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  • FIRST POST
    archived user
    How the flip are you meant to get a debt consolidation loan if your declined because your debt high!
    • #1
    • 5th Aug 18, 1:39 PM
    How the flip are you meant to get a debt consolidation loan if your declined because your debt high! 5th Aug 18 at 1:39 PM
    It's so frustrating.

    I have 31,500 I would like to refinance as it's now on 25% interest rate (mostly credit cards). I was swapping it around, but can no longer do that.

    My credit score is 701 (poor), ONLY due to affordability. Never missed a payment. No late payments. No CCJs or otherwise. Not a homeowner either, which for some bizarre reason counts against you.

    If I could combine into a nice say 7% APR loan over a longer term (5 years), I've worked out it would save me 281 a month.

    It seems my only option is go to a debt consolidation agency/charity. But I don't want to do this. I want to pay my way. I don't mind paying the interest. And I imagine having arrangements with creditors would kill my credit score.

    So what is a guy left to do???
Page 2
  • archived user
    Thank you.

    But maybe you could show me where I said the three assumptions you have claimed?

    1. I regret it
    2. I cannot afford the debt I have
    3. I think I have the right to consolidate my debt
    • ViolaLass
    • By ViolaLass 5th Aug 18, 3:35 PM
    • 5,465 Posts
    • 7,557 Thanks
    ViolaLass
    You don't want to consolidate all of it, do you? Some of it is on decent rates.
  • archived user
    No, I worked out 4 refinance options this morning. Although I am keen to pay back the debt as soon as possible and the higher the loan, usually the lower the rate. I would prefer to keep the loans and credit cards on good rates separate. Just the high APRs I want to move.

    It is OK tho. I think I have just figured out a solution through our business manager.
    • Cropstar
    • By Cropstar 5th Aug 18, 4:29 PM
    • 23 Posts
    • 4 Thanks
    Cropstar
    Everyone makes their own choices, but it's quite clear from what you've posted that nobody will see you as a good credit risk given the amount of debt you have.


    I would seriously think about how much you earn, spend and therefore how much you can pay back each month. Focus on the highest interest cards. Over time your interest payments will fall, freeing more to pay down the debt.



    If you start to make serious inroads into the debt, then you should start to become eligible for 0% balance transfer offers, take those to reduce the interest you paying on your credit cards (and close the old cards/reduce the limits so you are not tempted to use the credit). Less interest means you can repay more of the debt each month.


    I had a similar attitude to you (but only have around half that debt level). I find I can't get the absolute best deals but still have my credit card debt on 0% and a loan of 4.9%, which I've been making inroads into rapidly over the last few months. Interestingly as my debt has fallen my credit rating has steadily been improving.
    • sourcrates
    • By sourcrates 5th Aug 18, 6:01 PM
    • 15,912 Posts
    • 14,981 Thanks
    sourcrates
    Thank you.

    But maybe you could show me where I said the three assumptions you have claimed?

    1. I regret it
    2. I cannot afford the debt I have
    3. I think I have the right to consolidate my debt
    Originally posted by lawero1

    Hi,


    Re-write option 3, and call it The right to end up Bankrupt.

    Because, that is where the majority of debtors who consolidate end up, or in some other debt solution.

    You appear to be a bright, switched on chap, but it makes me cringe when i see people wanting to consolidate debt they simply cannot afford, you have not yet had your light-bulb moment, consolidation may take care of your debt in the short term, but you have accrued all that debt somehow, and if you carry on with the same lifestyle, you will accrue it again, after 8 years on these forums, i have seen it happen many times.


    These things tend to follow patterns you see, first you get one card, then another, and another, starts to get a bit much paying it back, so then you exhaust all the 0% deals, when they dry up, you look to consolidate, some people do this more than once, next step is debt management, if you are not careful, and listen to advice.


    Its good you were declined, although you will not see it as been so, the only sure fire way of paying down your debts, is by correct budgeting, formulate a budget, and stick to it, overpay when and where you can, snowball your debts, there are many ways to get rid of it, without resorting to further borrowing.

