Navigating loan amounts and what might be accepted

london1973

I’ve a couple of questions on loans that are different so posting 2 threads..i hope that is the correct protocol here!

i want to pay off various credit cards through a loan, but i’m not sure how much i would be able to borrow..want i don’t want to do is apply, have it declined, and keep applying for lower amounts until it MIGHT be accepted..racking up numerous hard searches on the way.. the simplest solution would be for HSBC (my bank) to tell me on the first application what would be accepted, but they don’t work like that apparently..so its a game of chicken really by the looks of it, unless someone can advise on how to navigate…i have a few cards all on quite high interest so ideally want to clear them all down, but if i can only do one or two then that’s fine too.. 

any ideas?
thanks

MorningcoffeeIV

They won't tell you in advance.

But rather than try to borrow yourself out of debt, which often ends in dismal failure, go to the DFW boards for help on clearing the debts.  Consolidation loans are high APR, high risk and not generally suited to people who already over-indebted.

london1973

Thanks, although i think its simple mathematics if i can borrow on a lower rate than the credit cards, and that would obviously be a pre-requisite..

MorningcoffeeIV

Have a look on the DFW boards and you'll see it's absolutely not a case of simple mathematics!

CliveOfIndia

london1973 said:

Thanks, although i think its simple mathematics if i can borrow on a lower rate than the credit cards, and that would obviously be a pre-requisite..

It does sound like simple maths on the face of it, especially since you (presumably) have every intention of using a loan to repay the credit cards.

However, once a bank gives you the loan, you're free to do with it as you wish.  You could repay your cards, or you could go on a nice holiday or splurge the lot on the 3:30 at Aintree.  For this reason, any lender has to assume that a loan will be in addition to - not instead of - your existing debt.  This will obviously be a major factor in their affordability calculations.

Additionally, it can be all too tempting to clear the cards with a loan, then merrily start racking up fresh debt on the cards - especially if you don't address the underlying cause of the debt in the first place.

I'm not saying that consolidation loans can never work - but in all too many cases they can just lead to an ever-increasing spiral of debt.  The Debt-Free Wannabe board is littered with examples of how it can go horribly wrong.

london1973

Look i understand all of this, and i am genuinely grateful for the responses and ‘concern’ however inevitably all this means is that the thread becomes about something else and people chime in with their opinion on something entirely not what the OP asked for..so i would be grateful if any posts were on-topic

CliveOfIndia

london1973 said:

Look i understand all of this, and i am genuinely grateful for the responses and ‘concern’ however inevitably all this means is that the thread becomes about something else and people chime in with their opinion on something entirely not what the OP asked for..so i would be grateful if any posts were on-topic

OK, well then the short answer is that you won't know how much someone is prepared to lend you until your application is processed.  I guess you could run a few eligibility checks, which won't leave a hard search on your files - but these are, at best, a rough indication.

backinbusiness

If you are carrying a large amount of credit and on high interest rates, I'm afraid you may well find that you are unable to borrow any further OP.  Take the advice and head to the DFW board.  BiB x 

Martico

london1973 said:

Thanks, although i think its simple mathematics if i can borrow on a lower rate than the credit cards, and that would obviously be a pre-requisite..

I realise you might not take well to this, but the thing to ask yourself is (assuming you are accepted for a loan): can you be absolutely certain that you can meet the monthly loan repayments for the duration of the loan without resorting to credit at any point during the period of the loan?

You really need to do those sums and be brutally honest with your budget, else you'll end up in a whole heap more trouble.

Consolidation rarely works. It doesn't pay off debt, just moves it. And while the headline interest may be lower than what you're currently facing, the timeline suddenly switches from ill-defined to a defined point only a few years away, and that's a real pinch for people that don't have a very strong control of their budget.

Apologies for the unasked-for lecture, I hope you take it in the spirit it's intended. Good luck

Nebulous2

Some general thoughts on getting credit:- 

Think about it in terms of income. As your debt, including your credit cards, rises towards your income, lenders become increasingly nervous and some of them will drop out. 50% of salary was often quoted as a key point where it began to grow more difficult to get further credit in the past. 

Personal loans are generally more expensive for smaller amounts, then hit a sweet spot between £7500 and £15,000. Above that lenders become twitchy again, and rates may start to creep up, or require a higher salary to justify them. 

The calculations all happen behind the scenes, with no transparency, otherwise people would game the system to get what they want. 

That all comes back to, you wont know for sure, until you try......