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Loan or 0% money transfer credit card

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pearm_mrpearm_mr Forumite
1 posts
MoneySaving Newbie
Apologies if this has already been asked but I couldn't find the relevant thread.  
My partner has a £6500 loan over the next 5 years with an interest rate of 12% paying £130pcm!!!!  She had a poor credit rating when she took out the loan.  I have a good credit rating so want to try and save us some money.  I should be able to simply get a loan about 3.5%, which would obviously save us loads, but I can't work out if I should do this or move the debt to a 0% money transfer credit card and then move it again when the interest free period expires as it wouldn't be paid off in this time.  We have no other debts apart from a mortgage so this is the only place we can save on debts.  We don't want to increase the monthly repayments much we just want to reduce the term or total cost.  
Any suggestions or advice would be happily accepted.  Many thanks for reading this.          

Replies

  • yksiyksi Forumite
    484 posts
    100 Posts Name Dropper
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    The honest and candid answer which you do not want to hear is: don't do it. Don't be the hero on your partner's debt.

    The reason your partner can't get a better loan themselves is due to being too big a risk to the lenders. Lenders, looking at her financial history, are very sure that she will not pay back a consolidation loan (or a 0% credit card) but instead they know she would get further into debt. They know this because they have data on thousands of customers and it's a very, very predictable pattern. People smarter than you or I still behave in the same ways. It's because people have not changed their spending habits and continue to do the same things that got them into debt the first time - usually not big and silly things, but a sustained pattern of spending just a little bit too much compared with earnings.

    So, heed what the banks are saying: partner is not a good risk with money. But you indicated a joint mortgage, so I'm assuming you have joint finances. Unfortunately, in addition you have indicated that in the next two years or so (the length of 0% money transfer deals out there right now) you would not be able to pay back £6500. It wouldn't help anyway in the short term - it's about the same cost in monthly repayments anyway! This tells us that finances are very tight for the two of you and that as a pair, you're not a good risk. The two of you are very close to the wire right now, ie, there isn't a penny to spare.

    There's only one way to address that and it's to tackle your spending. And I mean on absolutely everything from your haircuts to your broadband package and the brand of bread you buy. And throw every penny you can save into her loan, and get rid of it that way. It carries no risk of being stuck with an unpayable credit card debt.

    Check out the Debt Free Wannabe boards and give up the Costa habit and buying £3 Meal Deals. Good luck.
  • gingeralangingeralan Forumite
    224 posts
    Eighth Anniversary 100 Posts Combo Breaker
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    Yksi is correct.
    Don’t take on someone else’s debt. It’ll end badly if you separate or may become a source of resentment in the future.
    Help your partner manage her finances if they’re up for it, but don’t offer them your own form of QE. They’ll never learn if you bail them out without them experiencing some hardship
  • edited 14 July at 1:20PM
    DCFC79DCFC79 Forumite
    39.1K posts
    Part of the Furniture 10,000 Posts Name Dropper
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    edited 14 July at 1:20PM
    pearm_mr said:
    Apologies if this has already been asked but I couldn't find the relevant thread.  
    My partner has a £6500 loan over the next 5 years with an interest rate of 12% paying £130pcm!!!!  She had a poor credit rating when she took out the loan.  I have a good credit rating so want to try and save us some money.  I should be able to simply get a loan about 3.5%, which would obviously save us loads, but I can't work out if I should do this or move the debt to a 0% money transfer credit card and then move it again when the interest free period expires as it wouldn't be paid off in this time.  We have no other debts apart from a mortgage so this is the only place we can save on debts.  We don't want to increase the monthly repayments much we just want to reduce the term or total cost.  
    Any suggestions or advice would be happily accepted.  Many thanks for reading this.          
    Credit ratings aren't used for loans, credit histories are taken into account.
    Its not certain if you would get the 3.5% but do not take on her debt, well you can but it could turn nasty between you.
    Its her debt and she has to clear it. You can definitely help her to reduce her spending.

  • ZaSa1418ZaSa1418 Forumite
    115 posts
    100 Posts Name Dropper
    pearm_mr said:
    Apologies if this has already been asked but I couldn't find the relevant thread.  
    My partner has a £6500 loan over the next 5 years with an interest rate of 12% paying £130pcm!!!!  She had a poor credit rating when she took out the loan.  I have a good credit rating so want to try and save us some money.  I should be able to simply get a loan about 3.5%, which would obviously save us loads, but I can't work out if I should do this or move the debt to a 0% money transfer credit card and then move it again when the interest free period expires as it wouldn't be paid off in this time.  We have no other debts apart from a mortgage so this is the only place we can save on debts.  We don't want to increase the monthly repayments much we just want to reduce the term or total cost.  
    Any suggestions or advice would be happily accepted.  Many thanks for reading this.          
    It is lovely that you are willing to help her out but this may not be the best way to do it.
     Why did she get the loan out?  
    I was silly enough to help my husband out this way without getting to the bottom of his overspending and now we are in even more debt than before. I am not saying this would necessarily happen with you but it could. 
    LBM Debt Total : £48,326.50
    June : £45,762.32
    July : £42,149.91 
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