    Good luck with it, please take this advice in the helpful manner it was given.
    Last edited by sourcrates; 05-08-2018 at 6:08 PM.
    I'm a Board Guide on the Debt-Free Wannabe, Credit File And Ratings, and
    Bankruptcy And Living With It, boards. "I volunteer to help get your forum questions answered and keep the forum running smoothly".
    Board guides are not moderators and don't read every post. If you spot an abusive or illegal post then please report it to forumteam@moneysavingexpert.com. Any views are mine and not the official line of MoneySavingExpert.com.

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    • -taff
    • By -taff 5th Aug 18, 6:13 PM
    • 8,959 Posts
    • 8,930 Thanks
    -taff
    But maybe you could show me where I said the three assumptions you have claimed?
    Originally posted by lawero1
    Okey Cokey

    1
    1. I regret it
    Originally posted by lawero1
    I said it looks like a regret, not that it was.

    2
    2. I cannot afford the debt I have
    Originally posted by lawero1
    I have 31,500 I would like to refinance as it's now on 25% interest rate (mostly credit cards). I was swapping it around, but can no longer do that... It seems my only option is go to a debt consolidation agency/charity. But I don't want to do this.
    Originally posted by lawero1
    No-one goes to a debt consolidation agency/charity if they can afford their debt. And to be picky, I didn't say you couldn't afford it.

    3
    3. I think I have the right to consolidate my debt
    Originally posted by lawero1


    Surely it is crazy to say someone who would benefit most from a consolidation loan can't get one because they are trying to consolidate too much debt and save the most amount of money.

    Maddnes
    Originally posted by lawero1
    All of your posts are to do how great a time you had and you don't regret it.

    They are also about how much money you owe and why will no-one step in and take this unseemly amount of interest off you when logically, you would be so much better off without it. Why is there no 'innovative' company who will step in and pay this debt for you so you ca pay them bacl less than you are now paying....

    Everything you have said paints a picture of someone who had an amazing time doing wonderful things, but is now paying it back and doesn't like it.


    But you don't have to argue with me about it or listen to me at all, it's a public forum, you asked for responses and you got some. I, on the other hand, am not whinging about unfair interest charges or my level of debt.
    • nic_c
    • By nic_c 5th Aug 18, 6:20 PM
    • 1,857 Posts
    • 968 Thanks
    nic_c
    Consolidation loans ARE mislabled, but its because they are usually higher APR aimed at people with debts. It's new debt and so you will always be considered as if you are not using to pay off credit cards.

    So are you making minimum payments on your 0% and 6.9% and maximising paying off the double digit cards first? How long will this take, and have you looked at your budget to maximise repayments.
    • meer53
    • By meer53 5th Aug 18, 6:26 PM
    • 9,334 Posts
    • 13,616 Thanks
    meer53
    Always best to do things that you can afford, then you never end up in your situation. If you can't afford to travel the world, then you just have to cross it off your list. This seems to be an alien concept to a lot of people. I'd like to travel more but i can't afford it, so i can't. It's not difficult. Your analogy of paying 10 or 15 works fine if it's 10 or 15, but i suspect your borrowing was more like 4 figure amounts so the analogy doesn't work.
    • Carrot007
    • By Carrot007 5th Aug 18, 6:41 PM
    • 1,855 Posts
    • 1,615 Thanks
    Carrot007
    I have read lots of stories these day on here that such loans are problematic like this.


    What happened to ones like I got after university. Say 1999? I went to my bank for a such a consoladation load and they wanted all my credit cards (all not just theirs, in fact I might not have had one with them), they cut them up there and then and delt with the paying of and closing the account themselves.



    Does no firm do anything like that anymore? Just curious.



    Not that it helped. I opened new accounts and had a further 2 consolidation loans before I worked out how to stop spending!
    • redux
    • By redux 5th Aug 18, 6:42 PM
    • 18,713 Posts
    • 25,038 Thanks
    redux
    I appreciate you trying to help.
    Imagine you were queuing for the most amazing thing you always dreamed off. Maybe it is a concert, a club, a plane to somewhere you have always dreamed of going. In front of you is an endless queue of people. It!!!8217;s 10 entry. You may get in, you may not. Then someone says to you, I will let you skip the queue but instead of paying 10, you have to pay 15.

    Would you do it?

