Debt consolidation loan

[luelle]

Hi all

I spoke to a financial advisor today and decided the best way to get my debts paid off quicker would be to put them all into one loan and then close my other accounts and cut up cards. To do this I'd need a debt consolidation loan of £14k to clear all my balances.

My Experian credit score is 919 and it said I had a 70% chance of getting approved for 3 different loans all at a 3% interest rating, for 3 years and this would have one monthly payment for all my debts which was £20 lower than the payment I make monthly for just one of my debts! Sounded an absolute dream and so simple.

I got excited, and declined. Three times. Now I'm sitting here worried knowing I've just knocked my bloody credit rating down lower by applying for so many. I didn't get any of them and all my debts are still separate.

Dunno whether I want advice or just a moan, but I'm quite upset and anxious now. Sigh.

Anyone have any idea how much damage I've done with these 3 hard searches? Anxious thoughts and googling endlessly to no real conclusion

No idea OP but I would highly recommend the money saving expert website for advice on this matter. Hope you get some help soon.

Where did you find this financial advisor? Consolidation loans usually aren’t a good idea, as statistically borrowers tend to just run their debts back up again (despite good intentions) and then have even more debt.

Why did you get into debt in the first place? What’s changed to make you confident it won’t happen again?

What do you currently earn?
As a rule of thumb, lenders will lend up to fifty percent of your annual salary minus your existing debt, so you would need an annual income of £56k to be approved for a loan of £14k if you already have debts of the same amount.

When you apply for a rate of 3%, that’s only the representative rate. Lenders only have to offer this to 51% of successful applicants, so even if you were accepted you wouldn’t be guaranteed that rate, it could be a lot higher.

Also ignore your “score” lenders don’t see it. It’s worthless to them.

It’s not all doom and gloom, As advised by Fizbo. Visit the money saving expert site, specifically the debt free wannabe part of their forum. They will be able to offer you some great advice. They advocate a technique called “snowballing” which is great for paying off multiple debts in the quickest way possible.

forums.moneysavingexpert.com/forumdisplay.php?f=76

Just to reiterate the moneysavingexpert recommendation, both the debt free wanna forum and for budgeting advice. If you post on there, they will ask to see your budget anyway.

Drawing up a budget is important because you need to work out exactly what you are spending your money on, whether you can afford debt repayments as well as your basic expenses and to minimise expenditure, both by making regular bills cheaper (mse is brilliant for advice on this) and identifying areas where you may be leaking money on discretionary expenditure.

Food and drink outside the house is a good example. Do you take packed lunches or do you regularly buy coffee and lunches out, which can add up hugely over time.

It's disappointing that you couldn't get a loan, which may have been a good solution, but this comes with a huge caveat, that while you are paying back the loan, you must must must not use the credit cards.

It is surprisingly common for people to use their cards again, and end up with a loan to pay and credit card debt on top. This is usually because they either couldn't afford to pay the loan back in the first place, or they failed to control their spending on discretionary items.

Good luck!

)))))))))) Consolidation loans ((((((((((
Nasty smelly things.

Cards : move them all over to the standing order trick (details are on the spreadsheets thread)
And then snowball the debt.

You'll have it cleared faster and cheaper than with a consolidation loan.
How much was the "adviser" going to charge you to set up the loan

Have you tried the money supermarket Lon search: www.moneysupermarket.com/store/loans/

They tell you who's likely to approve workout looking at your credit.

Failing that credit unions offer reasonable loans.

Be careful with consolidation loans though, as others have mentioned many people end up worse off.