Consolidating loans

[twoandone]

Wanting some advice really.... we have stupidly taken out a few loans. Mainly during covid to live off and one was to attend a family wedding abroad.
Payments were affordable for a while but as everything is going up we are struggling. Is a consolidation loan a good idea. Any suggestions what we can do?

£257 per month, ends 2026 11%
£170 per month, ends June 2024 18%
£145 per month, ends May 2029 14%

Ps we know it was a mistake at the time but what is done is done. Thanks!

I think consolidation can be a good thing IF you pay less interest, but it can get messy, especially if you borrow a bit more.

Would you be able to borrow at a lower interest rate and pay off the £170 a month loan? I crawled out of debt years ago switching from one 0% credit card to another to pay off loans and cards.

Could you sell stuff to make payments? Take on another job? Let out a room? If not, have you approached your creditors and tried to negotiate lower payments?

Do you have any equity ? Can you borrow on your house ?

What is the total amount borrowed on each loan?
Do you own your house?
Do you have savings?

Only consolidate if the total payment is less, if not focus on the highest percentage one and pay minimum on the others. Also an interest free card might be an option to pay off the first, but only do that if you can definitely pay it off in time.

It is almost never a good idea to turn unsecured debt into secured debt against your house.

Consolidation can work as long as you address the reasons for overspend and don't end up in the same boat again.

I'd recommend the money saving expert forum, they really are amazing with information on consolidation and debt.

I think transferring balances to the lowest interest rate you possibly can would be good.

Have a look online and see if you can get any 0% or low % balance transfer cards.

Also as a PP has said, address the root cause. For example, attending a family wedding abroad - was it worth it to now be in this much debt? If not then learn from that and learn to say "no".

Those rates are very high for unsecured loans taken out in the last few years. Around 3-7% is more typical but I don’t know if such rates are still available now the base rate is rising.

If you can refinance at a lower rate it could be beneficial, but this would only work in conjunction with a thorough review of your budget to make sure you can afford the payments as well as all your other expenses, including annual and irregular expenses like car repairs, insurance, white goods replacement etc. It would also have to be very much a one off, or else you’ll end up with a new massive loan and more debt on top.

Have a look at Moneysaving Expert and don’t do anything until you’ve got your budget straight and cut as many expenses/spending as possible to see what you can really afford.

www.moneysavingexpert.com/loans/debt-help-plan/

What's your financial situation going forward? Secure jobs? Stable income? Can you agree to live the quiet life financially for a few years and stick to it. If the answers are yes, then a consolidation loan might work for you.
The worst thing would be to take the consolidation route, then decide next summer that you simply cannot live without a £3k holiday in the sun and take out a loan to cover it. Now you've got the consolidation plus the loan. And then it starts all over again...
A consolidation loan is not a Reset and Spend Again. It's Reset and make sure this shit don't happen again.