Debt consolidation any advice please

Paula1981

Hi, I have been trying to work out if i should consolidate my debt to bring my monthly cost down. I currently pay about £530 a month to cards & loans. I have one loan at 3.9% so i am happy to leave that one. I have 2 intrest free CC but it will take forever to clear them & wont be done with in the interest free period. They are Halifax at £130 a month & Virgin at £50 a month. I have a business loan (for a business i no longer have) at £147 a month, another loan at £65 a month. I have been looking at this every which way & now i have confused myself & got brain ache. Any ideas please? 

tacpot12

Have you worked out how long it will take you to clear these debts paying £530 per month? (i.e. if you didn't take out a consolidation loan)

Have you worked out what you can afford to pay per month to clear your debts? (How much less than £530 pcm do you really need to pay? And what will you do with the extra money?)

Have you worked out what interest rate you could borrow enough money to clear all your debts with, and how long the loan would be for? Getting a consolidation loan for the sort of amount you will need (just based on your £530 pcm figure), with the amount of credit you have, is likely to be expensive. 

Consolidation loans rarely work, but they can be right IF your spending is under control. Are you prepared to cut up the two credit cards, or do you intend to keep spending on them? If you are going to keep spending, you need to avoid a consolidation loan as you are going to end up further in debt, with less chance of repaying the debts.  

 

RobM99

A little more detail needed, I think. How long for each and what interest rates?
 
For example, if you have a 26% CC a,d a 5% one, pay the biggest interest rate one first. But as said, if the spending continues, to quote the song, "There may be trouble ahead"!

Grumpelstiltskin

tacpot12 said:

Have you worked out how long it will take you to clear these debts paying £530 per month? (i.e. if you didn't take out a consolidation loan)

Have you worked out what you can afford to pay per month to clear your debts? (How much less than £530 pcm do you really need to pay? And what will you do with the extra money?)

Have you worked out what interest rate you could borrow enough money to clear all your debts with? Getting a consolidation loan for the sort of amount you will need (just based on your £530 pcm figure), with the amount of credit you have, is likely to be expensive. 

Consolidation loans rarely work, but they can be right IF your spending is under control. Are you prepared to cut up the two credit cards, or do you intend to keep spending on them? If you are going to keep spending, you need to avoid a consolidation loan as you are going to end up further in debt, with less chance of repaying the debts.  

 

Also any lender will look at what you already owe and assume you want just to borrow extra and so decide you have too much outstanding debt. A lender doesn't know you want to consolidate.

A SOA on here will give your details and enable us to advise you the best way forward.

fatbelly

Paula1981 said:

Hi, I have been trying to work out if i should consolidate my debt to bring my monthly cost down. I currently pay about £530 a month to cards & loans. I have one loan at 3.9% so i am happy to leave that one. I have 2 intrest free CC but it will take forever to clear them & wont be done with in the interest free period. They are Halifax at £130 a month & Virgin at £50 a month. I have a business loan (for a business i no longer have) at £147 a month, another loan at £65 a month. I have been looking at this every which way & now i have confused myself & got brain ache. Any ideas please? 

Try to throw as much as you can at the credit cards before the interest free period ends, then Balance Transfer to another 0% deal.

Your aim should be to get debt-free as soon as possible, not to reduce your spend on debts while tying yourself into ever-longer repayment periods.

Give us  a statement of affairs if you want detailed comment

https://www.lemonfool.co.uk/financecalculators/soa.php

RobM99

fatbelly said:

Try to throw as much as you can at the credit cards before the interest free period ends, then Balance Transfer to another 0% deal.

Your aim should be to get debt-free as soon as possible, not to reduce your spend on debts while tying yourself into ever-longer repayment periods.

This exactly. You might get 'flak' for some spending but we're only 'cruel to be kind'!

Paula1981

Thank you! I only got the credit cards as we took on a run down bar & needed to get it up & running ASAP, which it is now but only for 5 weeks. I dont like CC never have & this is the first time i have had them. 
So:
Loan 1:£5415.90 outstanding at 3.9% with 41 months to go 
Loan 2: £2067.39 outstanding, at 24.7% with 52 months to go
Loan 3: £4,500 (ish) outstanding at 6%, with 48 months to go (this is an old business loan for a business i no longer have)
Credit card 1: £2198 outstanding at a minimum payment of £25 with 19% interest (would take 87 months to clear at the minimum)
Credit card 2: £4,917 outstanding at a minimum payment of £129 a month, 10 months interest free, (38 months to clear at minimum rate)
Credit card 3: £2694 outstanding at a minimum payment of £28 a month with 10 months interest free (96 months to clear)

My income is £1,400 in benefits. As soon as it hit my bank it is swallowed up by the over draught & unauthorised OD I don't buy anything like clothes, hairdressers etc nothing at all like that. We dont go out, go on holiday ect. There really isn't anything else we can cut back on. I have cancelled my DD for my gas & electric, as i couldn't afford it so now i am planning to pay when the bill comes in each month.

RobM99

"I have cancelled my DD for my gas & electric, as i couldn't afford it so now i am planning to pay when the bill comes in each month."

Hope you've done this properly!

Grumpelstiltskin

Back in August you were advised to put up a SOA.

Trying to consolidate 3 loans — MoneySavingExpert Forum

You say in that thread ' 4 of us '  Do you have a partner with income or is it you and children?

Paula1981

There is myself, partner, & 2 boys, 6 & 7. Partner got covid in March & nearly died, he is still recovering & having tests as his lymphnoids are u in his chest. We are classed as self employed but because the business has only been trading for 5 weeks we have been given a start up period of 12 months so we can still claim U/C as long as we can show its a viable business. 

Grumpelstiltskin

Is all the debt in your name or is it split between you and your partner?

If the only income is benefits stop paying all the unsecured debt NOW.

You must concentrate on Mortgage/Rent, Council Tax and Utilities.

Unsecured debt is at the bottom of the list, nothing terrible is going to happen, you must just past vital basics.