Loan offered and unsure to accept

Houndog6105

I need some help please
I'm not sure if I should go for this loan. I feel like it would help me clear most of my high interest debts I currently have but I can't figure out if it's actually saving me money or not in the long run

My current debts are
Drafty £1776 80% APR
Aqua £3600 39% APR
Capital one £800 interest free 8 months left
Bon Prix £390

Total £6566

I been offered a loan by lendable and it's £6000 over 30 months at 28.65% at £272 a month

Now this brings my monthly payments a month down from around about £315 a month currently to the £272 a month

It will also clear all of my debts mentioned above and have me just paying the one monthly payment to lendable each month but I'm paying lendable £2172 interest over the 30 months on that loan.

Obviously I'm paying huge interest on my current debts and the balance on then never seem to be going down where as at least with the lendable loan I'll see the balance actually going down each month

I'm swaying towards the loan or should I just carry on chipping away at all the cards ect as per normal and forget about the loan

Any help and advice would be very much appreciated
Thanks

Willing2Learn

Hi,

If it were me, I would forget about the loan and focus on snowballing those debts. My main thinking is that I have to stop borrowing at these high APRs and focus on making my credit file look a bit more better.

Edit: Research consolidation loans on this forum, and you will see that they very often fail to reduce debt...

MallyGirl

I agree.

Drafty £1776 80% APR - you should throw every penny you can at this till its gone (and never borrow at such a rate again I hope)
Aqua £3600 39% APR - pay the minimum until Drafty is paid off and then hit this one (if it is the highest rate debt at that point)
Capital one £800 interest free 8 months left - pay the minimum for now.Will there still be a balance in 8 months time and if so what is the APR?
Bon Prix £390 - what is the APR?

Moving it all to one loan will give the illusion that you have improved things but you won't have much.

Exodi

Houndog6105 wrote: »

I need some help please
I'm not sure if I should go for this loan. I feel like it would help me clear most of my high interest debts I currently have but I can't figure out if it's actually saving me money or not in the long run

My current debts are
Drafty £1776 80% APR
Aqua £3600 39% APR
Capital one £800 interest free 8 months left
Bon Prix £390 - whats the APR?

Total £6566

I been offered a loan by lendable and it's £6000 over 30 months at 28.65% at £272 a month - Out of curiosity, why £6000? You'll likely need nearer £8000 to consolidate everything.

Now this brings my monthly payments a month down from around about £315 a month currently to the £272 a month - No it doesn't, your proposed loan doesn't fully clear your current debts so you'll be servicing the loan and the remaining debt

It will also clear all of my debts mentioned above and have me just paying the one monthly payment to lendable each month but I'm paying lendable £2172 interest over the 30 months on that loan.- as above, it doesn't.

Obviously I'm paying huge interest on my current debts and the balance on then never seem to be going down where as at least with the lendable loan I'll see the balance actually going down each month

I'm swaying towards the loan or should I just carry on chipping away at all the cards ect as per normal and forget about the loan

Any help and advice would be very much appreciated
Thanks

I don't want to rub salt in the wound but you also seem to be missing the point that the above debts are your current balances, not the required amounts to settle. Most lenders will add two months interest onto the balance should you decide to settle early.

I've never been a fan of consolidation loans (reading these forums for more than a week would show they usually don't work - people become under the illusion that they're now financially better off and start spending again)

If it was me, I'd do as the other posters have said and snowball your loans - 80% APR is eye-watering.

Houndog6105

2.952% per month the bon Prix account

I wouldn't need 8k to consolidate I just need £6500 but they only offered me 6k

I won't get anything added on to settle early. They are credit card and drafty you can pay it all off in one with no early settlement figure required. I'd be paying all the debts off apart from £500

The loan is 2k interest. At £247 a month that's 8 months roughly just paying off the interest on the loan. Leaving me a further 22 months to pay off the remaining 6k

On a rough estimate I would be paying between £1200-1600 in interest on my current debts as they stand but the balances on all of my current debts would most likely still be very close to what the balances are now. They barely budge due to me just covering the interest on them alone every month

At least with the loan I'm seeing the balance reduce each month

Willing2Learn

Houndog6105 wrote: »

… At least with the loan I'm seeing the balance reduce each month

Research 'snowballing' debts as this methodology lets you visualise the debt-busting progress.

There are two differing methods to snowball:

1. You can do it the moneysaving way, which is to tackle the debt with the highest APR first. Throw everything at this debt. Every available penny. Pay minimum payments to the other debts until the first debt is paid. Then you focus on the next highest APR.
2. Or you can do things the psychological way. You focus on the debt with the lowest amount due. Throw everything at this debt. Every available penny. Pay minimum payments to other debts until the first debt is paid. Then you focus on the debt with the next [STRIKE]highest[/STRIKE] lowest amount due.

Method #2 allows you to see progress far quicker as you knock off the smaller debts first. But method #1 saves you the most money in reduced interest payments.

Houndog6105

Ok thanks willing2learn

iolanthe07

Are you sure the 80% APR figure is correct? This is outrageous usury.

MallyGirl

iolanthe07 wrote: »

Are you sure the 80% APR figure is correct? This is outrageous usury.

Drafty website has:

Representative 89.7% APR

in big font on front page

System

It will only save you money if you actually close the accounts and not open any more or get any more credit cards using the justification of having freed up money spare. Unless you do the only thing you'll do is add several grand to your debt albeit not immediately. Consolidation loans only work for the disciplined who have identified why they got in the situation they're now in, addressed that and don't repeat it.

Houndog6105

I would close the drafty straight away . The credit cards I would keep open but spend £20 a month and just pay off straight away just to keep that available credit showing on my report. I will be very disciplined. Most definitely