Advice

Dfarkas0

Hi, I'm not sure if i am writing in the correct section, but i have around £3-5k of debt.

I have tried to get a lump loan of £5k to pay of the debts and then ill only owe the lender but as my credit rating is low (due to my younger days) i am unable to obtain any loan or get a credit card. I have tried everything.

I am a lot older and wiser now so regular monthly payments would be made to pay of loans on time, but as we all know, credit ratings are what they go off and my younger days have ruined it for me.

I'm not sure what to do and my wage covers my priority bills such as rent etc but them im left with nothing.

I don't have any savings.

Are there any other options?

thank you for your time.

Grumpelstiltskin

Good job you couldn't get a loan, all it does is move the debt sideways.

Start by reading this thread.

In Debt and Wannabe Debt Free? First Steps! — MoneySavingExpert Forum

Complete a honest SOA and post it on here. Then when we see your circumstances we can give the best advice.

Dfarkas0

i really want this to be resolved as its affecting my sleep and work

sourcrates

Debt management plan likely to be what you are looking for here.

Brie

fyi - the reason you can't get a loan is because the lenders can see you are struggling to pay what you already owe.  You are asking them to give you more credit, so effectively double what you might spend.  They have no guarantee that you would use the loan to pay off the other debt so have to say no.  You might instead take the money and buy a car, pure bred dog, holiday whatever.  

I second the vote for you to do a SOA and see what advice the gang can give to help you through this.

DisabledDan

Dfarkas0 said:

Hi, I'm not sure if i am writing in the correct section, but i have around £3-5k of debt.

I have tried to get a lump loan of £5k to pay of the debts and then ill only owe the lender but as my credit rating is low (due to my younger days) i am unable to obtain any loan or get a credit card. I have tried everything.

I am a lot older and wiser now so regular monthly payments would be made to pay of loans on time, but as we all know, credit ratings are what they go off and my younger days have ruined it for me.

I'm not sure what to do and my wage covers my priority bills such as rent etc but them im left with nothing.

I don't have any savings.

Are there any other options?

thank you for your time.

I do not understand how you can have a debt of £3-5k, do you mean your credit limit is £5k but you owe £3k or that you owe £3.5k, in which case why did you want a lump loan of £5k?

There is an explanation about your credit score in this weeks tips newsletter

https://www.moneysavingexpert.com/latesttip/

Credit is a bit weird, if you do not have much then you are not showing your ability to manage your debt, at the same time if you have too much then it will also be restricted.

However, ideally you do not want to play this game unless you fully understand the objective of the lenders, they want to put you in a place where you can afford to just about service the debt, BUT you can't afford to pay off the Balance.

The £5K territory you are in is usually where a 0% balance transfer comes in handy, this takes your existing lending and transfers it to a new card that charges 0% subject to conditions which you should check carefully.  MSE has a page below showing these, you can use the eligibility checker to see if you stand a chance of getting one of these.

As you can see there are fees of around 3% for long periods of 29 months but 13 months free of charge for NatWest.

What most people do is use the extra money they are not paying in interest to pare down the debt so that it is paid off in as short a period as possible, then at the period of the offer they rinse and repeat to another bank.

• Longest 0% cards
  • Tesco Bank 29 months, 3.49% fee
  • New. Virgin Money 28 months, 3.25% fee
• No-fee 0% cards
  • NatWest 13 months, NO FEE

• 0% cards for poorer credit scorers
  • Virgin Money 16 months, 3% fee
  • Zopa 6 months, NO FEE
• Tool: Eligibility calculator

If you cut your old card in half but do not close the account then your percentage of credit used vs credit available ratio will improve and lead to a better credit limit in time.

HOWEVER, do not let these improvements in credit limit or credit score fool you into taking on more debt, your goal is not only being Debt Free but having an emergency fund in case you lose employment or have some kind of family issue. 

You do not say how much your current loans are costing you but a fixed loan of £3500 over 3 years would cost £120 a month at Barclays with 15.2% APR

That might sound appealing if you are currently paying £3,500 @ 39.90% with a Min Pmt of 4.00% or £50.00, that would take 176 months to pay off.

But that If you paid at £100 a month on a zero percent it would take 34 months to pay off, ideally you pay the same £120 that Barclays quote above and that reduces the period to pay off down to 29 months which fits in nicely for the Nat West card. Don't forget the fee of £122.  Still if you can manage £150 a month then the debt is gone in 24 months.

Once you are at zero you can use the card  for your food shopping and pay it off every month just to show you using credit, you can also use it for purchases between £101 and £30,000 so that you get the Section 75 protection that makes the credit card company jointly liable if there is a breach of contract. Again you would pay these off immediately.

https://www.moneysavingexpert.com/credit-cards/balance-transfer-credit-cards/

Refinancing loans is one thing but reducing what you pay for things is another option, the MSE website offers can reduce your mobile data and calls to under £3.5 a month, or get you £200 for changing bank, £75 if you migrate your energy to Octopus with a referral, then you can earn £50 for each friend you refer.

To help others support you and assess where savings may be achieved you are being asked to post an SOA, the link below will help you do that and you can copy the result back to this thread.

https://www.stoozing.com/soa.php

If all else fails and you do not care about a credit record then you have a semi nuclear option of a DMP, basically you stop paying any of your debts until they default and are sold.  You then negotiate for a discount of up to 60% off.  It will trash your credit record for 6 years but that is a good discipline if you know you never want debt again.

Dfarkas0

DisabledDan said:

Dfarkas0 said:

Hi, I'm not sure if i am writing in the correct section, but i have around £3-5k of debt.

