Need a loan from somewhere but not sure which source

NorthernKitty

Problem: 

Hi, I am presently in situation where for various reasons I will need to borrow £3500 in the next 2 months to afford middle payment instalment for home improvement (unavoidable).  I have paid first (nearly £6000) instalment on my usual (high apr) credit card and will pay that off using savings next month after Credit card statement produced. I had to use emergency savings to replace stuff that broke recently so have less money than I did have when committing to this home improvement project, but have enough for final instalment (£1300 ish) due at end of July . I need to source the remaining mid instalment of £3500ish, (due when home improvements being done in mid July) and don’t know the best way to do it minimising hard searches on credit file which might make lending harder:

I have dyscalculia so numbers tend to float around my head, I would prefer one lender to make it easier but not sure if that is the best way.

Due to past history (bankruptcy 11 years ago due to financially abusive ex husband causing havoc, I have never had my own personal unpaid debts), apart from owning credit cards for building up credit file paid off fully each month I have avoided debt/borrowing up until now. I have always lived very frugally in post-divorce life, so have small amount of money spare at the end of each month after mortgage/bills.  However,  my wages have halved in the past year to just over £18000 so realistically (unless my random Ebay sales improve drastically!)  will need to be able to pay it back over the space of a year or two or three. 

As far as I know, my most sensible ways to borrow the £3500 are:

A) My Credit Union - £3500 would apparently be 16.5 APR over 2 or 3 years, can make overpayments. A lot less APR if borrow £5500.

B) 0% credit card for full amount- applied for most likely one top of comparison, based on soft-search but they would only offer me £1500

C) Bank loan from my or another bank- will need hard credit search and might not offer whole amount

D) Using current credit card again for payment, then trying to get several 0% transfer credit cards if one lender wouldn’t loan me whole amount to cover it? I see on some people’s posts that they have numerous 0% credit cards, I am just worried if I don’t manage to get enough %  card credit to cover the £3500 I’ll end up with most of it still on my regular card which is something like 27% APR? How easy is it for someone on lower income to get multiple 0% credit cards? 

E) Mixture of bank/CU loan and 0% credit card- but that’s more hard searches at once so might one search put off the other lender? 

Or is it best just to go with the Credit Union which is obviously a trustworthy lender, and just try and overpay? Or borrow a higher amount for less APR for longer and overpay? 

Sorry about long post, I don’t want to burn bridges by applying too many times and failing, messing up my credit record, just struggling to think straight! I am frugal to point of most things in my house being second hand, inc clothing, I don't eat meat or dairy, not had had a professional haircut in over 30 years, never bought an alcoholic drink in my life etc, but lenders don’t take that into consideration when trusting people with money! 

Thanks if you've read this far!

Brie

I'm liking the Credit Union option. What's the APR for the higher amount? Might be worth going for that to get a lower APR and overpay what isn't needed currently?

NorthernKitty

Thanks for the reply, sorry, CU online form currently says 11% for over £5500, my brain isn't that mathematical to figure out differences, but I guess it would give me a bit of breathing space knowing I could pay a chunk back. On the initial form (without doing a hard search application) it doesn't say about overpayment rules or the like.

Brie

OK so trying to keep it simple as possible….

If you got £3500 at 16.5% over 2 years you'd have to pay about £166.39 a month. Total interest cost £659.73.

If you got £5500 at 11% over 3 years you'd have to pay about £176 a month. Total interest cost £1009.94. I did this over 3 years to give similar monthly payments. If you got this over 2 years the monthly payments would be much higher at about £248 but total interest much less at £676.87.

Obviously if you could make an overpayment on the £5500 loan the interest would go down. What you'd need to find out is if that would lessen the monthly payments (unlikely I think) or shorten the time to repay.

If you can make an overpayment of £2000 in month 2 on the £5500 at 11% and had the monthly payments still at £176 you would pay the loan off in less than 2 years (22 months?) and pay about £426 in interest. A significant saving in my mind.

Hope that makes sense. if not ask me to explain further.

NorthernKitty

Thanks, I will go off and process that information!

ManyWays

Can I ask why your income has halved?
And how large the third payment is and when is it due?
When does your current mortgage fix end and what mortgage rate are you currently paying?

NorthernKitty

Hi, I sadly had to change jobs.

The third payment is due at the end of July, £1300 as previously mentioned.

Mortgage rate is 5.59%, fixed until Sept 28, if that helps!

ManyWays

The taking the larger loan now will let you make that last payment?

NorthernKitty

Sorry, not quite sure what you mean. I have the money for the last payment in a bank account, it's the middle payment I can't currently cover. Would obviously want to borrow the least amount possible, but if it's more expensive long-term with higher APR, would try and borrow more, if lender would let me.

clixloan

Reading your post, I actually think you've thought this through really well. Personally, I wouldn't risk making lots of applications just to see what sticks, especially if you're worried about your credit file.

If it were me, I'd probably go with the Credit Union if the repayments fit comfortably into my budget. The option to overpay later is a nice bonus too.

Hope you get it sorted, and good luck with the home improvements!