Should I take out this loan?

soutermon

Bored wrote: »

I would suggest completing a statement of affairs (http://www.stoozing.com/calculator/soa.php) and posting it in this thread before you make any decisions regarding next steps. Are you sure you can't afford the current repayments even if you cut back on your other spending?

I am in the process of doing one just now. As for affording the payments, I am making my payments, and have never missed one, but I'd like to make some inroads into the debt, not just pay the minimum, hence the loan option. I was maybe being a bit melodramatic by saying I was risking not paying them.

determined_new_ms

soutermum I hope you are able to take on the good advice you have been given. Honestly, and with respect, I don't think you are thinking this through rationally. When I read your comment not thinking paying £35k in interest is a big deal as it will free up a few hundred £s a month and leave you able to spend your windfall made me wince. When you say you and your other half have agreed you won't buy anything new until you have the money also shows you don't quite get it yet. You don't have ANY money, you are in deficit. Every penny you spend is someone else's money.

Better look at all the options. At the moment I would focus on the credit cards - the loan and the HP can keep themselves while you divert your attention to the ccs. Post your soa here before contacting companies and let people have a look and they may have some suggestions about ways to reduce your outgoings, increase your income, find ways to help you rise to the challenge and drive that debt down. Every extra £1 you fling at your debts reduces what you will pay overall. Once it's done all of your money is yours.

I wish you all the luck

theoretica

What is the interest on the £7k HP debt? At £175 a month you are only paying £20 a month more towards it than you would as a proportion of the offered £20k debt. I think you would be foolish to roll this into a higher interest rate for so little gain.


How dire is your month to month situation? If you can survive for 10 months with current payments your loan will be gone and you will be £250 a month better off.

buythedip

Not to be mean but this is probably the worst propositon I’ve seen on these boards, perhaps except from the fella who wanted a £200k loan some sort of spa chamber/therapy pool

coolcait

soutermon wrote: »

Hi,

I have approximately £14k on a number of cards, as well as £2.5k remaining on a loan and about £7k of Hire Purchase. Credit cards account for about £500 a month, the loan is £250 and HP is £175, so roughly paying out £925 a month.

I have pursued a number of options to try and consolidate the debt (including a Debt Arrangement Scheme which is my last option), but extra borrowing on my mortgage is not viable, and we cannot get more balance transfer cards. I have tried to get a loan at a low rate, but these have been fruitless attempts also.

Today I spoke with Evolution money, and they are offering £20k, but at an APR of 27.16% and a monthly payment of £440 over 10 years. The one thing that bothers me is the higher interest, but it gives me an end date to this nightmare, and with the extra money (estimated I could be at least £350 a month better off), I can pay in extra if I want, reducing the interest paid on the loan. The other positive is that if I come in to extra money (elderly family member is 96 and seriously ill), the money is my own, and not instantly payable to a DAS.

I realise I have pretty much talked myself into it there, but I'd still appreciate any advice people may have, as there is more than likely something I have missed out. I have a tendency to only see the positives in things and overlook everything else.

Lots of good advice on the thread already. I just wanted to make it clear that if you're in a DAS you wouldn't have to pay an inheritance in it - unless you wanted to.

If your HP is in arrears and you want to add it into the DAS, that would give a total debt of £23.5k. Pay £440 per month to it and it would be completed in about 4 and a half years.

If the HP isn't arrears and you wanted to keep paying it at £175 per month, you'd have a total debt of £16.5k and could pay it in just over five years.

-taff

The fact that you can't get a loan with less than 27% interest should have indicated to you that you are a bad proposition for lending money.
You say redundancy was the reason for the debts this time. So what if it happens again because that is not outside the realms of possibility.
I would post up an SOA and the let people here see what and where can be saved from your budget. I would also urge you to go through your budget, go through your bank statements and cahs spending from the last month to see where you can save money.
One other thing to think about, if you are already at your maximum on your mortgage, if you do do a DAS, make sure you can carry on on their SVR rather than have to apply to another mortgage company, because they will probably take your debts ito consideration.

And don't count on the money from the relative, wills change [ yes I know you're in Scotland and there's a different system but that's no guarantee...they may not have what you think they have]

Martah

It seems that what you are looking at is a quick improvement £925 going down to £440 (you still will have roughly £3500 left outstanding). As loads of superbly experienced people have said it will be a very short term gain for a looooong term pain.

Do SOA so you can really honestly look at your spending, the loan should be gone in 10 months, it will free £250 you can use for other debts repayment.

You had some great advice, I do get a feeling you might have excepted to read something else. It’s up to you whether you take.

You can hold on for 6months and see how you get on with your spending and debt ( is it going down, up or stays the same). I am pretty sure that the loan that makes you pay £27 for every £100 you borrow will still be available.

backinbusiness

My two pence worth:- You've been made redundant once; it could happen again, or you could become ill and not be able to work. Consolidation is A Bad Idea! BiB x

CentiaRoyal

Don't do it. I did it and my £3.5k credit card debt ballooned into £34k over loans and credit cards within 5 years. I think post an SOA and ask for guidance from the many people who have been through it and come out of the other end, you may be surprised and able to become debt free without taking on this huge loan.

pab233

soutermon wrote: »

RhiBi, this has been discussed between my wife and myself already. Once a card debt is cleared, it will be cut up and the account closed. We are consciously trying to change our habits, with our monthly outgoings being scrutinized and agreeing that we don't get anything new unless we can pay for it outright.

Speaking from personal experience, I made the double mistake of taking out a consolidation loan and not cutting up the cards. So whilst I was paying off the loan, I was running up the cards again. (2 redundancies didn't help matters either)

My recommendation would be to cut the cards up NOW, rather than waiting until they are paid off so that there can be no temptation to use them and NOT to take the loan. Then, like others have said, post an SOA so that areas for cost-cutting can be suggested