I have tried to get a lump loan of £5k to pay of the debts and then ill only owe the lender but as my credit rating is low (due to my younger days) i am unable to obtain any loan or get a credit card. I have tried everything.

I am a lot older and wiser now so regular monthly payments would be made to pay of loans on time, but as we all know, credit ratings are what they go off and my younger days have ruined it for me.

I'm not sure what to do and my wage covers my priority bills such as rent etc but them im left with nothing.

I don't have any savings.

Are there any other options?

thank you for your time.

I do not understand how you can have a debt of £3-5k, do you mean your credit limit is £5k but you owe £3k or that you owe £3.5k, in which case why did you want a lump loan of £5k?

There is an explanation about your credit score in this weeks tips newsletter

https://www.moneysavingexpert.com/latesttip/

Credit is a bit weird, if you do not have much then you are not showing your ability to manage your debt, at the same time if you have too much then it will also be restricted.

However, ideally you do not want to play this game unless you fully understand the objective of the lenders, they want to put you in a place where you can afford to just about service the debt, BUT you can't afford to pay off the Balance.

The £5K territory you are in is usually where a 0% balance transfer comes in handy, this takes your existing lending and transfers it to a new card that charges 0% subject to conditions which you should check carefully.  MSE has a page below showing these, you can use the eligibility checker to see if you stand a chance of getting one of these.

As you can see there are fees of around 3% for long periods of 29 months but 13 months free of charge for NatWest.

What most people do is use the extra money they are not paying in interest to pare down the debt so that it is paid off in as short a period as possible, then at the period of the offer they rinse and repeat to another bank.

• Longest 0% cards
  • Tesco Bank 29 months, 3.49% fee
  • New. Virgin Money 28 months, 3.25% fee
• No-fee 0% cards
  • NatWest 13 months, NO FEE

• 0% cards for poorer credit scorers
  • Virgin Money 16 months, 3% fee
  • Zopa 6 months, NO FEE
• Tool: Eligibility calculator

If you cut your old card in half but do not close the account then your percentage of credit used vs credit available ratio will improve and lead to a better credit limit in time.

HOWEVER, do not let these improvements in credit limit or credit score fool you into taking on more debt, your goal is not only being Debt Free but having an emergency fund in case you lose employment or have some kind of family issue. 

You do not say how much your current loans are costing you but a fixed loan of £3500 over 3 years would cost £120 a month at Barclays with 15.2% APR

That might sound appealing if you are currently paying £3,500 @ 39.90% with a Min Pmt of 4.00% or £50.00, that would take 176 months to pay off.

But that If you paid at £100 a month on a zero percent it would take 34 months to pay off, ideally you pay the same £120 that Barclays quote above and that reduces the period to pay off down to 29 months which fits in nicely for the Nat West card. Don't forget the fee of £122.  Still if you can manage £150 a month then the debt is gone in 24 months.

Once you are at zero you can use the card  for your food shopping and pay it off every month just to show you using credit, you can also use it for purchases between £101 and £30,000 so that you get the Section 75 protection that makes the credit card company jointly liable if there is a breach of contract. Again you would pay these off immediately.

https://www.moneysavingexpert.com/credit-cards/balance-transfer-credit-cards/

Refinancing loans is one thing but reducing what you pay for things is another option, the MSE website offers can reduce your mobile data and calls to under £3.5 a month, or get you £200 for changing bank, £75 if you migrate your energy to Octopus with a referral, then you can earn £50 for each friend you refer.

To help others support you and assess where savings may be achieved you are being asked to post an SOA, the link below will help you do that and you can copy the result back to this thread.

https://www.stoozing.com/soa.php

If all else fails and you do not care about a credit record then you have a semi nuclear option of a DMP, basically you stop paying any of your debts until they default and are sold.  You then negotiate for a discount of up to 60% off.  It will trash your credit record for 6 years but that is a good discipline if you know you never want debt again.

thank you so much for the detailed response, extremely helpful.

I do not think i have a chance with a balance transfer credit card.

I wanted a loan of £5k to pay of my debts of around £3-5k then all i owe would be the lender but again i cant get a loan as my credit rating sucks!

Grumpelstiltskin

I explained in post 2 what you need to do. A loan is not the way forward.

TheAble

DisabledDan said:

What most people do is use the extra money they are not paying in interest to pare down the debt so that it is paid off in as short a period as possible, then at the period of the offer they rinse and repeat to another bank.

That's the theory anyway. In reality the spending continues and the overall debt just gets larger. 

Rinse and repeat until it's DMP time...

MEM62

Dfarkas0 said:

Hi, I'm not sure if i am writing in the correct section, but i have around £3-5k of debt.

I have tried to get a lump loan of £5k to pay of the debts and then ill only owe the lender but as my credit rating is low (due to my younger days) i am unable to obtain any loan or get a credit card. I have tried everything.

I am a lot older and wiser now so regular monthly payments would be made to pay of loans on time, but as we all know, credit ratings are what they go off and my younger days have ruined it for me.

I'm not sure what to do and my wage covers my priority bills such as rent etc but them im left with nothing.

I don't have any savings.

Are there any other options?

thank you for your time.

They have just done you a huge favor by refusing.  You cannot borrow you way out of debt.  It was borrowing that put you in this hole in the fist place and, at some point you have to realize that you need to stop digging.

Post up an SoA and the guys and girls here with give you some great guidance on dealing with your situation.     

sourcrates

You don`t extinguish a fire by pouring more petrol on it, likewise you don`t get out of debt by borrowing more money.

Something always comes up that needs urgent cash before you pay off what you already owe, and the cycle just continues over and over again.

We see it every day on this forum, most of those who, eventually need an intervention of some kind, have already consolidated possibly more than once, it just doesn't work for the majority of folk.