Loan Advice needed

BenKen21

Hi all,

I’m after some advice - I have a credit card with MBNA I’d like to pay off. I took out the card initially to transfer the balance I had of £4,000 from another card, this amount is interest free with my MBNA card until June, I have however spent a further £3000 on the card and am now being charged 20.3% on that balance. I am currently paying £250 a month however £50 of which is interest.

In addition to this I would like to borrow £5500 to fund the purchase of a new van, so the total amount required is £12500. 

I was looking in to getting a loan for this total amount, and pay my credit card completely off, however the loan I am pre approved for on the money saving expert eligibility checker still has a high interest rate of 14.7%. 

I am 80% eligible for a TSB loan for the full amount with a non guaranteed APR of 2.8% what would the likelihood be of me getting this rate or better than the above 14.7%  

I was wondering if someone on here might be able to advise on what would be the best thing to do? I’ve also been looking at other balance transfer credit cards, however I’m not sure if it’s best to consolidate all my debts in one place? 

I would also explore the idea of financing the van if advised.

My Experian credit score is 913 

Thanks for your help.

Ben 

 

sparelogin

You're unlikely to get a decent rate loan given your current interest bearing debt.

Try an eligibility checker for a BT offer. At least try to get the latest purchase to 0%.

Lenders don't see your made up Experian score but will assess you on your history, commitments and income. £20k is going to need a decent income as well as a clean history 

[Deleted User]

Any loan is assumed to be debt on top of your existing debt as there is no guarantee you will make the payment to the card or run it up again so they would consider 7k of CC debt + 12.5k loan debt i.e. 19.5k debt. Do you need a loan of £5500 for a van, really? Could you not get a cheaper one? 

Debt consolidation very rarely works as it doesn't address the underlying issues that caused you to run up all this expensive debt. I would start with a BT card application (use an eligibility checker on the lender sites not through Experian) and if you can get one, even if limit is low, transfer what you can and pay off the rest.

How were you planning on paying a loan if you can only put £250 a month on the CC?

Go to the debt free pages and post a statement of affairs, you may find ways to save money to hit the debt harder.

FaceHead

Deleted_User said:

How were you planning on paying a loan if you can only put £250 a month on the CC?

This. The cost of a £12,500 loan at 14.7% is going to be more than £250/month. 

I know it's not what you want to hear, but the honest best answer is to cut spending, see if you can boost your income and throw everything at your interest bearing debt.

Yes see if you can get a purchases or BT card to shift your debt to 0% (the other £4,000 is going to attract interest quite soon), but that isn't dealing with the actual issue and only kicks the can down the road. 
 

MEM62

Ben, In case you have not realised, the first three paragraphs of your post tell you that you are on a slippery slope.  You borrowing is increasing and so are the interest rates that you are borrowing at.  Now is the time to stop borrowing and deal with the debt that you already have.  A failure to do so will only lead to much more financial misery in the future.     

enthusiasticsaver

I think you need to reconsider these plans.  If you were unable to repay the £4k on the credit card and in fact added £3k to it then it does not sound sensible to add a further £5.5k loan into the mix even if you got a decent rate which I doubt you would.  Very few get given the headline rate and only those with excellent credit records so I don't think you would get 2.8%. Have you tried to move the current £7k on to a 0% deal as that should be more of a priority than taking on more debt. Consolidating debts usually ends  up to more debt in the long run.  

As others have said if you can only afford £250 a month then how will you repay the £5.5k loan? My suggestion is you look at your budget and really focus on repaying the existing debt you have and look at it again in a year when the debt is either gone or lowered.  If you increase your debt when you already seem to be struggling believe me it will not end well. 

BenKen21

Hi all,

thanks for all the replies.

the reason I added more onto the card was due to me relying on the card during the height of the pandemic, all overtime was removed at my place of work and my basic hours reduced meaning in comparison to the previous tax year I am on target to earn 60% of the previous year (pre pandemic) coupled with my partner being placed on furlough who is in a predominantly commission based roll. 

Fortunately now this isn’t the case, my partner is back to work and on full commission structure and although there is no overtime still at my place of work I have secured a second job in the evening to bump up my earnings.

Having re evaluated the situation the £4000 interest free on the MBNA is actually until June 2022! 

I have applied for a VM balance transfer card 18 months interest free to transfer the £3000 over and pay off both simultaneously.

I will put the loan on hold for the van for a year and see what happens.

thanks again for your help. 

Sncjw

I wouldnt rely on overtimes and also commision bonuses for income for debt. I would just base it on standard income as there maybe times when you won't get it. 

enthusiasticsaver

Sounds like you have a good plan now. If you have a second job and your partner is back to work I would focus on getting those CCs repaid. 

[Deleted User]

sparelogin said:

You're unlikely to get a decent rate loan given your current interest bearing debt.

Try an eligibility checker for a BT offer. At least try to get the latest purchase to 0%.

Lenders don't see your made up Experian score but will assess you on your history, commitments and income. £20k is going to need a decent income as well as a clean history 

what would you consider a decent income for a 20k loan?

I see this a lot on the forum, when someone mentions a 20k+ loan, reader get antsy and enquire whether you are earning 100k or more a year.

Most people don't earn very high salaries, so surely lenders want to make 20k loans accessible to the majority and not just the top 5-10 per cent of earners.

[Deleted User]

Adams18 said:

sparelogin said:

You're unlikely to get a decent rate loan given your current interest bearing debt.

Try an eligibility checker for a BT offer. At least try to get the latest purchase to 0%.

Lenders don't see your made up Experian score but will assess you on your history, commitments and income. £20k is going to need a decent income as well as a clean history 

what would you consider a decent income for a 20k loan?

I see this a lot on the forum, when someone mentions a 20k+ loan, reader get antsy and enquire whether you are earning 100k or more a year.

Most people don't earn very high salaries, so surely lenders want to make 20k loans accessible to the majority and not just the top 5-10 per cent of earners.

In the region of 30-40k and above.

No lenders want to make 20k loans available to people without the affordability to at them back.

Why do you believe they would?

And why are you antsy and wanting to know if they earn 100k or more?