loan to pay off credit cards HELP

Desperadoo

i have approx £20k of credit card debts. minimum payments are £665 per months and i know going to take forever to pay them off :-( most are apr off abput 21%-23%

i have been offered a personal loan in principal of £20k apr is 14.6% and monthly payments will £382 over 7 years .

I really cannot see me every paying the cards off any other way , not sure what to do

heartbreak_star

What do you mean "you have been offered it"...?

HBS x

Desperadoo

heartbreak_star wrote: »

What do you mean "you have been offered it"...?

HBS x

Sorry what I applied and the company rang to check a few details and loan has been offered in principle i just need to send off bank statements

T9090H

Desperadoo wrote: »

Sorry what I applied and the company rang to check a few details and loan has been offered in principle i just need to send off bank statements

I think that's a poor deal. £382 a month for 7 years equates to £12,042.68 in interest totalling £32k you would pay back. I would look elsewhere personally.

StopIt

How much extra interest are you paying for this loan over the term?


First the "lower" payments are not going to help you frankly.


14.6% APR over 84 months works out at £12,000 interest, so check your paperwork.


Also, using a calculator, paying £665 on your credit cards will clear the debt in 45 months approx at 22% APR (Averaged your cards APR to do this) and pay a lower amount of interest.


This loan gives you lower monthly payments but doesn't save any money and means you're in debt for longer.


Get to the DFW boards and find ways to snowball the debt. With some tweaks you'll be able to pay the cards off faster and pay les interest. Apply for 0% Balance transfer cards rather than a loan and any you do get will negate some of the interest payable.


Don't do it.

T9090H

Desperadoo wrote: »

i have approx £20k of credit card debts. minimum payments are £665 per months and i know going to take forever to pay them off :-( most are apr off abput 21%-23%

If you overpay £250 a month on the proposed loan it would reduce term to 3 years 5 months and save you £6,600 in interest meaning you would payback £25.4k

Desperadoo

StopIt wrote: »

How much extra interest are you paying for this loan over the term?


First the "lower" payments are not going to help you frankly.


14.6% APR over 84 months works out at £12,000 interest, so check your paperwork.


Also, using a calculator, paying £665 on your credit cards will clear the debt in 45 months approx at 22% APR (Averaged your cards APR to do this) and pay a lower amount of interest.


This loan gives you lower monthly payments but doesn't save any money and means you're in debt for longer.


Get to the DFW boards and find ways to snowball the debt. With some tweaks you'll be able to pay the cards off faster and pay les interest. Apply for 0% Balance transfer cards rather than a loan and any you do get will negate some of the interest payable.


Don't do it.

thanks will check the apr etc and use the snowball calculator before I sign any paperwork

StopIt

Desperadoo wrote: »

thanks will check the apr etc and use the snowball calculator before I sign any paperwork

It's a common trap people fall into.

Credit Cards often have a higher headline APR, but longer term loans can end up costing you more.


Again, look for any balance transfers you can and snowball the cards. A loan will, to use the same term I used with someone else asking the same, be a case of Extend and Pretend.


Extend the time in debt, and then pretending it's clear, leading to inevitable use of the Credit Cards once the next emergency hits. Then you'll be in CC debt and have a loan.

PeacefulWaters

T9090H wrote: »

I think that's a poor deal. £382 a month for 7 years equates to £12,042.68 in interest totalling £32k you would pay back. I would look elsewhere personally.

It's a better deal than sticking with 20% plus credit cards.

DCFC79

How was the 20k built up and will it happen again ?