    Some would, some would not. I am in the first camp. I choose to pay more by borrowing money to do the things I most wanted to do, while I had the chance, knowing very well that my future self would have to take the burden.
    Originally posted by lawero1
    If that 15 is rolled up with 3 years of interest at 26%, then it is 30. 6 years, 60. 9 years, 120. Etc.

    When people on here are talking about considering consolidation loans, even if they can apply and succeed, the advice from people here who have been in the situation themselves is extremely cautious, about the strong risk of things running away, the card balances creeping up again regardless.

    What is needed is the rigour to review patterns of spending, trim it, making more available to pay the highest rate balances down.

    By the sound of things not all of your borrowing is at the highest rates. Set yourself ambitions to be back ahead of when the 0% offers will end, and meanwhile start making decent dents in the high interest parts. Then it may become easier to rework some down to lower rates.
    • Larac
    • By Larac 5th Aug 18, 9:48 PM
    • 849 Posts
    • 531 Thanks
    Larac
    With the level of debt your in, I would suspect you won't get a consolidation loan and you wont get 0% BT. I had a similar level of CC debt and ended up on a DMP - the debt was frozen and paid it off in 5/6 years. I also had a secured loan and as soon as that was paid off and the DMP I started to be offered % CC. Prior to that I was being offered sub prime CC. Your options are very limited - but I am not sure you have grasped this. As others have said nobody knows whats coming around the corner so don't assume you will be in a position to service the debt in the future.
    • Sncjw
    • By Sncjw 6th Aug 18, 7:19 AM
    • 1,969 Posts
    • 1,155 Thanks
    Sncjw
    How much do you earn per year?

    With your debt when you get a consolidation loan your doubling your debt. The lender will be assessing you on affordability on 63,000.

    If your struggling to pay on 31.500 then your going to on 63,000. They don!!!8217;t know your going to use it pay off debts. Many people get the loan and then they think oh I have extra money to spend and sink more into debt.

    Get your self on debt free wannabe page and post a soa so we can see where to cut back to help pay towards the loan
    • foxy-stoat
    • By foxy-stoat 6th Aug 18, 8:56 AM
    • 3,229 Posts
    • 1,826 Thanks
    foxy-stoat
    No, I worked out 4 refinance options this morning. Although I am keen to pay back the debt as soon as possible and the higher the loan, usually the lower the rate. I would prefer to keep the loans and credit cards on good rates separate. Just the high APRs I want to move.

    It is OK tho. I think I have just figured out a solution through our business manager.
    Originally posted by lawero1
    Phew, that was lucky then....as long as your "business manager" isnt running a lottery syndicate.

    Seriously, you cannot borrow your way out of debt, you need to pay your way out.

    Just concentrate on the highest interest debt and only play the minimums of the low interest stuff.

    Sell as some stuff as you can, down value your car and buy a cheaper one, do the PPI reclaim thing and hope nothing un-budgeted happens.
    • Herzlos
    • By Herzlos 6th Aug 18, 9:09 AM
    • 8,650 Posts
    • 7,938 Thanks
    Herzlos
    I understand the idea of do it it whilst able but you also need to be aware of when you pay it off and how long before you start regretting it.

    I did similar and have similar levels of debt which I can manage. I didn't take it seriously enough when single, then married. Now I'm paying a bit more than he base line comfortably due to having kids, so whilst not struggling; I wish I'd thrown a lot more money at it 5 years ago.

    My bank did consolidation loans that requires you pay off the debt in front of them and ideally closed the accounts. Have you spoken to your bank?
    • Candyapple
    • By Candyapple 6th Aug 18, 9:46 AM
    • 2,969 Posts
    • 2,352 Thanks
    Candyapple
    48,000 credit limit.
    Some on 6.9% for life.
    Some on 0% until 2020.
    Some on 18%
    Some on 25%
    Two loans (5% and 10%)
    Originally posted by lawero1

    If you have 48k credit limit and you owe 31k, can you not balance transfer the 18% and 25% debt onto the cards which have 17k spare?

    For proper help you would need to list it like below eg:

    Santander 10k balance / 15k limit - 0% until Apr 2020

    Reason being, that way we can tell you which card companies are more lenient with their deals and what options would work best for you.

    The easiest way out of paying high interest debts is to increase your income. Whether that be finding a better paying job, or working overtime at your current job or working a second job alongside your main one - the faster you can increase your income the quicker you can pay your debts.

