Should I consolidate

Lukas239

Evening all, first time forum user so apologies if wrong. Currently trying to rid myself of debt and have 1 charged line of debt (ie, not 0%).

This was a loan of £9000 @ 9.9% interest with a 15 month payment holiday, repayable over 60 months (it was a career progression loan previously offered by Barclays and co-op bank). Totals just shy of £11,500 in total. Have paid 10 months so far and balance stands at £7772 (£9516 remaining including interest).

Question is, should I get another loan to pay it off? Have a good (nearly excellent) credit rating and good affordability with some savings so I don't have to borrow the full £7772 remaining.

I would do this through the lowest interest loan I could find at no more than 3 years (preferably less). It's a financial victory but also make me feel better given the shorter term.

Any help would be greatly appreciated.

DrEskimo

You could do, but I don't think 9.9% is massive, and even with a very low rate loan, it's not going to massive savings....

I would concentrate more on restricting your budget and throwing every disposable income you have (outside a suitable emergency fund) to pay it off as quickly as you can.

Lukas239

That was the original plan, and I'm technically 2 months away from having enough to pay it off but that would wipe me out clean. I'm trying to strike a balance with some cash savings, some refinanced rates to reduce my total debt.

[Deleted User]

You could look at refinancing, if you have the discipline to ensure the first debt is paid off.

But you may not get a decent rate as a) you're doubling your debt and b) your credit score isn't a factor in lending. It's about risk and affordability.

DrEskimo

Lukas239 wrote: »

That was the original plan, and I'm technically 2 months away from having enough to pay it off but that would wipe me out clean. I'm trying to strike a balance with some cash savings, some refinanced rates to reduce my total debt.

Worth a go!

If you can get say £7,500 at 3%, and then looked to overpay that too, you would be looking a decent saving.

Just be mindful that the lender is going to assume this is borrowing on top of what you owe. If this takes your total borrowing to a large amount relative to your income, it might be tricky to get the representative rates.

Unless advised otherwise, I don't see how it would hurt to apply somewhere and see what is offered.

Lukas239

Having done a bit of research I completed a soft eligibility calculator with Zopa/Sainsbury's/M&S and can get up to £7500 with their lowest advertised rate.

Is this likely to be different to the actual rate? How would it effect my credit score in the short term, given I would be in less debt immediately numerically.

[Deleted User]

You can ignore the credit score. It's still not become a real thing in the last few days.

If you're accepted, lenders will see the new debt. If you pay off others, they will then see that.

The rate may increase when a full search is done.

Craig1981

worth giving a go. if its rejected or PR too high, you havent lost much but a hard search on your file, which isnt too bad as you are not doing many applications.

why not throw half your savings at your current loan, and overpay what you can monthly on it as well (provided you can make overpayments. this was you get interest rebate, effectively reducing your current APR anyway