Debt Consolidation Loan

[Deleted User]

So after been rather stupid for a while I ran up a bill of nearly £15,000, did a budget checker a few weeks ago and found that I was overspending by £47 a month and would take around 10 years to pay everything back along with worries on how to cover the overspend.

Anyways checked with banks they were all a no go, wouldn't touch me for any line of credit anymore, so I turned to my Credit Union a couple of weeks ago and filled out a loan request form with them thinking it would come back as no way in hell.

A few days later they came back with an offer of the full amount i've asked for over 5 year at £305 a month the loan is at 6% interest, i've only been with them for less than 6 months and have a couple of hundred saved with them. Provided all my wage slips & bank statements as normal and then they wanted all the credit card statements to check through those, rather than the banks saying computer says NO they have seen that i'm able to pay the loan back as I was paying out more per month with the credit cards and other credit than I am with this loan they have provided.

They have been truly lifesavers :A as i've now paid off my credit cards and in process of cancelling them all, i'm £167 better off a month too as no longer paying out for all the other lines of credit, so on top of the regular savings I have with them I know have the chance ti put the extra money away and build up a decent buffer for any disasters that may head my way in the coming years.

5 years and counting i'll be debt free as not falling into that trap at least :T

sourcrates

Hi,

A rather cautious well done from me.

In order to make this work you MUST close off the lines of credit you have consolidated, as otherwise the temptation to spend again proves all too great.

Five years is a long time, you have to be very careful you budget correctly.

[Deleted User]

Thanks :j

Budget is sorted and done I have plenty spare cash each month now to cover anything that could crop up, no unnecessary bills / contracts available as i've cancelled all them a while ago, my wage rises by 20% over the next 4 years too so thats all extra coming in.

Won't be any temptation luckily

due to been able to finally save

• Credit accounts are all in process of been shut down and I no longer want to feel worried about a debt mountain ever again

I turned down an overdraft today on a new bank account as not needed / don't want one

fatbelly

It sounds like you have a very co-operative Credit Union. I don't think mine would consider loans of that size. They would be concerned about the risk. Also their maximum loan is 3 x savings with them, so you would have had to save 5k first.

My loan checker says 15000 over 60 months @ 305 pm is apr 8.5%.

Let us know how you get on.

MrsSave

Be careful. It is easy to be motivated and enthusiastic at the beginning. Just make sure you budget correctly to make sure that you won't spend on credit again. Consolidation loans can work, but unfortunately the majority of the time people spend on credit again. This is coming from someone who has consolidated, though I did make sure I was budgeting correctly and didn't add to my debt for a year before taking out the loan. Good luck and I hope it works for you.

EssexHebridean

[Deleted User] wrote:

Thanks :j

Budget is sorted and done I have plenty spare cash each month now to cover anything that could crop up, no unnecessary bills / contracts available as i've cancelled all them a while ago, my wage rises by 20% over the next 4 years too so thats all extra coming in.

Won't be any temptation luckily

due to been able to finally save

• Credit accounts are all in process of been shut down and I no longer want to feel worried about a debt mountain ever again

I turned down an overdraft today on a new bank account as not needed / don't want one

Never rely on future money like this - while that may be the current situation, things can easily change - from either side. A budget should always reflect what is coming in that month, and what is going out that month, never (other than theoretically) projected into the future.

As you say you are now able to save, and the Credit Union loan is at a high interest rate, are you putting a plan in place to overpay the loan and get it shifted early?

fatbelly

Moving your debt to a credit union is not necessarily a bad (or good) thing. It is still non-priority debt for which they would have to take court action to use bailiffs and attempt the usual enforcement options. It is a qualifying debt for all forms of insolvency.

The only unusual feature is that a credit union can ask for a direct deduction from benefits without a court order. There are some rules to follow and the deduction rate is currently £3.70 per week, so not really a game changer.

On the negative side, the worst examples of aggressive debt collection I have met recently have come from a credit union who employed an unlicensed collector. I'm sure that was a one-off.

enthusiasticsaver

This will only work if you close down cards and don't spend on them again. Build up some emergency savings and budget to make sure you are spending less than your income.

[Deleted User]

Don't worry the budget is based on actual figures not projected ones. Most of the cards are cancelled now just one more to ring up today to do then thats the job lot all closed, all the Direct Debits are now cancelled too.

I've got a savings account with the CU already which uses payroll deduction so that goes out before I even get paid, i'm going to be setting aside approx £100 a month into another account to build up an emergency fund for unforeseen expenses.

Drawingaline

Sounds like you are looking forward with positivity, I hope the consolidation works for you. I have consolidated more times to count and each time have fallen back into the slippery slope of building up more debt. I had a LBM last year due to redundancy, and took out a loan to repay a 8k cc bill which was at 29% :eek: the loan is very low interest and I am using YNAB to help overpay all our debt and save an emergency fund. So far it is working, and the sense of determination is not slipping.

So good luck, build that emergency fund up then look at overpaying the loan to free up that £300 for yourself. And budget, every, single, month......