Loan confidentiality (letters in the post)

RogerBareford

ThunderBet said:

Jami74 said:

ThunderBet said:

I can now get a debt consolidation loan from TSB at a much lower rate over 5 years, meaning I can clear the other three which I currently pay £633 a month for, so instead I'll just have the one loan costing £210 per month and I can actually save a good amount of money each month. 

I expect you've already considered the figures, but just in case you haven't. £210 per month over 5 years is £12,600 you'll be paying back. I just mention it because some people think of the monthly saving but do not consider that it might cost extra by extending the length of the loan. You haven't mentioned how much you currently owe or the interest rates so maybe £12.6k is a good deal to clear the other loans.

Do read the paperwork (electronic or physical) carefully. Often loans advertise a rate but once accepted you get a different rate. Double check it is what you are expecting. Unless the interest rate on the loan is lower than the best savings rate (I think First Direct are currently offering 3.5% on a regular saver) then it would probably work out better to overpay the TSB loan (check the T&Cs). £600 a month would not only save you a ton of interest it would probably have it all paid off in less than 2 years.

 Well done on making the decision to stop gambling. Good luck.

I did get the rate I was initially offered, which was 9.9%. I know that'll seem very high to most but when I've come from a position of a very poor credit score, getting loans of 80% APR or more, I'm really quite pleased!
You're right in that it will be costing me more in total to do it this way, but for me it's really important to have that disposable income and the ability to save, and some hope, especially in the short term while I get back on my feet. Even without gambling, paying £633 a month to loans was going to make saving very difficult even though they would be paid off in the next couple of years. Losing £210 should allow me to easily save £700-£800 a month. My plan is to automatically divert £200 into my help to buy ISA each month, £250 into savings and potentially pay off an extra £100 a month of the TSB loan. 

And thank you, it's going to be hard but I've definitely seen the light and I'm excited for the future now. Literally counting down the days until I fill in that form. 

There's not much point putting £250 a month into savings when you owe £12K+ at 9.9% which will be more than your savings.

It's definetly worth putting the money into the Help to buy ISA each month as the bonus is bigger than the interest on the loan but pay as much of the loan as you can each month to reduce the total amount of interest you pay.

Also you say "Help to buy ISA", how come you didn't transfer this to a LISA? the LISA has a bigger limit each year so much better if you can save more. There was a period when you could transfer it all over in one go but not sure if that has ended now.

400ixl

Having disposable income is a double edged sword. Yes it gives you some flexibility for the future, but it also gives you money to fall back into old habits.

If I was you I would be looking to pay down the loan as quickly as possible. Yes you want to save some money but until you have that debt under control then you are unlikely to get a mortgage so the help to buy ISA will be of little use to you for a while.

You will want to be able to put some money aside that you can use if something needs that spend out of the ordinary. Personally I would give that to your parents to keep for you so that you can't be tempted to spend it.

Working out a budget of what you need to live on each week, what you are going to save (to get to a set amount for rainy days only) and then pay what is left off of the debt. I would only be saving until I had that rainy day fund established then I would be piling it into paying off the debt.