Consolidation Loans, do they even exist?

DCFC79 · 28 November 2019 at 11:49PM

EssexHebridean wrote: »

Various lenders do market their loans under that heading though - see the links posted earlier.

So they do exist, that shows me.

Thrugelmir · 29 November 2019 at 12:01AM

The term consolidation really only applies to the purpose of the new funds. Not uncommon for people to apply and then not use the funds for that purpose. Resulting in a higher level of indebtedness and the lender exposed to a greater risk of default. If your repayments are currently affordable why do you need a consolidation loan?

MusS10 · 29 November 2019 at 12:02AM

Thanks for all replies.
I will choose to ignore the sarcastic comments amongst the replies simply because I clearly stated within my original post that I was not looking for lectures and nor was I disagreeing with anyone who is anti debt. In fact, I got many close friends who are debt free and would rather go without than borrow money and I love them to bits and respect them immensely for their will power and strength of character.
I am not, have never been and nor will I ever be a judgemental person. I respect all opinions each to their own. " I believe everything but I am attached to nothing"..
As for me, I prefer to live my life as happy and comfortable as possible. I am not suggesting for one bit that I am right to choose borrowing in order to afford the life style that I have. But it works for me and I am happy with it, that's all what matters.
I like to change my car every 3 years, I like to live in an owned house, I like to go on holiday every year, I like to donate to charities, I like to wear designer clothes , I like to eat healthy food and I like to play golf and go to the gym ..
If I try doing all the above without borrowing, it will be impossible so I carefully take out credit making sure that I can afford the repayments first before committing.
I have an emergency pot in place for unforeseen circumstances.
Lately, I began to think to cut my working hours down which will reduce my earnings hence why I started to look into the infamous consolidation loan route. It is just a thought to slash my monthly outgoings to resonate with my reduced earnings and continue to live happily ever after, that's all

@Ben8282 Yes I tried the eligibility check for a consolidation loan and it failed.

So the truth is then NO SUCH THING AS CONSOLIDATION LOAN it is just a marketing scam! Right??

Thrugelmir · 29 November 2019 at 12:18AM

MusS10 wrote: »

So the truth is then NO SUCH THING AS CONSOLIDATION LOAN it is just a marketing scam !!!

That's your personal view. That the majority will disagree with. That's a judgemental observation on my part.

enthusiasticsaver · 29 November 2019 at 12:26AM

There are banks which market loans as consolidation loans and what rate you are offered or indeed if you are even offered one depends on affordability and credit history as you already know. Some people get them with no issue if the debt is relatively low compared to income and all other factors being equal like good credit history, affordability etc etc.

Have you applied for one and been turned down or offered a bad rate? What exactly are you asking as your OP seems to be a lecture to those of us who choose to avoid debt and advise against debt consolidation and a reminder it is your choice to stay in debt? If you are not a DFW why bother posting?

enthusiasticsaver · 29 November 2019 at 12:28AM

I have just seen you failed your application so I guess the bank sees you as a bad risk. You will need a plan B then.

Nebulous2 · 29 November 2019 at 4:15AM

Thrugelmir wrote: »

The term consolidation really only applies to the purpose of the new funds. Not uncommon for people to apply and then not use the funds for that purpose.

That has always been the case. When there was a craze for remortgaging lenders expected people to spend the money on their house. There were many, many people driving around in their new kitchen.

OP it isn't lifestyle or a desire not to enjoy themselves that is the reason for many people forswearing debt. It's a recognition of what it costs in interest. People here sometimes refer to debt as borrowing from your future self. Eventually you are going to need the wherewithal to repay it. As you reduce work and income that becomes increasingly problematic.

Lots of people at the golf club will be in your position, paying a lot to service debt. Many of them will be doing their sums and thinking of slowing down. Some people at the golf club will have a large 6 figure sum in their pension, and a smaller 6 figure sum outside it. They are the ones who are best placed to reduce their hours, or may have already stopped completely. The ones paying £700 a month in debt repayments are the ones who will find it difficult, as they are paying for the spending made by their previous self.

For me it isn't about judging people, simply a practical decision about what I think will work. I guess I'm roughly your age. I haven't been a high earner, nor a high saver. I'm probably kind of middle of the road. Many of my pleasures in life aren't dear though. We get a lot of enjoyment from caravanning. It's possible to get a campsite in France / Spain for 15 euros a night. Move every 3-5 days, cycle into town, see the sights, visit a museum, eat some local delicacies and move on. We're budgeting for doing that 4-6 months a year. That isn't expensive, but more importantly it's what we enjoy. Some of my contemporaries will spend the same money on a two week cruise. They've made their choices, and I've made mine. For many of them being stuck in a caravan with two dogs is the stuff of nightmares. For me it's what keeps me going on the bad days at work.

Budgeting and lifestyle choices are two different things. They are closely related, and have a huge impact on each other, but it's possible to choose and enjoy things that don't cost much money.

Davy_Jones_II · 29 November 2019 at 7:51AM

May I ask, if your target is to be as comfortable as possible then how does carrying significant debt fit in to that?

Overall, because of the cost of interest, you’ll be less well off through your route, less secure, and with less spending power than if you’d not taken it on.

Once you hit your limit and are just servicing the debt you have less money every month than you otherwise would have.

TripleH · 29 November 2019 at 8:43AM

MusS10, by consolidation did you mean that if you got a loan the bank would transfer the funds direct to your other lenders cutting you out?

I think with a loan like this, it would be a lot harder process than people think if experience of consolidation loans in business are considered (accepting they are 2 different scenarios).

EssexHebridean · 29 November 2019 at 11:16AM

It's about the way the wording is used, isn't it. So rather than thinking of it as a "Consolidation loan" - instead ignore what the marketing says and call it what it really is - "a loan taken out for the purpose of consolidating debt".

As for the lifestyle thing - I'd love to retire from work, move to a nice sized ready-to-live in house in the Hebrides, buy a boat and a horse, and spend the rest of my days pottering about the islands, taking photos, riding, going out on the boat and flying back each weekend during the summer for the airshows, but my income doesn't allow that, and I don't have the guarantee of a big inheritance in my future to make "borrow now, pay back later" a viable option for me - and yes, to my mind that is the ONLY way that living a lifestyle far above your means is a safe option.

The problem with the approach of using other people's money to fund a champagne lifestyle on a beer budget is that eventually, the road runs out. Consolidating to reduce monthly payments extends the life of the debt. During that time, you are also looking to reduce your income - but will you be cutting back on the designer clothing, the new cars every three years, the holidays every year? If you intend to carry on with that lifestyle as usual, the £400 a month you are saving on the repayments, plus the reduced income from dropping your hours, is going to mean a lot more borrowing. Mainstream lenders are already starting to baulk at your affordability assessment - so to borrow you are going to have to start going sub-prime and accepting the high interest rates there. When you start using sub-prime your credit history will start to look less "excellent" (indeed - the affordability thing suggests that it has already taken a hit, and being turned down for a loan won't have helped that either).

The reason people are urging caution here is that we can see what you can't, or are choosing not to, currently - that you are at the top of a steep and slippery slope - and at this point you have the choice - a step back leaves you on solid - albeit possibly still slightly shaky - ground. A step forwards and the slope beckons, and the only way is down.

Consolidation Loans, do they even exist?

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