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    • Greyhorse
    • By Greyhorse 13th Jun 17, 9:12 AM
    • 93Posts
    • 14Thanks
    Loan to pay off debt?
    • #1
    • 13th Jun 17, 9:12 AM
    Loan to pay off debt? 13th Jun 17 at 9:12 AM
    Hi all.

    I'm wondering if this will be possible and if so what's the best way to go about it.

    I currently owe 12k on a car at repayments of 360.
    I want to get a loan for 15k to pay this off and also pay of my credit cards to avoid high interest charges. The repayment on this loan is significantly less than im currently paying which means I could overpay. The current loan has high interest and is a PCP finance. I am 4K away from the walk away point.

    How would be best to go about this and also I'm struggling to see how I can borrow more money to pay off debt when I already owe too much on paper?

Page 1
    • zx81
    • By zx81 13th Jun 17, 9:15 AM
    • 16,413 Posts
    • 17,465 Thanks
    • #2
    • 13th Jun 17, 9:15 AM
    • #2
    • 13th Jun 17, 9:15 AM
    In theory you can, but you will need a very high income to to be able to carry a total of 30k.

    I'd look at smaller steps. Can you get any BT cards to shift the current card balances?
    • Greyhorse
    • By Greyhorse 13th Jun 17, 9:32 AM
    • 93 Posts
    • 14 Thanks
    • #3
    • 13th Jun 17, 9:32 AM
    • #3
    • 13th Jun 17, 9:32 AM
    Unfortunately my income has dropped hence why I can't afford the repayments on the high Apr PCP loan and was hoping to change. I am -4000 on the car hence wanted to pay it off and keep it rather than loose all I've paid into it.

    If I couldn't get a loan I could go to the garage and get a cheaper PCP- say foe 100/month instead of 360 but would this also require two loans?

    What a mess!
    • MEM62
    • By MEM62 13th Jun 17, 10:04 AM
    • 1,529 Posts
    • 1,154 Thanks
    • #4
    • 13th Jun 17, 10:04 AM
    • #4
    • 13th Jun 17, 10:04 AM
    A loan does not pay off debt - it just shifts it from one lender to another.

    The issue with PCP is that any negative equity in the vehicle will be added to the finance on your next vehicle. (PCP seems like a good deal at the outset but, in my opinion, they are not always the best way to finance a vehicle)

    As already stated, you will be a big income to secure another loan to clear your current debt. I think that the best long term decision would be to persevere with the car payments until you reach the walkaway point and then hand it back.
    • EssexHebridean
    • By EssexHebridean 13th Jun 17, 11:19 AM
    • 8,623 Posts
    • 45,385 Thanks
    • #5
    • 13th Jun 17, 11:19 AM
    • #5
    • 13th Jun 17, 11:19 AM
    OK - until you have the basics in place you're asking for trouble by consolidating. A LOT of people on here will tell you from bitter personal experience just why this is such a bad idea!

    First step: Put together your SOA (Statement of affairs) - you'll find the link in the "sticky" post at the top of this board. Make it as accurate as possible and ensure it reflects how things are right now - not how you think things *ought* to look. (As an example - if you say you're saving 50 a month for car maintenance, 50 a month for a holiday and 50 a month for emergency fund, but show no cash assets, it's pretty obvious that in fact that money is being frittered...!) Get together 12 months bank statements and CC bills to make sure you include what you're actually spending and don't miss annual expenses like insurances etc. Once you've done it I'd suggest posting it in here and we can take a look and see if there are savings to be made anywhere that you might not have thought of - you'd be surprised!

    You then put the savings into place and update the SOA to reflect the new figures - this gives you what you should have as a surplus.

    Step 2 - spending diary - note everything you spend, this accounts for the oddments that don't feature on the SOA as they pass under the radar, the odd coffee, a bus fare here and there, a trip to the shops for a pint of milk that ends up at 15 because you find other stuff you "need".

    You've now got a working budget - and the next step is to stick to it! Once you've done that for a while you know where you really stand in whether you can afford your repayments as they are, and what your best next steps are. It might be that 0% cards will work for you (and on that note - those credit cards of yours, they ARE cut up so you're not tempted to use them, aren't they?)

    Once you've attacked the debt successfully and got rid, then you'll be able to stash aside 50 - 75% of whatever you've been paying off towards saving for your next vehicle to avoid the need to use finance.
    MORTGAGE FREE 30/09/2016
    Sainsbugs 0% card: 22/12/16 1229.00/853.32 (12/02/18)
    SOA Calculator for DFW newbies: SOA Calculator
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