Increasing overall debt to reduce monthly debt

CliveOfIndia

JacobusV said:

Alternatively I stick with how things are and hope commission from my job bails me out eventually. But with that and general living cost and kids, it's becoming an uphill climb. 

As per my previous reply, re-financing the loan is saving you less than £100 per month, at a cost of £5k more overall.  Get an SOA filled out and share it here - odds on you'll be able to make a £100 pm saving from your existing budget with some guidance and a fresh pair of eyes to look over your figures.

Brie

Another vote here for NOT getting a new loan.  But the SOA will reveal more than you've said so far so I agree that would be a good way to look at the bigger picture.  Don't post it back here if you don't want to, even to do this for yourself would be a good exercise to see what your real spending habits are.  You might be able to spot savings to be made.  Frankly that's probably one of the best reasons to post back here as the debt experienced amongst us may be better at seeing where there are holes in your budget or what looks excessive in expenditures.

kimwp

The point when you are borrowing to get out of debt is the point at which to consider if a dmp or similar solution is needed. If you can't afford unsecured debts, it's almost always a good idea to stop paying them so they default and follow the dmp route.

Exodi

JacobusV said:

The renogotiated loan is with my original provider as unfortunately, based on the loan options who would give me a loan on the tool offered by this website, only my original provider would offer me a loan. So it's my original provider or bust really. Alternatively I stick with how things are and hope commission from my job bails me out eventually. But with that and general living cost and kids, it's becoming an uphill climb. 

Sorry, but please could you provide the details, or at least the interest rates, of the current loan and renegotiated loan?

The reason I keep asking for this, is that this is what is important. The amount you borrow is of secondary importance because the interest isn't generally paid upfront (though I'm still mystified about why the loan goes up £5k).

That said, trying to guesstimate what your loan rate is (since you keep forgetting to tell us), £13k at 10% interest over 3 years is about £15k repayable in total (with about £2k being interest). You can see from those numbers alone that it is hard to see how adding £5k onto your debt to bring it up to £18k would be a good idea (potentially with interest on top of that).

I'm still confused about what the £5k is for? Could it be that that's additional amount you'll pay in interest over the term by extending it perhaps? Not that it's immediately added to the balance?

It's hard to give any form of advice when all of these details aren't being shared. At the moment you've just said is loan A or loan B cheaper - loan B is £5k more, but you'd pay about £2.4k less in monthly payments over 2 years. If we go by just those surface details, the decision seems obvious.

(And not addressing the common reality that people taking out consolidation loans without addressing the route cause often start spending again on their now empty cards).