We'd like to remind Forumites to please avoid political debate on the Forum. This is to keep it a safe and useful space for MoneySaving discussions. Threads that are - or become - political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.
Debt Consolidation Loan - Good Idea? + Should I pay off soon to be paid off loan?

Saladin95
Posts: 5 Forumite

Hi,
I'm considering a debt consolidation loan to pay off all my debts and end up debt free for the first time in my adult life. See below for my debts and relevant details:
I've been pre-approved for a £16,000 loan at 13.8% APR (high, I know but considering all my debt I guess fair), paying back a total of £19,407. I've opted for a 3 year term at a monthly payment of £540 a month. This would have two obvious benefits:
Thoughts on what I should do? Or is this a no brainer and I should go for Option 2?
I'm considering a debt consolidation loan to pay off all my debts and end up debt free for the first time in my adult life. See below for my debts and relevant details:
Debt Type | Amount Owed | Monthly Repayment | Final Payment Due |
---|---|---|---|
Loan 1 | £1624 | £232 | February 2025 |
Loan 2 | £6000 | £219 | July 2027 |
Credit Card 1 | £4400 | £110 | |
Credit Card 2 | £1000 | £35 | |
Credit Card 3 | £1000 | £30 | |
Catalogue | £2000 | £90 | |
Total | £16,000 | £716 |
I've been pre-approved for a £16,000 loan at 13.8% APR (high, I know but considering all my debt I guess fair), paying back a total of £19,407. I've opted for a 3 year term at a monthly payment of £540 a month. This would have two obvious benefits:
- The capital is actually repaid and I'm completely debt free by 2028.
- Monthly payments drop from £716 to £540, giving me breathing space of an extra £176 a month
- Until February 2025 my monthly payments will be £714
- From March 2025 my monthly payments will be £482
Thoughts on what I should do? Or is this a no brainer and I should go for Option 2?
0
Comments
-
This is an amazing bit of double think.
Are you really suggesting that a loan is not a debt?
Moving debt from credit cards to loans means you have just as much debt as previously, which you might pay off at a level rate for longer.
Were either of the loans already listed amongst your debts used for consolidation?
Just don't do it.
Put together a proper SOA including the rates and end dates of deals and loans and we can help you sort out a payment schedule.If you've have not made a mistake, you've made nothing0 -
Debt consolidation loans are rarely considered a good idea. It just moves the debt (albeit to one more affordable) and still leaves the lines of credit open and waiting to be used again.
Might I suggest that you fill out the SOA (statement of accounts) which is on one of the top stickies and then either have a look at that to see where you might trim something or post it back here on the debt board for others to help you find a way to make things work in your current budget.
All that said you do seem to have considered things somewhat sensibly. Option 2 does look to be a better way forward. If you did that and then flung that full £234 onto the catalogue (I'm guessing that's the highest interest) it would be gone in 10 months. And then take all the excess and put it against the card with the highest interest and so on.
But best if you don't take out a new loan and find a way to put excess funds that are lurking somewhere in your budget against the highest interest item and hang on til Feb when there's more space and you can revamp your payments to get rid of this all asap.
btw - have you asked any of the cards/loan to stop charging you interest? That would make things move much more quickly.I’m a Forum Ambassador and I support the Forum Team on Debt Free Wannabe and Old Style Money Saving boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.
"Never retract, never explain, never apologise; get things done and let them howl.” Nellie McClung1 -
It’s a ‘don’t do it’ from me too!
But if you are hell bent on doing it anyway, surely it would be better to take a 3 year smaller loan to clear the credit cards and everything would be paid by July 2027? That is assuming that all credit cards are never used again which is a big assumption - so big that I can only repeat my first comment - don’t!3 -
13.8% apr doesn't sound very attractive to me.
You've got 3 credit cards. Can you not balance transfer them to 0%?0 -
Another massive NO from me, you get out of debt by using debt solutions, not by borrowing more money, however much cheaper your monthly payment "would" be, its going to cost more in the long run, and the temptation to re-use lines of consolidated credit will always be biting at your heels.
These type of loans have a very high failure rate, most end up consolidating more than once, some do it twice, three times or more, until they finally realise, you can`t borrow your way out of debt.
It always makes sense until the wheels fall off.I’m a Forum Ambassador and I support the Forum Team on the Debt free wannabe, Credit file and ratings, and Bankruptcy and living with it boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.For free non-judgemental debt advice, contact either Stepchange, National Debtline, or CitizensAdviceBureaux.Link to SOA Calculator- https://www.stoozing.com/soa.php The "provit letter" is here-https://forums.moneysavingexpert.com/discussion/2607247/letter-when-you-know-nothing-about-about-the-debt-aka-prove-it-letter5 -
RAS said:This is an amazing bit of double think.
Are you really suggesting that a loan is not a debt?
Moving debt from credit cards to loans means you have just as much debt as previously, which you might pay off at a level rate for longer.
Were either of the loans already listed amongst your debts used for consolidation?
Just don't do it.
Put together a proper SOA including the rates and end dates of deals and loans and we can help you sort out a payment schedule.No, neither of the loans were for consolidation and the cards have been a poor choice. I’ll have a look at the SOA you mention.0 -
Brie said:Debt consolidation loans are rarely considered a good idea. It just moves the debt (albeit to one more affordable) and still leaves the lines of credit open and waiting to be used again.
Might I suggest that you fill out the SOA (statement of accounts) which is on one of the top stickies and then either have a look at that to see where you might trim something or post it back here on the debt board for others to help you find a way to make things work in your current budget.
All that said you do seem to have considered things somewhat sensibly. Option 2 does look to be a better way forward. If you did that and then flung that full £234 onto the catalogue (I'm guessing that's the highest interest) it would be gone in 10 months. And then take all the excess and put it against the card with the highest interest and so on.
btw - have you asked any of the cards/loan to stop charging you interest? That would make things move much more quickly.
Re the interest stop - that'll have a negative impact on my credit history, no?0 -
[Deleted User] said:It’s a ‘don’t do it’ from me too!
But if you are hell bent on doing it anyway, surely it would be better to take a 3 year smaller loan to clear the credit cards and everything would be paid by July 2027? That is assuming that all credit cards are never used again which is a big assumption - so big that I can only repeat my first comment - don’t!1 -
sourcrates said:Another massive NO from me, you get out of debt by using debt solutions, not by borrowing more money, however much cheaper your monthly payment "would" be, its going to cost more in the long run, and the temptation to re-use lines of consolidated credit will always be biting at your heels.
These type of loans have a very high failure rate, most end up consolidating more than once, some do it twice, three times or more, until they finally realise, you can`t borrow your way out of debt.
It always makes sense until the wheels fall off.
1 -
SOA, look at www.lemonfool.co.uk.
You really don't need to consolidate if you want to clear this debt. That Very account is probably c40%, but you can clear it in a few months in 2025. Any stuff you bought that you could sell? Car boot etc.If you've have not made a mistake, you've made nothing0
Confirm your email address to Create Threads and Reply

Categories
- All Categories
- 348.3K Banking & Borrowing
- 252.1K Reduce Debt & Boost Income
- 452.4K Spending & Discounts
- 240.9K Work, Benefits & Business
- 617.1K Mortgages, Homes & Bills
- 175.6K Life & Family
- 254.1K Travel & Transport
- 1.5M Hobbies & Leisure
- 16K Discuss & Feedback
- 15.1K Coronavirus Support Boards