Consolidation Loans Can Work

ratrace

Its not the loan that is the problem, its people's spending habits, consolidation loans are sold like they are some sort of magic pill that will cure everything and you only have one payment to worry about but we are people, and most people are in some form or another emotional spenders, yes from a maths point of view consolidation is great but for most it dosent work as they are still spendng emotionally.

redux

About 15.4% apr that loan was, for anyone who was wondering.

MrsTinks

redux wrote: »

About 15.4% apr that loan was, for anyone who was wondering.

So good chance snowballing would have worked out cheaper then

redux

MrsTinks wrote: »

So good chance snowballing would have worked out cheaper then

Maybe it would depend whether balance transfer offers were possible for parts of the total, say some at 0, some at 5 to 7%, then hit the high ones first. If everything was maybe 18 to 30%, then the loan is cheaper.

ronny147

The point is that when you have 7 credit cards it is difficult to put all the debt onto 0% cards and the interest seemed to be very high on various cards - but 3 years ago we looked at how to get rid of our debts and, believe me, if we had kept the 7 cc's open we would still be in debt. So we went for a loan

With the loan we are debt free by May (31k in 3 years - also no cc's to put money onto

MrsTinks

redux wrote: »

Maybe it would depend whether balance transfer offers were possible for parts of the total, say some at 0, some at 5 to 7%, then hit the high ones first. If everything was maybe 18 to 30%, then the loan is cheaper.

Ah but as you clear cards then they tend to throw a 0% offer at you to get you back, then you move the highest APR to that card, and slowly but surely there is a good chance of all the cards being 0%... So yes some APR initially and transfer fees, but still likely to work out lower in general.

lazer-zxr

Consolidation is working here.
Clearing over £55k, was on APRs from 5.4% through to 8.7%, moved nearly all of it onto 3.8% loan.

As far as I can see, consolidating is purely moving your existing debt to a better interest rate, enabling you to pay off more quickly, and your debt costing you less.

Win Win.

I'm pleased I consolidated.

MrsTinks

lazer-zxr wrote: »

Consolidation is working here.
Clearing over £55k, was on APRs from 5.4% through to 8.7%, moved nearly all of it onto 3.8% loan.

As far as I can see, consolidating is purely moving your existing debt to a better interest rate, enabling you to pay off more quickly, and your debt costing you less.

Win Win.

I'm pleased I consolidated.

And I think that's great, but I also think we should be realistic and say that most users do not have over £2000 to put towards their debts each month. Having that scope and I guess decent equity in your house. Otherwise the chances of a 3.8% apr loan would not have been likely.

We're not saying consolidating never works, but please respect that 99.9% of the time we can tell when a new forum user is looking for that "quick fix" solution. And in those situations it's unlikely that consolidation will work.

We're not trying to take away from those of you who have managed it and are about to be Debt Free - well done! Honestly! But likewise please respect that it is not something that will work for the majority, and sadly we see that time and time and time again on here. We try to make sure the majority do not end up in a worse state in a few years with potentially twice the debt.

[Deleted User]

Totally agree with you MrsTinks.

In our case it didn't work, however I am pleased for those that have managed it and remain debt free afterwards.

sourcrates

Stepchange see a lot of clients who have consolidated debts.

This is their opinion, from a recent post :

"you should avoid a consolidation loan at all costs. This option rarely works and in our experience people often end up in worse situations than they started. If you’re able to get back on track with your creditors within 3 months and without taking a consolidation loan you might want to consider trying this first. Remember we are always here if you need any further help and advice."

When experienced debt advisors tell you this, it pays to listen.