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  • FIRST POST
    • Mr.NSG
    • By Mr.NSG 5th Jan 18, 12:08 AM
    • 9Posts
    • 2Thanks
    Mr.NSG
    Consolidation loan with bad credit
    • #1
    • 5th Jan 18, 12:08 AM
    Consolidation loan with bad credit 5th Jan 18 at 12:08 AM
    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
Page 1
    • CommitedToChange
    • By CommitedToChange 5th Jan 18, 12:13 AM
    • 1,289 Posts
    • 4,022 Thanks
    CommitedToChange
    • #2
    • 5th Jan 18, 12:13 AM
    • #2
    • 5th Jan 18, 12:13 AM
    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.
    Attempting to buy a house
    • -taff
    • By -taff 5th Jan 18, 8:14 AM
    • 7,420 Posts
    • 5,493 Thanks
    -taff
    • #3
    • 5th Jan 18, 8:14 AM
    • #3
    • 5th Jan 18, 8:14 AM
    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
    • By DCFC79 5th Jan 18, 8:34 AM
    • 31,903 Posts
    • 20,091 Thanks
    DCFC79
    • #4
    • 5th Jan 18, 8:34 AM
    • #4
    • 5th Jan 18, 8:34 AM
    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
    • By Nebulous2 5th Jan 18, 8:42 AM
    • 1,883 Posts
    • 1,127 Thanks
    Nebulous2
    • #5
    • 5th Jan 18, 8:42 AM
    • #5
    • 5th Jan 18, 8:42 AM
    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
    • By ViolaLass 5th Jan 18, 9:29 AM
    • 5,385 Posts
    • 7,440 Thanks
    ViolaLass
    • #6
    • 5th Jan 18, 9:29 AM
    • #6
    • 5th Jan 18, 9:29 AM
    How much money do you have spare each month to throw at your debts?
    • Mr.NSG
    • By Mr.NSG 5th Jan 18, 9:39 AM
    • 9 Posts
    • 2 Thanks
    Mr.NSG
    • #7
    • 5th Jan 18, 9:39 AM
    • #7
    • 5th Jan 18, 9:39 AM
    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
    • By -taff 5th Jan 18, 9:55 AM
    • 7,420 Posts
    • 5,493 Thanks
    -taff
    • #8
    • 5th Jan 18, 9:55 AM
    • #8
    • 5th Jan 18, 9:55 AM
    Np.
    You can try finding a 0% interest cc or a money transfer card and paying that off with no interest hopefully.
    • Mr.NSG
    • By Mr.NSG 5th Jan 18, 9:58 AM
    • 9 Posts
    • 2 Thanks
    Mr.NSG
    • #9
    • 5th Jan 18, 9:58 AM
    • #9
    • 5th Jan 18, 9:58 AM
    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
    • By ViolaLass 5th Jan 18, 10:15 AM
    • 5,385 Posts
    • 7,440 Thanks
    ViolaLass
    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
    • By Mr.NSG 5th Jan 18, 10:49 AM
    • 9 Posts
    • 2 Thanks
    Mr.NSG
    Viola
    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
    • -taff
    • By -taff 5th Jan 18, 10:53 AM
    • 7,420 Posts
    • 5,493 Thanks
    -taff
    You have savings? Beyond n emergency fund?

    Go to the debt free wannabe board for advice with budgeting, go to the old tyle board for ideas about cheap grocery bills and batch cooking.
    • Mr.NSG
    • By Mr.NSG 5th Jan 18, 10:57 AM
    • 9 Posts
    • 2 Thanks
    Mr.NSG
    I am looking to get a second job also to help in fact. Come april.

    I could nip and tuck some areas and am in the process of doing so.

    Im trying to find that balance between living and paying off debts.

    Genuinely, thank you all
    • dealer wins
    • By dealer wins 5th Jan 18, 10:58 AM
    • 5,797 Posts
    • 11,065 Thanks
    dealer wins
    Most people say they are not disciplined, but what they really mean is they like spending too much money. Theres a difference!

    You have got to try and get into the mindset where you only spend what you can afford to, and see debt as something to be avoided at all costs.

    Debt is basically borrowing from your future self, and over a lifetime it will rob you of £1000s and £1000s in interest that you could otherwise spend and enjoy.

