New turn of direction

droopinlily

Morning people. Hope you're all ok?

Since I was last one here, a new situation has arose - my dad's accountant had a look at my problems and worked out that it would be far better for me to take out a loan, pay off the credit cards, existing loan etc etc and just have one monthly payment. This way I'm actually saving money as the loan rates are lower than the credit cards and other loan.
So, I have managed to get a 12% loan from my bank and have now only got one debt.

Have I done the right thing? Oh I can never be sure about my decisions.:rolleyes:

skint_spice

Well, it's done now... Personally I would have tried to get 0% or low rate balance transfers to other credit cards rather than pay 12%. Can you overpay on the loan or save up to pay it off early and save on the interest>

I hope this works for you but generally people advise against consolidation as it doesn't address the spending issues, I got a loan to pay off credit cards in the past but paid them then spent again - whoops. Just make sure you've got your spending under control and hopefully you'll be debt free in no time.

Debt_Free_Chick

The loan rate might be lower, but whether you pay less interest depends on the term of the loan.

Still, it's done now and you sound relieved. At least you have a real target end date to aim for. Remember to save, where you can, as you may be able to pay the loan off early with a lump sum.

Good luck

Seaxwyn

HI droopinlily. Is the deal signed and sealed now? As I'm sure you can get a better rate than 12%. For example Sainsbury's is advertising loans at 7.3% at the moment.

Generally people advise against consolidation loans on here, because you may be able to pay the debts off faster by snowballing - have you tried entering your figures on https://www.whatsthecost.com and comparing that with the loan?

Also there is a tendency to build up more debt once the loan has taken off the immediate pressure. I am a casualty of that myself.

floss2

And don't forget to CUT UP THE CARDS!

CCCS_Alan

Hi Droopinlily

By taking out a loan to consolidate your debt you are making things more manageable by one payment, but increasing your debt amount overall.

This can also bring the temptation to start spending on your cards that you have cleared already as the comfort of only having to make one payment can be misleading. Giving the false impression you are in control of your situation and the next thing you know you have maxed out all your cards again and your back where you started with an extra loan to pay as well.

If you have taken the loan I would advise cancelling all your cards that you have cleared to remove the temptation of further spending, and stick to a budget to avoid getting into further debt.
If you have not paid all your creds off yet try and offer lump sums to clear debts and save money, its worth a try.

Other options could have been available, such as some DMP’s will try to stop interest and charges which could have saved you some money.

At the end of the day its your choice and if your happy with this option we all hope it works for you.

Regards

CCCS_Alan

droopinlily

Part of the problem with the Credit cards is because I am disabled, it is hard to get people to give me loans and credit cards, I have tried to get the 0% transfer cards to no avail.
Yes! The cards were cut up a while ago, so no temptation there - thank goodness.
I went to my own bank because they know my circumstances, so shopping around for a lower rate was not really available. It's a buggar when you are disabled, trying to get financial things, even life insurance is difficult!

I do have 14 days to change my mind, but at the moment it does seem the best way for me to proceed. I'll be actually paying out less on the one sum than all the others put together.

I'll let you know if I change my mind.... {in deep thought}

Sea78

Do you think you will be able to not debt any further now? Or will the temptation still be there because you have now got more 'free' money?

Sea xx

Debt147

Consolidation did work for me but it does mean sticking to a very tight budget and you're very wise to have cut up your cards (make sure they're actually cancelled as well), that's what I did x