Loan advice (high interest rate...)

ryanm8655 · 11 October 2016 at 6:37PM

Hmm...I guess that would explain the leap from 8-16% within a couple of years when I increased my debt and consolidated.

I have a regular saver set up into which I pay £250/month which matures in March, it currently has about £1500 in. Perhaps I could use this to overpay...

[Deleted User] · 11 October 2016 at 6:44PM

Unless you're getting more than 17% on the regular saver, use it to over pay immediately.

ryanm8655 · 12 October 2016 at 9:06AM

So I woke up to a declined application from admiral...think I should probably wait a month until my credit file has updated...

Re: using savings to clear it sooner...My gf and I will be moving in together in March so this would wipe out my savings for a deposit etc. I know financially it makes sense in the long run but in the short term it reduces my liquidity...I will also need to buy a cheap car around then (I am currently carless) as I will no longer be living in London (I'm in a wheelchair so a car is pretty essential outside London). So my concern is that I will then have to dip into my overdraft in March.

Though if I do refinance the debt I think I will reduce the amount with savings as the reduction in repayments will have an impact monthly.

I think perhaps I need to do a proper budget, save as much as possible between now and March having done that budget, and revisit the situation then perhaps in terms of reducing it down...

foxy-stoat · 12 October 2016 at 8:06PM

You cannot borrow your way out of debt, just over pay by £200 a month and see where you are in a years time.

You won't get a better rate as the purpose will be for debt consolidation.

ryanm8655 · 13 October 2016 at 9:27AM

I see where you are coming from, but the fact that the rate is higher than the rate on my £5k overdraft, and most of the £9k available credit I have on cards I don't think it is crazy to think I can find a better rate. (I know it was a dumb decision to take the loan/rate at the time when it was worse than all of my various smaller bits of debt but at the time I was going through considerable mental strife and wasn't thinking clearly, I just wanted one payment so that I knew how much I had each month and that I would be debt free one day...)

Likewise my income has increased considerably since then too.

Gaz83 · 13 October 2016 at 10:11AM

ryanm8655 wrote: »

I see where you are coming from, but the fact that the rate is higher than the rate on my £5k overdraft, and most of the £9k available credit I have on cards I don't think it is crazy to think I can find a better rate. (I know it was a dumb decision to take the loan/rate at the time when it was worse than all of my various smaller bits of debt but at the time I was going through considerable mental strife and wasn't thinking clearly, I just wanted one payment so that I knew how much I had each month and that I would be debt free one day...)

Likewise my income has increased considerably since then too.

This is where you are going wrong.

You are not a good risk for a lender. You already have considerable debt, and you've tried to consolidate once before, which hasn't worked, only a year ago.

You are not going to be offered a low rate. You need to realise this.

Candyapple · 13 October 2016 at 10:16AM

How much is your annual salary?

Problems I can see:

1. You have a loan for £13k and £9k available on credit cards and want to take out a further loan to clear the £13k. Unless you are earning circa £70k you will fail on affordability.

2. Being on the electoral roll does help, but it takes time to build up history and most companies like to see stability so at least 3 years minimum at one address/being on the ER.

3. It can take 1-3+ months for any information to be updated with the credit reference agencies. Let's say you closed down all your cards with the £9k available, it may still take up to 3 months for this to be shown on your credit reports. Don't forget you will need to check with all 3 (Experian, Equifax and Call Credit) to make sure they are all the same.

4. Lots of applications in a short period of time makes you look desperate and will definitely affect your credit history.

Solutions:

1. Close any unecessary accounts/credit cards which you aren't using.

2. Any savings accounts you have, use them to clear off the loan debt.

3. Don't make anymore applications.

4. In 3 months time pay £2 to Experian to check your credit report and sign up with Noddle and ClearScore to check monthly for free whether your accounts are showing as closed/electoral roll info appearing etc.
5. Work out a budget and throw as much money as you can towards this loan debt and then perhaps in 6 months time check a loan eligibilty site whether your situation has improved because at the moment all you are doing is setting yourself back further and further with each application.

ryanm8655 · 13 October 2016 at 11:26AM

Thanks for the replies.

Agree with the above approach. Seems sensible.

Disagree with the post saying that consolidation previously didn't work, my debt has gone down since then so it did work...but because the interest rate is so ridiculous a year of paying circa £320/month has only reduced the amount of debt by about £1k, everything else has been interest. Now I want to get rid of it more quickly and pay less interest overall, that is the reason for another loan, not because I need more cash. Not that I am saying you are wrong to say I won't get a better rate, perhaps I won't, but I don't think it's crazy to think I could...and if I am such a high risk why on earth do I keep getting money chucked at me (credit cards and overdraft limits get increased).

To be fair 12K was the amount to settle the loan about 3/4 months ago, it is probably a bit less now and I also have savings of about £1500 so a £10k loan would do it.

My gross income is about £46K.

-taff · 13 October 2016 at 11:37AM

If your gross income is 46k, why are you not overpaing anyway? £320 is nothing a month out of that wage, you could have easily paid double, while you waited for a better deal.

Banks don't exist to be nice to people, they exist to make money, they are making lots of money off you, hence being chucked credit.

NorthernMonkey1 · 13 October 2016 at 11:49AM

My HSBC personal loan allowed unlimited repayments, but the total amount owing is not recalculated until you ask for a settlement figure.

You should increase your payments to the maximum possible by reducing your spend, and use your low interest savings to repay your high interest debt.

You can also continue to complain about the high APR, but do so in the knowledge that you're completely wasting your time.

Loan advice (high interest rate...)

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