Financial Advise

Casdawer

Casdawer

Casdawer

Soldato
Joined
14 May 2009
Posts
4,329
Location
Hampshire
Hi Chaps,

It's the New Year and one thing I really want to do this year is sort out my monies.

At the moment I'm pay £440 per month on my biggest debts which are -

£190 for car lease
£150 for loan
£100 for credit card.

In 3 years all 3 of these will be gone, but in till then I'm having to fork out £440.

The other choice that I have is to get myself a Consolidation Loan. I've checked how much it would cost me over 5 years and it's £340 which gives me a saving of £100 per month and on top of that, I would also own the car and not 'lease' it which would be good thing (though I would change the car I currently have).

So my question is, what would you guys do?

Obviously paying £100 less each month is nice, but then I have to pay that £340 for the next 5 years :eek:

Anyway, I'm ready to receive the wisdom of OcUK!
 
You end up paying less for £440 over 3 years than you do for £340 over 5 years. Unless you got the length wrong on the consolidation loan it would cost you more.

Edit: So you may save £100 a month now but 3 years later you're still paying that £340. A lot more than £Nil.
 
[TW]Fox;20942786 said:
What are the particulars of each of the debts? APR etc. Impossible to suggest before we know that.
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The car is 7.7% APR and after the 3 years I have the option to buy it, give it back or finance it again.

The Loan is about 9% APR I believe. The Loan is with Tesco Bank and my plain is to get the consolidation loan from them as they will lower your interest rate if you get a new loan when you have another one with them.

Credit Card currently has £3000 on it (I KNOW!) and the interest on that is 19.9% APR.

Pudney said:
You end up paying less for £440 over 3 years than you do for £340 over 5 years. Unless you got the length wrong on the consolidation loan it would cost you more.

Edit: So you may save £100 a month now but 3 years later you're still paying that £340. A lot more than £Nil.
Click to expand...

I understand that, but it makes my life a lot easier now and that extra £100 can go into my savings account to pay off the debt early. The lower interest on the consolidation loan will mean I probably pay the same amount.

SpeedFreak said:
what car do you lease?
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Volkswagon Polo - Basic Edition. Only has AC. No remote central locking and no alloy wheels (search the Cars thread for my EPIC FAIL) :D
 
Casdawer said:
I understand that, but it makes my life a lot easier now and that extra £100 can go into my savings account to pay off the debt early. The lower interest on the consolidation loan will mean I probably pay the same amount.
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ALARM BELLS!

The consolidation loan will almost certainly be charging more in interest than you will get in your savings account. Reducing the loan repayments in order to top up your savings is a bad idea, you are just creating more debt in the longer term.

You will not pay anywhere near the same amount in total with the consolidation loan:

Current payment £440 * 36 months = £15840
Consolidation payment £340 * 60 months = £20400

In other words you will end up paying more than £4000 extra.

My advice would be to try and find a cheap, long term credit card balance transfer. Currently you are getting rooked for 19.9% every month, so shifting that will be a big step in the right direction.
 
If I was you I would look at getting a loan to pay off your credit card. The car and the other loan dont really need to do anything with 9% arp isnt that bad for a loan at the moment. If you could get them to lower it and get the credit card in there as well that would be a good deal. You could probably get that all sorted over three years much like you are now and you wont have that big 20% apr on that card. At you balance of £3000 you are paying £600 a year in interest alone at 20% so if you think about it like that you have to pay £600 in a year before you even start paying off the balance and so at your current rate of £100 a month you are really only paying half of that off the balance. More of your money would go towards the loan if you got it becuase its less APR and so you pay it off quicker.
 
The only burning issue here is the credit card. The APR on the others isn't bad. The car is a crap deal, but then we told you that in Motors and got flamed at the time :p

Leave the car and the loan alone, but get that card paid off ASAP. Probably the best way to do this is to apply for a card with 0% on balance transfers, and balance transfer the 19% card onto this card. This will stop the interest acruing.
 
How much extra do you have over the £440 you're paying out currently? Can you afford to increase it, or are you struggling to meet current payments?

A long term credit card balance transfer is a good idea, although you would need to consider the best route to take at the end of any free period (unless its 0% for life of balance).

I would ask the leasing company about options to hand the car back. If it's available there may be cheaper ways to run a decent car.

If you can afford more than currently, you should focus any extra on the credit card, as it's a big interest rate. You should not have savings either - it should all go towards the credit card.
 
Pudney said:
You end up paying less for £440 over 3 years than you do for £340 over 5 years. Unless you got the length wrong on the consolidation loan it would cost you more.

Edit: So you may save £100 a month now but 3 years later you're still paying that £340. A lot more than £Nil.
Click to expand...

HangTime said:
ALARM BELLS!

The consolidation loan will almost certainly be charging more in interest than you will get in your savings account. Reducing the loan repayments in order to top up your savings is a bad idea, you are just creating more debt in the longer term.

You will not pay anywhere near the same amount in total with the consolidation loan:

Current payment £440 * 36 months = £15840
Consolidation payment £340 * 60 months = £20400

In other words you will end up paying more than £4000 extra.

My advice would be to try and find a cheap, long term credit card balance transfer. Currently you are getting rooked for 19.9% every month, so shifting that will be a big step in the right direction.
Click to expand...

[TW]Fox;20943495 said:
The only burning issue here is the credit card. The APR on the others isn't bad. The car is a crap deal, but then we told you that in Motors and got flamed at the time :p

Leave the car and the loan alone, but get that card paid off ASAP. Probably the best way to do this is to apply for a card with 0% on balance transfers, and balance transfer the 19% card onto this card. This will stop the interest acruing.
Click to expand...

*Please let the OP listen instead of getting a loan and a Subaru Impreza or some such*
 
I think it's a very bad idea to get a consolidation loan to pay off the car and also pay the final payment, if that's what you're intending.

For the CC, check out the balance transfer cards on moneysavingexpert.com. You can get something like Virgin Money which has 16 months 0% on balance transfers with only 1.99% fee. It also has a low minimum payment at 1% or £25 so you could focus on getting the loan paid off faster.
 
Look at trying to transfer the debt to a 0% interest card, should give you a few months relief.

After that you will probably want a loan to take out the credit card debt, 19.9% interest is an unforgiving sum :S
 
Have you considered selling one of your organs?

That or mess about with your credit card balance with some 0% transfers, that clearly will be the stinger.

Car deal sounds a shame so I'm going to find the relevant flame-thread...
 
Not massive debts. But as said get a 0% balance transfer card to stop the high interest card from acrruing more. Pay the highest interest off first and only when it's gone should you save
 
The problem is with the credit card transfer is that I doubt I'm going to be able to get a credit card with a £3000 limit. Most places only offer a £1200 limit!
 
Casdawer said:
The problem is with the credit card transfer is that I doubt I'm going to be able to get a credit card with a £3000 limit. Most places only offer a £1200 limit!
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then get a £1200 limit and transfer as much onto that card as possible, pay off the most expensive debt first.
 
Get rid of that Credit Card ASAP. As above, transfer £1200 onto a 0% one and concentrate on getting rid of the 19.9% APR one. Pay the card off then worry about the car lease/loan.
 
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