Consolodation Query

weedav

Hello everybody!

I rang my loan company today to get an outstanding balance figure, and I was offered more money to pay off my credit cards and reduce my interest. I have tried the snowball calculator, but I am still unsure whether I'd be better off taking them up on this offer. If any moneysaver can give advice, I'd be so grateful )

Current State:

Bank of Scotland Loan - £6614 at 11.3% = £248 per month, 27 months left.
HBOS credit card - £2000 at 15%
Barclaycard - £620 at 19%
TOTAL - £9234

I can easily afford my minimum loan repayment of £248, and depending on overtime / bonus I am trying to pay between £100 and £200 off my credit cards. The credit cards don't seem to decrease very quickly though :os

SO, what was I offered....

Firstly, a settlement figure of £6143 on my existing loan. Then, an additional £3056 to pay off my credit cards - I'm not sure why I have an extra £400 there. So the total loan amount would be £9200.

The interest rate would be 7.9%, 36 months at £290, total amount payable £10440.

When I asked the advisor, I was told there would be no penalty for overpayments - something I am likely to do as my income can vary from month to month.

When I tried the snowball calculator, it appeared that my debts would be paid off in the same amount of time whether I stick or move. Is this correct??

Hope somebody can shine some light!

Thanks,
David

crystal_clear

Hi there
I am no expert but I see you are paying more per month with all 3 combined debts than you would be on the one loan so firstly I would ask are you comfortable paying these amounts and not leaving yourself penny pinching
if the answer is yes then I would suggest trying to get a 0% CARD AND TRANSFER THE BALANCES then you are paying more off quicker and the cards are gone in 14-29 MONTHS APPROX depending on how much you continue to pay them above the minimum and so is the loan saving you atleast another 7 - 10 months if not more on all your 3 debts. To me that would be the option i would take if I could afford to carry on with current situation but getting a better rate loan for the balance only over 24 months would be a big plus to 11.3% is high and there are much better deals around

I am sure someone much better qualified than me will be along shortly and may be able to give better advice again so hang fire and good luck what ever route you take :beer:

weedav

Cheers crystal!

One thing I probably should mention is that I seem unable to get ANY 0% credit card transfers

This is probably due to my moving around quite a lot in the last two years, but due to the nature of credit referencing, I cannot be sure. I think I have a good credit history, no defaults etc. At the moment though, that's not an option.

Ta!

tinalives

You should get a copy of your credit report so that you can see if there's anything on there that shouldn't be.

mountainofdebt

Can't really say whether you should consolidate or not but a couple of things spring to mind:

if you can't get a 0% deal then depending on your credit limit, I would ring Barclaycard and ask them what deal they can offer you....they seem to be offering a lifetime of transfer rate for 6.9% on their web site.

Provided they offer you this ask them to increase your limit (if insufficient) so that it covers your existing balance with them and your HSBC. If they press you to do the transfer there and then, tell them you haven't got the details with you.

Then ring up HSBC and ask if they charge a BT fee. If they don't, then trasnfer the balance from Barclays. (if they do then I would still be tempted to do it but only you can decide if its worth it given what I'm going to say)
Once the balance is clear with Barclays and you have a statement with a nil balance from Barclays ring them up and trasnfer the WHOLE balance from HSBC so in effect you are transferring back to Barclays the balance you transferred from Barclays to HSBC plus the balance that was on HSBC.

The only difference now is, is that the two balances, instead of attracting interest at 15% and 19% is now attracting interest at 6.9% for its lifetime.

What I would then do is throw any spare money into the loan (provided you can do that).

What I've suggested (re your barclaycard) is in one of Martin's articles ....so you know it makes sense!

weedav

Well, I have just cancelled my new loan. With a three month payment holiday I don't really need, plus an extra two minths on the payments, it would be nearly 5 months extra on my debt free day.

I'm glad I used the info on this site, because - like many do, I'm sure - I would have otherwise presumed that switching to a rate of 7.9 % across all my debts is better.

The problem is settling my original loan early, but still paying most of the interest on it AND my new loan!

I have apllied for a virgin 0% card, and I'm about to ring Barclaycard as mountainofdebt has suggested. I don't think they'll increase my limit though! It's worth a try

Cheers,
Dav

mountainofdebt

Even if Barclaycard won't increase your limit it would be worth dong what I suggest if only to get your %age down to 6.9%!!