    The second part is snowballing your debts so that you are paying the highest interest ones first.

    Third and finally, you have to suck up paying the high interest - think of it as the price you pay for having travelled. Until you clear a decent portion of your debt down, most lenders will not touch you. Once say you've cleared 25% of your debt, then you should look to see if you have any 0% offers with your credit cards or look to see if you can apply for one to shift across the higher interest debts into 0% debts.
    I'm a Board Guide on the Credit Cards, Loans, Credit Files & Ratings boards. I'm a volunteer to help the boards run smoothly, and I can move and merge threads there. Any views are mine and not the official line of moneysavingexpert.com
    • purdyoaten2
    • By purdyoaten2 6th Aug 18, 10:43 AM
    • 951 Posts
    • 467 Thanks
    purdyoaten2
    Since this is not possible. I have to suck it up for 2 years until two main loans are paid in full, freeing up 780 a month, which can be diverted to the high interest credit cards.



    Absolutely the way to go and a much better solution than what you are proposing.
    • davidwood681
    • By davidwood681 6th Aug 18, 11:03 AM
    • 689 Posts
    • 2,068 Thanks
    davidwood681
    To get help first you must admit you have a problem.

    No matter how you see yourself and how good with money you think you are the reality is nobody in the right mind would get involved with you financially
    • MEM62
    • By MEM62 6th Aug 18, 11:19 AM
    • 1,894 Posts
    • 1,534 Thanks
    MEM62
    My credit score is 701 (poor), ONLY due to affordability.
    Originally posted by lawero1
    ONLY? Affordability is the express route to the slippery slope and if financial institutions are concerned about your affordability so should you be.

    Thank you. But it's OK. I'm on top of my finances.
    Originally posted by lawero1
    31K of debt at 25% suggests otherwise.

    Surely this is what credit scores are for? To assess a persons credit worthiness and past history.
    Originally posted by lawero1
    Actually no, credit scores are randomly generated numbers that serve two purposes, firstly to persuade people to sign up for the CRA's subscription services in order to 'improve' your randomly generated number and secondly, to amuse those that collect numbers.

    Lending decisions are made on the basis of your credit history with each lender having their own criterion. In your case it appears that lenders have concerns over your current level of borrowing in relation to your income.

    It is a positive that you enjoyed the money and have no regrets having borrowed from your future self. However, now the tally man has come to call and you need a plan to deal with it - particularly as it will impact future plans you may have for such things as house purchases and starting a family.

    The DFW board is great for advice in this respect. Post an SOA up there and you will receive some really good advice on taking control of and dealing with your debt.
    • Clive Woody
    • By Clive Woody 6th Aug 18, 1:41 PM
    • 4,535 Posts
    • 5,118 Thanks
    Clive Woody
    Out of curiosity, where did you go travelling?

    After finishing my degree and before I started my PhD I went travelling and had an amazing time. I ran up decent sized debt, but no regrets at all, it was a brilliant experience. Debt were all paid off and I have many happy memories and lots of drinking stories to bore my mates with.

    I do quite a bit of international travel for my job and having done a fair bit of travelling before, few things phase me. I see my student travels as a sort of work experience.

    You've probably heard it already, but focus on clearing the debts with the highest APR first, throw every spare penny at them and then work through the other debts in order of highest interest rates. Over-payments, no matter how small, all count and can make a big difference. I've always made over-payments on my mortgage and this is why it'll be gone in a couple of year's time, 6 years early and paid off before I am 45.
    Rugby Union - The Greatest Game
    • Clive Woody
    • By Clive Woody 6th Aug 18, 1:49 PM
    • 4,535 Posts
    • 5,118 Thanks
    Clive Woody
    Actually no, credit scores are randomly generated numbers.
    Originally posted by MEM62
    No they are not.

    They are values generated using various algorithms and take into account many factors from a person's credit history. We do not know what calculations are used to reach these mystical values, but they are not random (they may not be logical in some case I concede).

    To make things more "exciting" different institutions calculate your credit-worthiness differently which makes it a bit of a lottery but the credit score from the various agencies serves as an indicator of whether you might be eligible for a loan
    Rugby Union - The Greatest Game
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