Need Personal Loan

JohnR · 30 September 2016 at 11:48AM

Having done an audit of our finances, we've come to the conclusion that a personal loan is the best solution to getting on top of things. We need to pay off some credit cards where the interest rates are so high that all our spare cash is barely covering the interest.

Thanks to the MSE Credit Club, we had seen that we could easily afford a loan which would clear both cards and give some left over to buy some new white goods that we desperately need and new brakes for the car. It indicated that my credit rating was fair/good (866). I've always made payments on the credit cards, although last couple of months there have been charges for going over the credit limit.

The Credit Club indicated an 80% acceptance chance with Zopa, and since they only do a soft search which doesnt leave a mark on your credit file, I thought I would apply. However, I've been rejected. I opted for a 5 year loan, as it would keep the repayments low and make things affordable within the budget we've drawn up.

Any advice on how to proceed from here? If the company most likely to accept me has rejected me, is it worth going elsewhere?

[Deleted User] · 30 September 2016 at 11:54AM

With recent overlimits, probably not. If you're over indebted and missing payments, you'll be viewed as pretty high risk.

What are you current balances, limits, APRs and income?

Nasqueron · 30 September 2016 at 12:01PM

Consolidation loans often fail as people clear the balance of the cards then simply refill them as the underlying cause hasn't been fixed and then they're left with 2x the debt. This is why the loan company are rejecting it as there is no guarantee you'd pay off the debt

Have you spoken about a loan from whoever provides the card where they could guarantee the card was paid off and closed?

Otherwise possibly speak to your bank about a financial hardship case where they may be able to freeze charges or even refund some to help you get on top of the debt.

JohnR · 30 September 2016 at 12:12PM

Deleted_User wrote: »

With recent overlimits, probably not. If you're over indebted and missing payments, you'll be viewed as pretty high risk.

What are you current balances, limits, APRs and income?

I've never missed a payment, never been late with a payment, no CCJs and no defaults and have always paid more than the minimum amount off the cards. The current APR on these cards is 34.5%, hence I'm looking for somewhere a lot cheaper so that I can clear them off.

If I'm "pretty high risk" it seems strange that MSE Credit Club gave me an 80% chance of acceptance (and 70% for some other providers as well, such as the AA and the Post Office).

In terms of being "over indebeted" I'm not sure what level you are talking about. My salary is £30k pa and I'm looking for £6.5k.

[Deleted User] · 30 September 2016 at 12:15PM

Unfortunately, the Credit Club isn't lending you any money.

If you want to post the details I mentioned in my first post, we may be able to suggest something.

JohnR · 30 September 2016 at 12:40PM

Current Balances: £5k
Limits: £5k
APRs: 34.9%
Salary: £30k pa

[Deleted User] · 30 September 2016 at 12:42PM

The indebtedness problem is that you say your spare cash is barely covering the interest. Which means further credit would push you over the edge.

You may intend to consolidate, but they can't make you.

You're also using 100% of your available credit. That will send signals that you're over stretched.

The best thing to do is to look to cut costs so you can get the debt down. Once you have a some space between balances and limits, you may have more of a chance.

foxy-stoat · 30 September 2016 at 3:32PM

If your monthyly interest is around £140-£150 at the moment then you should be making a minimum payment of interest + £85 to clear this in 5 years. How much do you pay towards your credit card debt and are you still using the card?

Taking out a loan over a longer period only works if you cancel the credit card once paid off and you can get a better interest rate, the difference in the loan repayment and your current credit card monthly payment should be put into a savings account or making over payments on the loan.

Consolidating without addressing the cause only cures a symptom. If you need a loan to buy brake pads/disks/calipers for your car, this would suggest that you are not in a good financial position....if you need to buy a clutch/cambelt/tyres etc in the next 5 years, what then.....use the credit card that you have cleared?

Your better off working towards over payment the credit card and not just the minimum, once you have chipped away 25% of the balance you can look for a low interest balance transfer card, you should be in a better position to get accepted.

Good luck

glentoran99 · 30 September 2016 at 3:34PM

JohnR wrote: »

I've never missed a payment, never been late with a payment, no CCJs and no defaults and have always paid more than the minimum amount off the cards. The current APR on these cards is 34.5%, hence I'm looking for somewhere a lot cheaper so that I can clear them off.

If I'm "pretty high risk" it seems strange that MSE Credit Club gave me an 80% chance of acceptance (and 70% for some other providers as well, such as the AA and the Post Office).

In terms of being "over indebeted" I'm not sure what level you are talking about. My salary is £30k pa and I'm looking for £6.5k.

80% chance of acceptance means 20% chance you wont be, you are the 20%

DCFC79 · 30 September 2016 at 7:16PM

JohnR wrote: »

Current Balances: £5k
Limits: £5k
APRs: 34.9%
Salary: £30k pa

Cut your bills, sell stuff.

Where is your money going if you have that salary ?

enthusiasticsaver · 30 September 2016 at 7:35PM

As others have said the credit companies judge that as you are up to your limit giving you another £5k is not a good idea. If you are going over your limit and incurring charges this is a big no no when it comes to applying for new credit.

It is never a good idea to just make minimum payment so my suggestion is that you cut costs and throw everything at the credit cards for a few months and hope that you are then offered a 0% deal or better rate. The interest on that debt looks like it is around £145 per month so I would be looking to pay at least double that.

Not sure what to suggest about the brakes unless you can sell something and you desperately need an emergency fund so in the future this won't throw you into a panic. Can you post an soa to see if people can suggest ways for you to save?

Need Personal Loan

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