    Like others have said try to really knuckle down and pay off your debts as quickly as you possibly can, there is not better feeling than being debt free!!
    Choose life
    • Mr.NSG
    • By Mr.NSG 5th Jan 18, 11:02 AM
    • 9 Posts
    • 2 Thanks
    Mr.NSG
    Well on a couple hundred pounds, its a help to buy isa that i started the other month becuase i realised i had nothing but debt and before putting money aside i was just spending money on nonsense.

    Yes i will be, i started shopping at macro for bulk buy, no thrills food. Ill check out that board for budget and further ideas
    • Mr.NSG
    • By Mr.NSG 5th Jan 18, 11:17 AM
    • 9 Posts
    • 2 Thanks
    Mr.NSG
    Dealer Wins. Cheers,

    Its true, i do like spending.

    Thats a good thought. I want my future to be safe and sound.

    Ill knuckle down but its difficult. All work and play will send me insane.

    . Thanks alot.
    • enthusiasticsaver
    • By enthusiasticsaver 5th Jan 18, 1:45 PM
    • 6,606 Posts
    • 13,847 Thanks
    enthusiasticsaver
    Posting an soa on the DFW board is a good start.

    Both the credit card and the overdraft are on horrendous rates. Are you able to get any 0% deals or have you tried ringing the credit card company or your bank to see if they can give you lower interest rates? With £2640 charges on a relatively small debt that is easily 45-50% aprs which is extremely high.


    There is no quick fix to getting rid of debt and consolidation never ever works because it does not address your attitude to debt and spending or adjust to living within a budget. You have to stop spending on the cards altogether to make any headway on this.
    Debt free and mortgage free and early retiree. Living the dream

    I'm a Board Guide on the Debt-Free Wannabe, Mortgages and Endowments, Banking and Budgeting boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of moneysavingexpert.com. Pease remember, board guides don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com
    • Mr.NSG
    • By Mr.NSG 7th Jan 18, 10:09 PM
    • 9 Posts
    • 2 Thanks
    Mr.NSG
    Hi there

    Ive been thinking really hard about what todo, i think im going to have to consolidate. Although ive heard loads of negatives and i may live to regret it, but if (alot riding on the if) i borrow successfully with a new frame of mind, attitude and respect for money and my financial future, i think it could work.

    My life will take a huge hit if i just push money into my debts, and i dont really want to make those sacrifies. As well as my credit take a double positive hit in that im clearing an CC and paying a loan.

    Ive set up a budget and after repaying the loan and life stuff i do have £300+ to play with. Which will keep me sane and safe. Where as if i dont, and attempt to pay off as advised ill have nothing spare each month and just simply cant live like that.

    Thats the conclusion ive come to. Ill let u know it due time if it was a good one or not.
    • Arleen
    • By Arleen 7th Jan 18, 10:19 PM
    • 1,150 Posts
    • 863 Thanks
    Arleen
    Posting soa on DFW will have a lot better results than consolidating, it's just an easy way out and will be spent on you fueling your spending instead of addressing the problem. No one says that you should have nothing for entertainment, but 300 quid a month when in debt is extraordinary.
    • Money maker
    • By Money maker 7th Jan 18, 10:35 PM
    • 5,008 Posts
    • 11,383 Thanks
    Money maker
    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.
    Originally posted by Mr.NSG
    But you are burdened with debt and now you want to consolidate which will almost double your debt instead of reducing it. The reason you want to consolidate is to give yourself wiggle room. You want your credit card to be clear so you can run it up again. If you clear the 2K+ off your overdraft then you will convince yourself that you have 2K's worth of spending that you can do. Please believe me that this is the way it goes - almost always and given your honest admission of your spending problems there is no other outcome on this basis.


    You need to pop on the DFW board, let them have a look at your SOA. Use a spending diary - yes, pen and paper to record every single penny that you spend. Read other peoples diaries, be stingy, make a packed lunch, walk when you can, sell things, take on another temporary job. You feel like debt is holding you life back but you can crack this mere £6K debt bit by bit a darn sight quicker than in 5 long years. Start today, do what it takes then start living properly within a budget. Please don't go down the consolidation route - it wont work.


    Good luck.
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