Loan with Bad Credit 11 June 2022 at 10:46PM edited 11 June 2022 at 10:47PM in Loans 7 replies 514 views

Pikapika1990

Hi there

I was wondering if anyone could help?

I am trying to get a loan to consolidate my debt. I have a poor credit rating but loan repayment would not be unaffordable at all, so I am really confused as to why I may be getting declined.

Does anyone know of any specialist brokers online who you can speak to and will find a company that will give you a loan?

I recently bought a house last year by going through a company called Simply Adverse and they were absolutely brilliant and did exactly what they said they would - got me a mortgage. So I am hoping there is a company out there that may be able to help me consolidate these credit cards into a one lump payment each month over the next couple of years so they are gone!!

Thanks in advance

longjohnjohnson

If you're applying to subprime lenders and getting declined, it's probably best to knock the idea on the head.

I suspect any brokers will be peddling secured loans, and you REALLY don't want to be going down that route.

JohnDorian

What is the reasoning behind you wanting to consolidate? Why not just pay off your current debts as they are? 

[Deleted User]

Pikapika1990 said:

I am trying to get a loan to consolidate my debt. I have a poor credit rating but loan repayment would not be unaffordable at all, so I am really confused as to why I may be getting declined.

It's because you owe too much already so lenders can't risk giving you further borrowing. You were also in a DMP this time last year, so are a very high risk borrower.

Head to the DFW boards for advice on cutting costs and clearing your debts.

Dobbibill

Consolidation is rarely the answer. Head over to the DFW boards and post a SOA. The good forum members will share hints and tips on how to attack the debt and where you can save some pennies to throw at the debt to get it cleared ASAP. 
Paying one payment instead of 3 isn't always the right answer - ask about snowballing and focus on the highest interest bearing debt first, snowball that payment to the next debt when cleared and so on. 
All the best. 

Ebe_Scrooge

Consolidation is rarely the answer.  Firstly, it doesn't repay the debt, merely punts it down the road for a few months.  And the danger is that you take out a loan, clear the credit cards, then merrily go out and spend on them again - before you know it, you've got twice the debt.

If your credit history is already on the poor side, then that will be one limiting factor.

The main reason you're struggling to get a loan is most likely down to affordability.  If you have debt on cards and apply for a loan, the lender has no way of guaranteeing that you will actually use the loan to clear the existing debt.  There's nothing to stop you taking the loan money and putting the whole lot on "Knackered Ned" in the 3:30 at Chepstow.  So when they do their affordability calculations, they have to make the assumption that the new loan will be in addition to, rather than instead of, your existing debt.

As previous posters have said, the only way to tackle the debt is by making some short-term sacrifices for long-term gain - the Debt-Free Wannabe board is an excellent staring point.

DCFC79

So if you were in DMP last year, what's happened to that ?
If your still in the DMP your not meant to take out more finance, speak to who your DMP is with.

Sncjw

Because you are doubling your debt. They are assessing your affordability on double the debt as there's no garuntee you will use the loan to pay off your current debts.