Loan to clear credit cards?

elsmore1

Hi All,

I have some credit card debt of about £2000 on a 4.9% for life so I am OK with leaving this. I have about £5700 on about 20-27% APR and part on 0% for about 9 months.

To avoid keep trying a 0% deal on a credit card shuffle and risk still using cards I have estimated that a loan of £6000 over 4 years will be about £136 according to loan checker tool, and I pay this already on credit card repayments so looks a good deal as I will pay no more per month but it will be cleared after 4 years, rather then eternity!

Does this seem a good idea, my credit is good and the eligibilty tool on this website appears to give some 80-90% chances of a loan at about 4.5% from various companies.

Thanks for any advice.

Nasqueron

Add all your debt up then add on the loan on top - if it's well over 50% of salary, chances are they will reject. There is no guarantee you will use the loan to pay off the debts and no guarantee if you do that the credit cards won't get maxed out again

jonesMUFCforever

elsmore1 wrote: »

Hi All,

I have some credit card debt of about £2000 on a 4.9% for life so I am OK with leaving this. I have about £5700 on about 20-27% APR and part on 0% for about 9 months.

To avoid keep trying a 0% deal on a credit card shuffle and risk still using cards I have estimated that a loan of £6000 over 4 years will be about £136 according to loan checker tool, and I pay this already on credit card repayments so looks a good deal as I will pay no more per month but it will be cleared after 4 years, rather then eternity!

Does this seem a good idea, my credit is good and the eligibilty tool on this website appears to give some 80-90% chances of a loan at about 4.5% from various companies.

Thanks for any advice.

What rate was the loan checker giving you?

£136 seems a bit low to me as a monthly repayment as normally to get the best rates you may need to borrow £7500 or more.

Is there any guarantee that you would not spend any more on the cards for the next 4 years??

DCFC79

How did the debt build up ?

Will it build up once you clear the cards ?

MEM62

Consolidations loans rarely work.

Firstly, it does not require individuals do not examine why they racked up the debt in the first place and therefore there is not consideration as to what changes are needed to prevent going down the same path again.

Secondly, when consolidating, individuals see debt has paid off when it has actually just been moved. This sense of 'financial relief' (particularly that which comes from seeing credit card balances cleared) encourages further spending.

If you have access to interest-free balance transfers then make use of these. Juggle balances to reduce interest as much as you can and work to pay off the balances that remain at higher interest rates in as short a time scale as you can manage. You will be less inclined to rack up debt again having had to work to clear the debt in this manner.

enthusiasticsaver

If your credit rating is good why can't you get a 0% balance transfer then you can pay £136 a month and pay it off over 41 months rather than the 48 month loan and save more than £500 in interest? Cut the card up if you are worried you will spend on it. There is no guarantee you won't build up the cards and you may well then have loans and credit card debt. This is why consolidation doesn't work because you fool yourself it is all under control. You need to stop spending on the credit cards, use cash or your debit card (no overdraft), move as much as possible to 0% and pay a fixed amount off the cards to clear within a certain time period.

Dobbibill

Not necessarily a good idea - this is just moving debt, not paying it off.

This rarely works.

Your better options would be to get 0% BT cards and shuffle it around meaning, you are paying no interest.

Also address the reason you have the CC debt, without doing that, there's a good chance it will happen again.

Have a look around the forum for success stories from consolidation - they are few and far between........have a look for stories of consolidation that didn't work and you will find many examples.

elsmore1

Hi,

I appreciate all the replies, I do try the 0% deals but I don't always get enough of a balance at 0% and not for as long as I want. This means that the balance transfer does not always work as I have to retry a little later and if I don't get the deal I need then the rest is stuck at a high rate. The debt is from a wedding, conservatory mainly but I never use it now only to hire a car as they require credit cards not debit cards.

As my wife due to health had to give up work its harder to pay extra off. I hate credit cards and never will apply for one again other than at 0% if I try the balance transfer again rather than the loan option.

I would pay my cards off and chop them up for sure, no doubt about this.

I will do a search for loan and balance transfer but I feel I have a better chance to get a loan rather than a good deal on a credit card such as 43 months at 0% for 5k for example. Also a balance transfer means I would have more cards so could spend on both such as is suggested with getting out a loan.

I never have much issue with mortgages and other credit in the past, I find that I fare less well with the credit card offers.

Thanks All

forgotmyname

The loan company will think what if you dont get rid of the cards also.

The balance transfer has not worked, why will getting a loan be any different? May sound harsh but the threads pop on here far too often.

Had CC debt issues so i know what its like when the moment hits how long its going to take to clear.

elsmore1

Hi,
The balance transfer has not worked because I tend to pay the minimum or a bit more but its always a short term and I don't always get %0 over a long term. So a loan would be set over so many years. I did a check with Zopa and got offered 13.1% which is a bit high but they don't carry out a credit check to see this.
It will mean about £30 more a month than I am paying on my credit card but will be finished in five years, but paying the minimum will be about 6 years as I have some credit at about 27% and 20% so if I cant get a 0% card this will be more. I know if I got a loan the credit cards would be destroyed and closed down 100%

Thanks

elsmore1

I think I would pay more in interest over 5 years with the credit cards than the loan and still not fully pay off the debt.