Loan Repayments

Smit2024

So I need some advice about a loan repayment, currently I have two loans out and the payments are getting our of hand. please see details of loans below. 
loan 1 - £104.95 a month at 9.9% interest and 3 years 7 months left on the loan
loan 2 - £206.59 a month at 2.3% interest and 2 years 2 months left on the loan.

My question is, is there any way to consolidate these loans or potentially take a new loan to lower the amount? Any advice is always welcome. 

CliveOfIndia

Consolidation can sound like an attractive option, but it's often not a good idea.  One of the biggest problems is that if you apply for another loan, the lender has no guarantee that you'd actually use it to repay the existing loans.  They therefore have to take the view that the new loan will be in addition to, not instead of, your existing debt - and will price the loan accordingly.  So there's a good chance that, even if you did get accepted, you'd find the interest rate they'd offer you would be higher than what you're already paying.

You could potentially look at a Money Transfer card.  This is where the credit card company deposits money into your bank account, then you pay off the debt on the credit card at a low rate - sometimes even zero percent (there's usually a fee attached, which you'd need to factor in).  But you still have the same issue with regards to affordability calculations.  Plus, you must be able to repay the credit card balance in full when the promotional rate expires.  Otherwise any remaining balance would start accruing interest at the card's standard APR, which will be a lot higher than your loan APRs.

Rather than trying to borrow your way out of debt, a better approach is to head on over to the Debt-Free Wannabe board, post up an SOA, and let the good folk there take a look at your budget and see where savings can be made.

cymruchris

In addition to the good advice given above - in the current financial climate, combined with the existing level of debt you have, you are unlikely (not impossible but unlikely) to get rates as good as you've gotten again. So any new loan would potentially be at a higher APR meaning you'd end up paying more interest. If the payments are the same each month - and you signed up to those payments - does it mean other things are getting out of hand rather than these loans? It could be time as said to put together a statement of affairs and look at the options of reducing spend/making savings somehow - or having a clear out and ebaying off things that don't get used anymore to put a chunk of money towards whatever is causing the most challenges at the moment.

fatbelly

If you can't afford the £300+ contractual payments, head over to debt-free wannabe

Herzlos

You're unlikely to get close to 2.3% now (the Bank Of England base rate is 5.25% so loans will likely be above that).

Your best bet is to try and pay off loan 1 quicker - either by making overpayments or seeing if you can get a better rate than 9.9% which is high but not ridiculous.