Take a loan?

[GreenDressy]

Finding it hard to make a decision on this.

I owe close to 1k on a credit card. I also have some urgent repairs/improve to I need to do to my house and I am considering taking a loan from my bank and repaying it over a long period (eg 7 years) because that is what I can afford. I've worked it out on their online calculator.

But is it wise to do this? I know that I need to make sure I don't fall into the same pattern and overspend again-this is crucial. That's first. Also these are not good times for any of us financially, should I voluntarily be taking on more debt?

For more info, I may be selling my house in 4 or 5 years and am thinking that whatever's left to pay, I would pay back out of the house sale.

But I recognise old patterns of thinking here, that led to me getting into debt, and only being able to pay it off because of an inheritance. I won't get a second chance like that.

The repairs would increase the value of the house for sure, and hopefully bring my heating costs down. But some of them are cosmetic eg new carpets (replacing at least 20+ year old ones).

What would you do?

Get the loan?
Don't get the loan and just try and pay down the credit card ASAP?
Wait till interest rates drop and then get a loan?

I know I've been vague with numbers, sorry. I'm pretty embarrassed about all of this.

What are the interest rates on your credit card? The first thing I would do is to apply for a new credit card with a 0% balance transfer rate and at least get your current CC debt onto that.

For home improvements, I would have a look at what 0% credit agreements you can get. For instance, Carpetright have a 0% for four years offer.
https://www.carpetright.co.uk/useful-links/interest-free-credit/?gclid=EAIaIQobChMIq46M4cHC_gIVl7PtCh08QQTwEAAYASAAEgJyBPD_BwE&gclsrc=aw.ds

I know some people will say 'Don't get into debt, save up and pay from savings instead', but if you don't take on too much and are as secure as you can be in your income, 0% agreements are a good way to get improvements done earlier than you could via saving. Obviously, don't take out more agreements than you can sustainably afford to pay off - but there are plenty of offers out there, and so I don't think it makes sense to take out a loan and pay interest unnecessarily.

In the grand scheme of things (no pun intended) if your only unsecured debt is 1k, you really shouldn’t be beating yourself up too much about it.

Hard to advise on the best course of action without knowing your income, the amount you want to borrow, and the interest rate you’re being offered.

Hard to advise on the best course of action without knowing your income, the amount you want to borrow, and the interest rate you’re being offered.

This. Though as you still have £1k of credit card debt I'm guessing you either live fairly hand to mouth or you piss money up a wall each month.

It's also difficult to advise on what urgent repairs means. Roof leaking or bored of bedroom wallpaper?

Ok, my salary isn't bad, mid 30s.

The credit is a mixture of using cc to pay for things because I've overspent for the month, and lots of small impulse purchases. That needs to be knocked on the head, clearly!

Loan amount is 9k, interest is 7.5 (ouch) but smaller rates have higher interest.

House repairs include replacing remaining single glazed windows, carpets that are ancient, and some general redecoration because there are stains from leaking pipes, flaking off wall paper, house just looks a crumbly old mess.

Thanks for replies btw, will look into transferring debt to 0%

Would you consider getting a £12k limit 0% credit card, putting your existing balance into there and then using it to finance the renovations, then aggressively paying it down/ moving it to another 0% agreement when that runs out?

It's worth remembering that a lot of 0% cards are putting in a few to move the balance, sometimes quite a sizeable % fee.

I certainly like the sound of it but I would only be able to make payments of about £150ish a month, which is why the long loan period was appealing.

I might have to forget about the house repairs I think. I'll pay down the debt first and then think again.

This is good...my usual impulsive self would have that loan in the account by now and be merrily ordering new windows etc.

@rbe78 Thanks for the suggestion about finding 0% credit for carpets etc. When the time comes I probably will do that.

@GreenDressy Plenty of double glazing companies offer it too, e.g.
https://brackenwood.com/funding-solutions/
https://www.safestyle-windows.co.uk/finance/

Just make sure you're keeping track of what agreements you're taking out, how much they are monthly, when they end etc., so you know you're not over-committing yourself.

I wish I only had 1k debt 😅

I agree with the others about trying to get a 0% balance transfer and then paying it down.
Usually my head would say 'yes go for it and take out another loan if you can manage' but considering the mess I have got myself in I actually say focus on paying the 1k off otherwise you will end up in a spiral of credit card interest and loan interest

(I'm currently about 15k debt and struggling because of interest, hard to pay it off when the minimum payments for everything take up any exposable income you'd have to pay things off)

@pinksheetss
Well this is the thing, I've been there before, with about 30k debt which took care of most of my inheritance 😞
I know the patterns which lead to that 1k suddenly becoming 10k etc!!

In your shoes I would spend the next 6 months getting control of my day to day spending the house bits can wait. Pay off your credit card loan and develop new habits so that you aren't indebt at the end of the month, then and only then would I consider taking out a large loan.

This is sensible advice, thank you.
Clear debts, new habits. Wait for interest rates to drop.

Agree to wait. Plus I think any outstanding debt is taken into consideration for a remortgage to move? Hopefully someone with more knowledge can help on that.

I also recommend the Debt Payoff Planner, its free has a white bird with a branch in its mouth on the icon.

I have a lot of (good) debt from house renovations, I can afford the repayments but the app is really good at showing how new debts impact old ones so you can play around with it before applying for a loan, works out how long each one will take to pay back etc which I find really useful and I find it quite motivating to see what percentages I have left to pay and often over pay to move it to the next % if I have spare cash.

Good luck greendressy !