanks

~Beanie~

Why would you swap 2 x 0% debts for one where you will be paying interest? Doesn't make sense to me.

What is to stop you getting the loan, paying off your CC's & OD and then running them up again? A lot of us have been there and done that

-taff

Consolidation loans very rarely work, take it from someone who has had several, because they don't address why you went into debt to start with.
Why is paying one amount better than paying three? They all come from the same place, and you don't need to physically do it, which suggests you're not budgeting very well, or that you would feel psychologically better if it was just one payment....

You'd be better off snowballng your debts, rather than borrowing more money and paying interest.

If you're getting deeper into debt despite paying off your cards, then you need to wrok out where the money is going so post an SOA and see if people can help you.
http://www.whatsthecost.com/snowball.aspx

Sazzie23

Hi

As a person who's been on the spiral of debts, consolidation, more debt, bigger so consolidation, more debt, I'd strongly recommend you don't take out the loan, and follow the snowball advice.

If you're new to budgeting I think the stepchange on line debt remedy tool is useful at making you look at what you should you be spending/saving, try it and see if if helps.

Saz

foxgloves

Hi,
No. Consolidation loans rarely work, despite good intentions. We 'consolidated' 3 times. The 1st time was pretty much as you describe. The 2nd time was because we ran up the debt again. Ditto the 3rd time! If you intend to have a bank account with no overdraft facility & to cut up your credit cards & not to take out new ones, then I suppose a consolidation loan could work. The problem is that this rarely happens as many on these forums will testify. There is also the temptation to borrow just 'a little bit more' than necessary when consolidating just to 'help us get a new oven', 'pay a holiday balance', buy a sofa etc. We did that on Consolidation Loans 2 & 3. The 2nd time was supposed to be the last ever time, but from experience, I can say that unless the CCs & other borrowing channels are closed off & a realistic budget is put in place & stuck to, then consolidating has a horrible tendancy to prolong & increase debt rather than get rid of it. You also get regular letters from the loan provider to tempt you into extending/increasing the loan. So from experience, I'd advise avoiding this route.

lala4506

Thanks everyone for your responses to this thread.

I appreciate the advise, I am not racking them up as not spending on the CC's and paying way more than the minimum every month on them but just seems to be taking forever.

I will avoid the loan though for sure after reading your comments and work to pay them off.

Thanks