Advice on new loan

lilmissworry

I have been re paying a loan to a debt collection agency for a while now. They have offered me a rather generous reduction to clear it. I am in a position now where I can take an ordinary loan to clear it,and in the end,I would pay back around the same as what I originally owe the debt collection place. I’m wondering if it’s worth doing as would this be more positive for my credit rating clearing the long term,debt collection loan? Either way,financially I will be no worse off.

MallyGirl

It would help to get a bit more detail.
What APR and term are the new loan? What is your arrangement with the DCA

lilmissworry

The APR is 24.9 which I think is quite high because of the loan I want to clear. I pay the DCA £20 a month but I can now pay more. If I paid the DCA the same as what I would pay the loan from Santander I would clear it in the same time,but it is just reflecting badly on my credit file. They are offering me a reduction of £2037.90.....

System

Absolutely stupid to do it. You're paying out more money than you need to and the damage has already been done hence the 24.9% APR. You could take out a loan but those bad entries on your credit file won't change, they don't go away just because you repay a debt. You'd literally be spending more money to achieve nothing.

lilmissworry

Yeah and I have looked into it further and the reduced loan would show on my credit file as partially paid. I will just keep paying the DCA as much as I can and get rid of it eventually

System

Get yourself on the Debt Free Wannabe board and post an SOA on there. They'll have suggestions for cutting your outgoings so you can pay more off and get rid of this quicker.