Help with Consolidation; What to do? 30 September 2019 at 12:46PM in Debt-free wannabe 7 replies 1.4K views

Chrisabian

Hey guys, so here is my situation.


I'm currently paying back £11,000 across two credit cards and one loan.


The two credit cards have a balance of £2000 and £2141 to go. 0% APR until April 2020 and August 2020. I planned to move these to other 0% offers once I reach the dates.


The loan is with Hitachi, at 18.6% with £7,036 to go until August 2023. Settlement figure of £5100.


I am eligible for a £5500 loan with Lendable at a guaranteed 12.9% with an 'arrangment fee' of £395. Total repayable £6595.


My question is: with the settlement figure of £5100 & arrangement fee of £395, I can effective knock £500+ off my loan total by switching this loan to £5500 with Lendable? Should I do this? I think this rate is the best I can get at the moment and I'm not going to make 'representative' applications.


I could then look at switching to a lower APR again further down the line once I've cleared more of the balances.


Just trying to work out what to do to get this money paid off as soon as possible. Any help/advice is much appreciated!

sourcrates

Hi,
Take on extra hours at work, or get a second job maybe, cut your budget back to pay the debt down quicker, sell things you don’t need, cut back on luxuries, 1001 things you can do that don’t involve further borrowing.
You don’t repay debt by continuously shifting it around, you just line the banks pockets.

EssexHebridean

In answer to the second part of your thread title - the answer to the question is "don't consolidate" as a general rule.

You don't say what the loan is for however it's clearly at a painfully high rate - and in fairness the new one you're looking at isn't much better when you look at the sort of rates mainstream lenders are offering currently. It does however suggest that your credit history is less than wonderful, which also suggests that there may be more going on here that needs looking at and thinking about.

When did you last work through your monthly budget to see where you might be able to make savings?

Are the credit cards currently being paid by means of the standard minimum monthly payment as set by the card company, or have you set the amount you pay on these? As a tip - if it's the former then set the monthly payment for a little over what you're paying now - so if the minimum should be £76.50, you might set it for £80 a month - then just leave it there. As time goes on this means the payment stays the same rather than dropping incrementally as the minimum would - and this in turn means you make more impact on the outstanding balance without even realising it. (This only works with a card which you never spend on).

Sncjw

Also they will be assessing the affordability of the loan on your current £5100, your £4200 and the £5500 loan. They won’t trusr your going to use the money to clear th debts. If you are struggling now to pay your going to struggle on that much also.

What is your income it would need to be about 30k to get this at least with a nice credit history.

Chrisabian

Hi sourcrates,


I'm not borrowing further. I would close the Hitachi loan immediately with the money, and then pay back to Lendable at a lower rate and £500 less.


I'm not struggling with my debts, I'm repaying them back comfortably but this looked to me like an easy opportunity to save £500 of interest, no?


Hi Essexhebridean,


The Lendable loan is purely to clear the Hitachi loan and carry on repaying at a lower rate and a £500 interest saving.


The minimum payment on my credit cards is £25 each, but I pay £50 off them both.


Hi Sncjw,


There's no affordability to check, it's pre-approved at a guaranteed 12.6%, if I want this loan I can get it, regardless of the Hitachi loan. Although this Hitachi loan will be cleared immediately.

EssexHebridean

You're missing the point - you ARE borrowing further - you're taking credit to clear credit and that's rarely a good idea.

You could almost certainly save more by working through your current expenditure and overpaying - or saving money against an early settlement - on the Hitachi loan. Have you reviewed your monthly & annual budgets lately? Do you have enough in your emergency fund savings that you could divert ongoing payments from there as overpayments against the loan, for example? Is there surplus from anywhere else that could also go to this?

enthusiasticsaver

Just overpay the Hitachi loan. That will save you a lot more than moving it about which is all consolidation is. The fact you can only get high rate loans indicates you may have problems getting more 0% deals when your credit card deals expire so you might want to tackle those too by budgeting better and cutting back.

Chrisabian

Thanks for the advice everybody, I understand things a bit better now! I'm doing more hours at work from this month so I plan to put anything extra I earn per month towards clearing these balances. I'm used to what I earn so shouldn't even miss it. Thanks!