Serious Advice Needed

GUNN

Hello everyone, im new here and in need of some financial advice.

Im 21 years old and live in England, Im in financial bother all down to a bad choice in car. I purchased the car (MG ZT) 2 years ago for £5000, I got a lloyds TSB personal loan (36 month) for this, everything was all fine and dandy. In the last 2 month though the car has needed £2700 of repairs! Unfortunatly I had no savings to pay for this so I have a £1200 overdraft and £1500 on a lloyds credit card. The loan with interest added came to £5,832, I have now £4698 left on the loan. So im in £7398 worth of debt!

Now the loan gets paid off £200 a month and will do untill 2010 as in the loan agreement, its fixed interest.

I can free up £200 a month (doing overtime) for the overdraft and credit card but I get charged a fair bit of interest. I have applied for new credit cards (11 in total) to balance transfer but unfortunatly it seems I have a poor credit rating (who can blame them) and I get refused.

The car has been valued at £4000, unfortunatly I need a car for work (im a field engineer). I have thought about getting a smaller car but I need all my tools to fit in and I need to do a lot of motorway miles so a hatchback isnt viable.

What would the advice be in my situation?

Carry on paying off the loan (£200 month) and creditcard & overdraft (£200 a month)?

Get a consolodation loan (if my credit rating allows me to)?

Merlot

Hi and welcome the DFW board.

Firstly, it would help us to help you if you posted an SOA (a list of incomings and outgoings).

Consolidation is rarely the answer, and I doubt very much if you have been refused for so many cards in recent weeks you will get an offer of a loan, do not try and apply for more cards, this is affecting your credit rating.

Merlot.x.

Idiophreak

GUNN wrote: »

I purchased the car (MG ZT) 2 years ago for £5000, I got a lloyds TSB personal loan (36 month) for this.....
....The loan with interest added came to £5,832, I have now £4698 left on the loan.

Just out of curiosity, if you got the loan 2 years ago over 36 months, shouldn't you be 2/3 of the way through by now? Or was the start date delayed?

Merlot

Gunn, did you purchase PPI with the loan? Is this why your outstanding figure is so high, if you did buy it, you could try and claim it back, they are usually not worth the paper they are written on. Have a read of Martins article regarding PPI.

GUNN

Idiophreak wrote: »

Just out of curiosity, if you got the loan 2 years ago over 36 months, shouldn't you be 2/3 of the way through by now? Or was the start date delayed?

Thanks for the replies, Yes the loan was a "buy now and pay later" offer lloyds TSB had at the time.

I do indeed have PPI on the loan and I am now currently filling in the template letter provided,

My incoming is (monthly):

800 (net wage) or

1000 (net wage + overtime)

My outgoings are (monthly):

200 (bank loan)

100 (fuel)

100 (car insurance)

210 (rent)

100 (entertainment, new clothes if needed)

40 (food, £10 a week)

Merlot

GUNN wrote: »

Thanks for the replies, Yes the loan was a "buy now and pay later" offer lloyds TSB had at the time.

I do indeed have PPI on the loan and I am now currently filling in the template letter provided,

My incoming is (monthly):

800 (net wage) or

1000 (net wage + overtime)

My outgoings are (monthly):

200 (bank loan)

100 (fuel)

100 (car insurance) - :eek: This is really high, can you do a comparison and then go through Quidco and get some cashback.

210 (rent)

100 (entertainment, new clothes if needed) - to high, you are in debt and you need to reduce this somewhat

40 (food, £10 a week)

£10 per week on food - is that enough?

Do you own a mobile phone? Do you pay council tax etc, or do you live at home with parents etc.

I have added that up to £750 and you bring home £800, you are very close to the wire and I suspect you are spending more than £100 per month, do keep a spending diary, it will help.

How much was the PPI on the loan?

Merlot

You do realise that the car is costing you £400 per month, that is half of your wages per month. I would seriously think about selling it.

Merlot

Where is the credit card payment on your SOA and payment towards your overdraft?

Sell the car for £4000, repay your overdraft and credit card and spend the reminder £1300 on a car (I know its not much for a car, but its what you can afford what matters, not what you would like at the end of the day), inturn lower insurance and therefore more money to repay the loan, this loan figure may well be reduced somewhat if you are successful with the PPI claim.

LilacPixie

Sorry to be all responsible but the MG ZT starts at a 2.5 litre petrol doesn't it?? Is that not alos the car based on the rover 75 and S-type jag??

Why would a 19 year old want such a big hulk of a car??

Anyway that aside I can't see any utilities in your SOA no provision for car tax MOT etc and no council tax.

£10 a week seems a small amount for food and £100 a month entertainment seems alot when ultimatly you can't afford it.

Ultimatly you should look at getting rid of the car but i would guess a 2001 ZT is only worth 2.5k at best and as you bought it for 5k 2 years back i'm presuming it must be around a 2001.

GUNN

Merlot wrote: »

Where is the credit card payment on your SOA and payment towards your overdraft?

Sell the car for £4000, repay your overdraft and credit card and spend the reminder £1300 on a car (I know its not much for a car, but its what you can afford what matters, not what you would like at the end of the day), inturn lower insurance and therefore more money to repay the loan, this loan figure may well be reduced somewhat if you are successful with the PPI claim.

I am working overtime so in effect im bringing home £1000 a month,

The credit card payment would be the extra £200 income from overtime, £200 is minimum, often I can bring home £250-300 a month extra but as a failsafe I will say I get £200.

£10 a week is enough for food as I shop at local no frills supermarket, I buy raw ingredients and make meals from there.

I agree that £100 a month for "entertainment" is high, I thought it was a realistic figure as I included other shopping, IE items such as toiletries.

I dont live with the parents but I live in their property so the £210 for rent covers insurances and taxes.

I appreciate your help a lot!

EDIT: The car is a 1.8T model, I started an electronics job after an apprenticeship as a field agent. I needed a "motorway" cruiser as I cover many miles (all paid for by the company), I am too young for a company car so I had to get the car myself. The ZT seemed at the time good value for money, unfortunatly it came with problems! The problems have been sorted (head gasket failure) but I fear it may affect the resale value of the car. Its a 53 reg model and online valueing sevices value the car at around £4000 for the specification of the car itself.

As you can tell so far by my postings im not very financially minded at all, I am getting steady 6 monthly pay rises though (next one in September to 12480 Per annum). I guess I thought with the pay rises it would be difficult at the start but will get easier, I did not take into account the engine would blow up! Also prices for food itself and petrol REALLY dont help with the fluctuations!

Merlot

£950 will be your outgoings with your c/c and overdraft repayments. It is more than your net income, you cannot guarantee overtime especially in the current economic climate.

I urge you to think carefully about selling the car, if not that, then do look at your insurance and your entertainment budget, they are far too high.

Re: you edit: Petrol and food prices are only going to increase in the foreseeable future, you need to take action now on the car, I appreciate you could be getting a pay increase soon but nothing is certain.