loan or cards help please?

gelbean

hi

I was on the phone to lloyds yesterday and they basically talked me into consolidating all my cards and overdaft into a loan in addition to my other loan. The rate would be 22% and over 5 years by which time I would be debt free as my other loan would be paid of also.

i appreciate it is a high interest rate but it would make me pay every month and would mean it was paid off without really thinking about it - if that makes sense although money would be very tight

however i know it would be cheaper if i switched the cards to 0% balances and just tried to pay them of as and when i could. i appplied for an egg card a while back to try and start this proccess but they are messing me about and i dont feel i am getting anywhere!

do you suggest i stay with the loan idea which will take less will power and effort on my part or keep juggling my cards and if its the second option what would you do to get rid of my 2700 pound overdraft? i agreed to the loan over the phone so am I still able to cancel it - i think i need to sign the Terms and Conditions before it all goes through- is that correct?

i would be grateful for any advice

tyllwyd

Without any other information to go on, in principle a loan at 22% over 5 years seems like a crazy idea. I put the figures into a calculator, and it came up with £1,774.26 in interest.

Don't sign anything, have a look at all your other options first. You might not be able to get all your debts onto 0% deals, but 22% has to be absolutely a last resort.

gelbean

this is what i am thinking I am too easily talked onto things - this is how the debt started - some bloke walkin round Halfords talked me into getting a credit card somehow and it kinda spiralled!! i think with the loan i was just been lazy but you are right it is going to work out loads more expensive!!

gelbean

high OD and Lloyds CC are 20%, Halfords is 30% dont even know the Barclaycard one but think its around 20 as well.

gelbean

see this is what i'm thinkin - i was just seeing the loan as being a bit less effort wich isnt really very money saving is it?!?!- sometimes i need a kick up the !!!!

gelbean

see this is what i'm thinkin - i was just seeing the loan as being a bit less effort which isnt really very money saving is it?!?!- sometimes i need a kick up the !!!!:rolleyes2

gelbean

No but i have looked at it long and hard and cant see much room for improvement - i have added it below

income - 1450

outgoings - 1427

outgoings
mortgage - 647
council tax - 101
gas/elec - 60
water - 35
pet ins - 35
house ins - 11
phone- 30
virgin tv/phone/internet - 30
loan - 131
barclaycard - 60
Halfords CC - 100
Lloyds CC- 35
Food 100
overdraft charge 35
life insurance - 6
tv licence - 11

gelbean

i need to look into my overdraft as i got into the habit of just extending it online everytime i needed to

definitely need pet insurance- one of my dogs ended up costing me 600 pounds last year which i could never have got treatment for without the insurance but i am going to look at getting it cheaper for the time being

phone is on contract but i think i could probably drop it to 25 pounds - am trying really hard and making people call me now instead of me calling them

yes the life ins is tied to mortgage

thanq for helping me!!!

Shineyhappy

Do you have any way of bringing in some extra income to help get the debts paid off quicker? Maybe a lodger or a second job or Ebaying some unwanted items?

I would avoid that loan like the plague and instead visit some of the challenge threads like raise ten pounds a day or the olympic challenge thread.

kizzykizzywizzy

Hi there at the moment you've only got £23 left over for haircuts/clothes/gifts etc what about travel expenses?? do you have a car?
I use a PAYG mobile & hardly spend any on it
Are you able to go interest only on your mortgage for a while to free a little to pay the debts off?
You can pay your council tax over 12 months may free a few quid a month ( though I use my 2 free months to pay for a years car tax )
Do you have a spare room you could rent out to make a bit of money?
What were the monthly payments on the loan? were they that much lower that they would make a difference to you? or in the end, like I did when I consolidated, are they going to leave you so short that you start using the cards again!!
22% is terrible anyway! If it were me, & I knew what I know now about consolidation & the debt spiral it gets you into, I would try & balance transfer to a 0% card asap, or even a low apr for life of balance as even that will be cheaper than the loan.
By the way I'm not an expert, just in the same boat as you & don't want you to go down the same road as I did!

kizzykizzywizzy

Meant to say, if you do go the cards route - do not be tempted to spend on them as after the initial 0% on purchases you will pay interest on those purchases for the life of the debt.
Best option is to cut the cards up once received & set up a direct debit for the payment so you don't pay late as they can withdraw the low or 0% apr if you make a late payment too!