Consolidation loan with bad credit

Mr.NSG · 5 January 2018 at 1:08AM

hi all,

So ill warn you now, we arent talking big numbers here but i would really like some advice.

First of all, ive got really bad and have a little bit of debt,
Overdraft £3000 and credit card of £3000.
Im considering a loan to pay back the credit card and an overdraft, both i encure monthly interest charges totalling around £220 and not really any chance in the foreseeable future of getting these back in the black.

Here is where i need help.

Due to my bad credit, ive been offered a £5500 loan over 5 years paying back a total of £9000.
Now i know this is a rip off bit here is where i am considering it;
-credit improval
-managable repayments £150
-first loan ive ever had and need to show i can pay back a loan in hope of a mortgage later on in life
-out the red and in the black

Why im sceptical
-its 5 years,
-£9000
-there could be better out there

Im wondering if there is anychance of getting anything better or is that the best i can hope for given poor credit?

Should i try and pay off my debts on my own accord?

Ill leave it there and thank you in advance

CommitedToChange · 5 January 2018 at 1:13AM

Look into snowballing your debts - that is an awful offer and imho not the right move.

Paying off the debts without the loan will still improve your credit.

Try paying an SOA in the debt free wannabe board - you'll get loads of help and advice there.

-taff · 5 January 2018 at 9:14AM

Consolidation loans very rarely work. You pay off everything you owe, then keep the credit cards 'in case of emergencies' then a year or two dw the line and you're in the same position again.
Pay off your debts the old fashioned way. And cut up your credit cards anyway

DCFC79 · 5 January 2018 at 9:34AM

The offer you have might be the best you can get so even though the apr is high its not a rip off.

This thread might be worth a read http://forums.moneysavingexpert.com/showthread.php?t=5567669

Nebulous2 · 5 January 2018 at 9:42AM

That isn't a very good offer, but may be the best you can get.

You don't need to pay off a loan to demonstrate that you can manage a mortgage. Paying off a credit card can do the same thing.

How do the charges for the overdraft and the credit card break down? What is the APR on the credit card?

You haven't given exact figures, but that looks to be an APR of 24% on the loan, which isn't horrendous given you have bad credit.

I'm making some assumptions here, but I'm thinking you have been hit by changes to overdraft rates and the biggest issue for you is the rates on that.

The problem with consolidation is often that it pushes out the timescale, reducing the monthly payment but increasing the total interest. Then people become fedup of paying brefore it is cleared and take out further credit as well.

Another option would be a £3000 loan - clear the overdraft and cancel it. Cut up the credit card, stop using it and repay what you can. Then as your history improves and any adverse drops off you could try to move anything left on the credit card onto a 0% card.

ViolaLass · 5 January 2018 at 10:29AM

How much money do you have spare each month to throw at your debts?

Mr.NSG · 5 January 2018 at 10:39AM

Thanks Taff

You know what i think your right, its just a quick fix soluation and those verg rarely work. Its a lack of disapline that has gotten me into this mess, so im just gonna have to draw up a budget and stick to it.

The worst thing is my financial situation isnt that bad im just really hopeless with money, im trying to get better but sometimes it just feels like 2 steps forward 3 steps back.

Thanks again for the solid advice

-taff · 5 January 2018 at 10:55AM

Np.
You can try finding a 0% interest cc or a money transfer card and paying that off with no interest hopefully.

Mr.NSG · 5 January 2018 at 10:58AM

Thank you nedulous

Some good ideas and ill consider them.

My OD costs me about £90 on a 2350 od that im constantly at the bottom of, and my credit card about 130 a month on a £3700 credit card. Totalling £220. I dont have the statments on me atm to give u exact apr’s

I think the consensus is that the credit card needs to go.

Ill have a look at a smaller loan but as u (and others) have said after a short time ill just get fed up with paying that too.

Its a bitter pill to swallow but jm guessing there is no quick fix.

Thanks for the advice!

ViolaLass · 5 January 2018 at 11:15AM

The thing that will make the biggest difference to both the amount you owe and your credit history is to throw more money at your debts.

Do you have spare money? Could you cut back? Make more?

Mr.NSG · 5 January 2018 at 11:49AM

morning

Its difficult to say, im really not being very disaplined at all. I put 400 into my credit card each month, which i spend almost immediately. My wages go into my od and are spread out between some other direct debts.

I put about;
700 into debts
700 into everything else food, dd’s, saving ect
And thats my wages done each month.

Very boring and not really letting me live, which is why i just end up spending and going back to square one each month. This is why i initially decided to consolidate, to free up some funds and actually not feel so burdened with debt. However its not appearing to be the best idea.

Slightly lost

Consolidation loan with bad credit

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