Loan? What do you think?

sonicshelly

Hi, my debts are
£704 barclay card - £100 a month
£1475 Egg card - £50 a month
£280 Nationwide card - £10 a month
£2400 Northern Rock Loan - £96 (3yrs)
£1500 overdrawn

At the moment we are paying out £250 month out on debts and struggling, also our overdraft just keeps getting bigger and bigger.
From my budget we will always be £1500 overdrawn as we have no extra cash to throw at it.
But I have drawn up a new budget and if we take out a loan to clear all our debts and start again with the will power to not spend what we haven't got, then we can look ok written down on paper.
So would you take the loan of £7000 over 6 years for £140 a month repayment. We can afford this outgoing and hopefully be ok with our budget. I know its a long time but at least we know where we stand and it will be a few years before I return to work as I have a child.
Would appreciate your thoughts.

tallyhoh

Any chance of you transferring to a 0% credit card.

sonicshelly

Hubby doesn't think he his credit limit on a credit card will be enough.

Would we be able to put £7000 on a 0% credit card?

rog2

sonicshelly wrote: »

So would you take the loan of £7000 over 6 years for £140 a month repayment.

'Consolidation Loans' are often very tempting, yet can lead to much higher repayments, when taking into account the term of the 'loan'. These 'Loans' can often contain very high, usually hidden, early repayment penalties and other costs. This is particularily true of those 'glitzy' companies that advertise on the TV.

That said - 'consolidation' can be a solution when:

a. the 'loan' is with a reputable, main-stream lender - such as the high street banks or building societies, and is at normal interest rates.

b. the borrower uses that 'loan' purely for the purpose of 'consolidating' other debts. The biggest problem is that, once you have paid off your credit card, there is always the 'temptation' to keep these cards for a 'rainy day' and, before you realise, you have racked up the 'credit' once again, and end up with double the problems that you currently have.

At the end of the day, the decision will be yours, and yours alone. Personally, I would try to explore every other option, before 'consolidation', but if you do go ahead, please cancel, and cut up, all your existing credit cards, as soon as you have paid them off, and resist the temptation to apply for other cards, or credit, during the period of the 'loan'.

Good luck.

tyllwyd

What are the APRs on the cards, and the APR of the loan you are considering?

sonicshelly

Hi

Barclaycard is 0% but finishes in April.
Nationwide is 15.9%, had this card for years, never usually put loads on it.
Egg card is 16.9%, again a card hubby has for big items we buy or electricals
The loan is over 3 yrs and then the overdraft, which as I said just gets bigger and bigger.