Loan eligibility

confuddledabit

Hi,
 I did a loan eligibility search via the MSE calculator and there were 2 that said 100% eligible for an 18k loan (pre approved) one with Zopa and the other with Admiral. I earn just over 46k (plus up to 2k in bonuses and odd bit of overtime, which I didn't include) but for various reasons I owe 18k on credit cards which I am looking to consolidate into a loan as all the 0% transfer rates are expiring/expired on the 4 cards. I overpay the minimum on all cards at the mo and payments are easily managable, also for the would be new loan over 3 years.
The 2 loans mentioned says that to apply, I shouldn't have high levels of unsecured debt, but I think I may fall into that category? As such, I entered into a webchat with Zopa and she said I couldn't consolidate NON Zopa debts with one of their loans which has confused the hell out of me as the MSE search said I was eligible even though I put the loan was to consolidate debts! 

There were 3 other loans in my results that came back 95% eligible but with lower (non guaranteed APR's) that didn't say anything about levels of unsecured debts. These were all far less in overall interest but I guess I probably wouldn't get the low rates offered so am not too keen on applying for these.

My main question is.... are my c/c debts classed as high levels of unsecured debts and will I get a similar response from Admiral? (or every other lender?) I can't seem to enter into a chat with Admiral to find out and I don't want to apply and get a mark on my credit history if I'm not going to be accepted. 
I'm confused and don't know what to do. Please help someone?

MEM62

The 'high level' will be in relation to your income.  Effectively, you are asking for £36k of borrowing against a salary of £46K.  That is sailing close enough to the wind to put off most mainstream lenders.  

confuddledabit

MEM62 said:

The 'high level' will be in relation to your income.  Effectively, you are asking for £36k of borrowing against a salary of £46K.  That is sailing close enough to the wind to put off most mainstream lenders.  

No I'm not asking for 36k. I want the loan to pay off the credit cards so 'only' 18k against a 46k salary (unless you mean if I weren't to pay the C/C's off, which would be extremely stupid!)

[Deleted User]

You're still asking for 36k, because until you get another 18k, you can't pay off the first 18k.

Zopa know there's a good chance you won't clear the existing debt, hence their decline.

Try an application elsewhere, but you're probably going to need to clear your debts the old fashioned way, with your own money.

Ebe_Scrooge

confuddledabit said:

MEM62 said:

The 'high level' will be in relation to your income.  Effectively, you are asking for £36k of borrowing against a salary of £46K.  That is sailing close enough to the wind to put off most mainstream lenders.  

No I'm not asking for 36k. I want the loan to pay off the credit cards so 'only' 18k against a 46k salary (unless you mean if I weren't to pay the C/C's off, which would be extremely stupid!)

But you've hit the nail squarely on the head there.  If you take out a loan, the lender has no way of guaranteeing that you'll use it to pay off your existing debt - there's nothing to stop you taking the money and putting the whole lot on "Lame Larry" in the 5:30 at Cheltenham.  Lenders always take the worst-case view that your new loan will be in addition to existing debt, not instead of.

Yes, of course, any sensible person would use it to pay off existing debt, but the lender has absolutely no way of enforcing this.  That's one reason why consolidation loans can be hard to get, and are rarely recommended on this forum.

You could try looking at transferring the balances to other zero/low rate cards perhaps?  Admittedly, such deals are harder to come by than they once were, but it may be worth looking into?

[Deleted User]

The old way of consolidation loans was that you'd borrow the money in the bank, the bank would then use the money to pay the debts off and close the accounts to avoid temptation.

Then you had the likes of Ocean finance with people getting out of debt with a consolidation loan and being shown on the adverts going on holiday and generally wasting money with all the money they were "saving" which of course didn't address the problems that caused the debt in the first place...

Hence why responsible lending now is to assume you won't use the new loan to pay off the old so they have to judge if you can afford both.

I'd look up the snowball method of debts - if you are responsible, pay the absolute minimum on the cheapest debt and throw everything you can at the one with the highest interest to clear it down, then you've got more money free to throw at the second highest and so on. If you're looking for quick wins, pay off the one that is easiest to get rid of using the same min/max approach and then when you pay that off, work on the second etc etc 

confuddledabit

Deleted_User said:

You're still asking for 36k, because until you get another 18k, you can't pay off the first 18k.

Zopa know there's a good chance you won't clear the existing debt, hence their decline.

Try an application elsewhere, but you're probably going to need to clear your debts the old fashioned way, with your own money.

I do get your point but when I have consolidated debts via my bank before (many years ago) they actually paid them off for me directly so they knew where the money was going. As I have already said, Zopa didn't actually decline me personally, but just said that they wouldn't lend anyone to pay other lenders off, only to consolidate debts with them.
I AM clearing my debts off with my own, hard earned money, but I am looking for a cheaper and quicker way to do so. 

Ebe_Scrooge

confuddledabit said:

As I have already said, Zopa didn't actually decline me personally, but just said that they wouldn't lend anyone to pay other lenders off, only to consolidate debts with them.

I guess that kind of makes sense, from a business point of view.  Effectively Zopa would be taking on the risk, and the previous lenders would have have their risk removed.  Risk assessment is just one of the many factors that go to make up lending decisions, and different lenders have different risk appetites.  And of course, no lender is obliged to lend money to anyone.

confuddledabit said:
I AM clearing my debts off with my own, hard earned money, but I am looking for a cheaper and quicker way to do so. 

Unfortunately there is rarely a cheap & quick way to clear debts.  If you are unable to refinance to a lower APR, then your best bet is to take the Debt-Free Wannabe approach.  In a nutshell, live like a hermit for a while, cut your outgoings to the absolute bare minimum, and throw every spare penny at the debts.  It's not fun - been there, done that.  But it can be done, and a relatively short period of pain will reap rewards many-fold in the long term.

Sncjw

But the lender won't pay directly to the other loan now a days so you will be assessed on 36k of borrowing. If your struggling to pay now what do think they think of 36k