Consolidation Loan advice

Grf2000

Hi All 
Newbie hear just after a little advice tbh, or feedback if anyone has been in the same position as me. Okay so this ,maybe little ling winded.
I have accumulative credit card debt of around £9500, and a loan of just over £7000. I,m looking to consolidate and get rid of the devils work of credit cards altogether. This would mean a loan of £17.5k over 6 years with payments of £300 a month a5 7.5%, £75 more than Im paying now. My monthly outgoings in total are £1100 (this would be including the new loan payment also), my income is around £1500 a month, with a rumoured pay rise this month, which I think may be an additional £100 a month, so I will have some disposable income a month. The total payment of the loan though will be around £20k. 

Just a little daunting, anyone been in the same situation?? good or bad feedback. 

Thanks 
Father of one and trying to save for a home also. 

vic_msn

I took a loan last year for £25K where my total repayment would have amounted to £30K over 6 years.
I have since paid part of the loan from my savings and transferred the remaining to a new loan, thereby saving £1K on the total payment.
My suggestion is not to think too much about the total repayment, you can always move the loan to a different provider after a year or so.
As for the credit cards are concerned, please check if you can transfer the full balance or part of it to a new 0% card, which will definitely be cheaper than a consolidated loan.

MallyGirl

have you read the sticky about consolidation loans at the top of the page?

sourcrates

No, no, no and no again, never, ever try to borrow your way out of debt, it never works.

You would be nuts to consider taking out further borrowing in the current uncertain climate, a bank would be just as nuts to approve it, you say your due a pay rise soon, update, you'll probably be lucky to have a job next week, never mind a pay rise.

Ok, its not entirely your fault, everyone's first response when faced with unafordable debt, is a consolidation loan, its just not the right choice for most people, because even if it gets approved, they still exercise the same behavior that got them into debt in the first place, and very soon those consolidated lines of credit are all maxed out again, and your in even deeper trouble than you were before, we see it all the time on these forums.

If you cannot afford your current borrowing, try cutting back on your outgoings, and increasing your income if possible, if that does not work, look at Government debt solutions as a next step, debt management is the most popular choice, i would normally refer you to stepchange or one of the other free to use debt charities, but at this time of uncertainty, they are absolutely inundated with clients scared of there financial position right now, so just do some research online as to what your options may be.

[Deleted User]

In addition to to the above and it being a terrible idea in general, the chances of someone lending you another 18k on top of the existing 17k in today's climate are virtually non existent.

Grf2000

Hi all 
Thanks for the replies, I think I may not have relayed the info correctly, so my total debt would be £17.5k, this will include my current loan and transferring debt from my cards. The loan would consolidate everything, so more cards, my job is very stable at the moment as I work in Psychiatric Nursing (Private). I have looked at Balance Transfer cards and cant seem to get the amount I need to transfer everything over. So what I thought was this, I have already been approved for the loan with HSBC at 7.9%, I am going to call them tomorrow to see if they will offer me a balance transfer card instead, if not I will try to haggle a lower rate loan (may work, may not). I will also try a few other card companies to try and get the balance transfer. 

Credit Cards will no longer exist in my life for sure I'm done with them. 

[Deleted User]

No, your total debt would be 35k. 

You need to borrow the extra BEFORE you can pay off your existing debt.  And the lender has to assume you'll just keep both debts and blow the second loan.

So 17k plus 18k = 35k.

You should be accepting the BT cards you're offered and transfer what you can.

DrEskimo

What is the APR on your current £7,000 loan?

I echo the above. Do not consolidate. Shift as much of the £9,500 credit card debt using 0% BT.

Go through your outgoings and determine if any cuts can be made, and then stick to this written budget (remember to factor in annual expenses). Keep a small saving pot to cover potential emergencies (£1,000), then rank the credit card debts smallest to largest (assuming it's made up of different cards). Use ALL surplus money to pay down the credit card(s) until they are cleared, then move to overpaying on the loan. As you pay off each debt, you can snowball those repayments into the next debt, increasing the amount you overpay each time. 

From what you've said, you've got ~£500 surplus on top of your monthly payments towards these debts, so if you use this surplus in your budget each month to go towards debt repayment, then you I'm guessing you could be completely debt free within about 2yrs? Probably sooner if your income increases over this time. 

Now you can use all that free income to save for a house.

zippygeorgeandben

You're basically extending your debt though by 6 years by agreeing to a consolidation loan.
Like another poster has said, read the sticky at the top.  It's full of some good advice.
I should know.  It's my sticky.  

JReacher1

I’m not sure you can haggle with HSBC over a loan rate. It doesn’t strike me as something a bank would do

enthusiasticsaver

I would never advise consolidation. I think you will also find you will not be offered a decent rate as others have said you will need to arrange the new loan before paying off the old one and credit cards. The only way to deal with debt is to budget and plan to repay highest apr debt first.