Which Loan to pay off..

[Deleted User]

Looks like you don't really owe that much, just lots of little loans.

Can you not get one larger loan at a more sensible rate to consolidate, then use your 2k against that?

That if course depends on a couple of things.
1. Can you get a decent loan rate? You might struggle. But if you go to your own bank, where they can see your financial track record because your current account is with them, they might be more willing to lend to you than a company that relies on your credit reference alone.

2. Honestly, and please don't take this the wrong way, I don't know you. Ask yourself, if you did get a loan to consolidate your debts, can you trust yourself to use it only for that?

If the answer to both of the above is yes, then I think if it were me, I'd take out that loan, actually potentially borrowing more than necessary so as to get a better rate, pay everything off, put the 2k you mentioned against the new loan, then have just one manageable monthly payment for the remainder.

Now here's the controversial bit. I might get kicked off MSE for this. But I would still keep a buffer, in a seperate instant access savings account. After paying off all your other debts, and 2k off the new loan, I'd put the change from the new loan in the new savings, but only if the interest rate is good, like below 10%. Why? Sounds crazy I hear you say. Yes, you're paying interest on debt you don't need. But if 6 months down the line you get an emergency expense, you really don't want to be going back to payday lenders. Then build yourself a strict but realistic budget, stick to it, and overpay on your loan, while keeping that buffer around. Set a threshold for your buffer. Let's say for example 1k. Anything over that goes to paying off the loan. Keep topping up the savings whenever you can, even if it's literally pennies here and there. If your savings go over your 1k threshold, then that surplus goes to overpaying the loan. That way although you'll have debt for longer than if you paid it off as fast as possible, you'll have a buffer against unforeseen expenses at a reasonable rate, no need to go to payday lenders, and you'll get into the habit of saving. And when the loan is fully gone, that threshold you set to maintain, that's still there, so you're not only debt free, but have actual savings too. 

peteuk

Beardybaldy said:

Looks like you don't really owe that much, just lots of little loans.

Can you not get one larger loan at a more sensible rate to consolidate, then use your 2k against that?

Hi Thanks for the advice, I want to close all my loan accounts, so taking another one out isnt really an option.  I am also looking at a Mortgage at the end of the year. 

[Deleted User]

peteuk said:

ManyWays said:

have you looked at affordability complaints? Against the payday lenders and also the two guarantor loans?
You asked for the loans but the lenders should have checked you could afford the payments without having to borrow more!

Do they not hide behind you said you could afford the payments statement?

Nope.  Lots of these su prime lenders are starting to refund customers the interest paid plus some compensation for mis-selling so I think it's worth a punt.  You'd still be repaying (most of) the capital you originally borrowed it's just that some/all of the interest might be refunded and you'd get some compensation which would speed up your Debt Free Date.

From the Debt Camel page I posted previously....

What are “unaffordable” loans?

Was a loan affordable just because you managed to repay it?

No! If paying a loan left you so broke you had to borrow again – from the same lender or a different one – it was unaffordable!

[Deleted User]

peteuk said:

Beardybaldy said:

Looks like you don't really owe that much, just lots of little loans.

Can you not get one larger loan at a more sensible rate to consolidate, then use your 2k against that?

Hi Thanks for the advice, I want to close all my loan accounts, so taking another one out isnt really an option.  I am also looking at a Mortgage at the end of the year. 

That's great. I'm not going to try to tell you what to do. That is of course your decision.

What I'd say is this, you say you want a mortgage at the end of the year. So presumably you either already have, or have budgeted to save for a deposit, which again is great. But have you also budgeted for all the myriad less obvious expenses that come with buying a house? When I bought mine, I had the deposit and legal costs all saved up, and figured the sundry odds and sods will just come out of my normal day to day. How wrong was I. I was literally financially wiped out by the time we got in. I ended up having to borrow 2k from family.

If you have a taste for going to payday lenders, ask yourself (you don't have to answer me, it's entirely your business), when you realise you could have done with an extra few hundred or couple of grand to get set up, will you slip back into the payday loan cycle? 

peteuk

Lover_of_Lycra said:

Nope.  Lots of these su prime lenders are starting to refund customers the interest paid plus some compensation for mis-selling so I think it's worth a punt.  You'd still be repaying (most of) the capital you originally borrowed it's just that some/all of the interest might be refunded and you'd get some compensation which would speed up your Debt Free Date.

From the Debt Camel page I posted previously....

What are “unaffordable” loans?

Was a loan affordable just because you managed to repay it?

No! If paying a loan left you so broke you had to borrow again – from the same lender or a different one – it was unaffordable!

I've emailed four loan providers today with help from Debt Camel,  so lets see what happens next.  Thanks for the advice. 

peteuk

Beardybaldy said:

That's great. I'm not going to try to tell you what to do. That is of course your decision.

What I'd say is this, you say you want a mortgage at the end of the year. So presumably you either already have, or have budgeted to save for a deposit, which again is great. But have you also budgeted for all the myriad less obvious expenses that come with buying a house? When I bought mine, I had the deposit and legal costs all saved up, and figured the sundry odds and sods will just come out of my normal day to day. How wrong was I. I was literally financially wiped out by the time we got in. I ended up having to borrow 2k from family.

If you have a taste for going to payday lenders, ask yourself (you don't have to answer me, it's entirely your business), when you realise you could have done with an extra few hundred or couple of grand to get set up, will you slip back into the payday loan cycle? 

 Your spot on with the "taste" for pay day lenders and no I wont be going back. The whole exercise is to pay off the debt and get a mortgage and house.  Circumstances are such that at present I have two incomes till the end of July.  So during this time we are paying off debt (Loans first and then credit cards - as they are smaller) building a resilience fund.  Then in August I get a larger pay out which will be the deposit and pay the fees ect.   This (with the credit cards kept active) will be our only debt. 

macman

While I am fully supportive of your desire to put these absurdly expensive loans behind you, the fact that you have apparently taken out three of them within the last two months or so does not inspire confidence, albeit that they are relatively small amounts.
The other problem you now have is that, with that succession of payday loans on your credit history, no mainstream mortgage lender is going to go near you for the forseeable future. I suspect that you'll need a year or two of clear blue water between you and these payday loans before they will consider you. Certainly not at the end of this year.