What are my chances?

A question about : What are my chances?

I am looking at applying for the derbyshire loan of 5.8% and was wondering whether i would be accepted.

My debts are as follows

Ј2900 left to pay on my loan with lloyds paying back Ј167 a month (rate of just under 10%)

Ј5000 on lloyds credit card, latest payment minimum of Ј117 (17.9%)

Overdraft of Ј800 (never been over), usually around Ј600-Ј700 overdrawn every month

On my latest statement for credit card the interest stood at Ј68, now i have been tackling the debt head on by cutting our cloth accordingly and doing what i can (overtime when available and car boot sales etc) but feel i am not making big inroads.

I know it is not a good idea to consolidate existing loans with another one but if i was accepted for the derbyshire loan i would be paying back Ј191 a month on a 10k loan over 5 years, as opposed to Ј300 when you count up my payments of existing loan, credit card and overdraft usage fee!!

I have never missed a payment on the credit card, loan or been over my overdraft limit so hoping this would go in my favour, maybe i am missing something here but to me this seems like a no brainer, my wife returns to work in new year so we will be a lot better off and able to tackle the debts a lot better.

Any thoughts you can contribute would be great

Thanks in advance

Best answers:

• Good morning inbetweener!
  Trust me when I say this that getting a consolidation loan will not help you in the long run. Trust me.
  Everyone on this forum will tell you the same thing - consolidation loans are the start of a slippery slope into more debt. We've all said that once the debts are consolidated, I'll close the accounts. Well, maybe I'll just leave this one open 'for emergencies'. Uh huh. You say you're going to pay the other debt off but do you know how many thousands of times banks have heard this story? They certainly heard it from me half a dozen times......... and I meant it every single time.
  For a start, getting another loan on top of your exisiting debt is not that simple. It depends on a lot of things - existing outgoings like rent, council tax etc. Then there's your income - the amount of credit you can get is worked out a % of your income - the exisiting debt will count towards that % whether or not you intend to clear it. And the chances of you getting the advertised 5.8% is unlikely - that's a 'typical' rate designed to lure you in and the only people who will get that rate are people with squeaky clean credit scores - considering you've never missed payments etc will probably mean that your credit score is fine - but you almost never get the rate advertised.
  You can try for the loan - it will leave a footprint on your credit score for 6 months I believe and footprints are not good especially if you're leaving a lot of them in a short space of time.
  My advice? Do a Statement of Affairs, get all your income and outgoings down in black and white, see where you can make cuts and throw as much money as you can at your debts. They're not too bad at all. And if your wife is due to start earning in a few months, just hang in there and wait until your income increases and throw even more money at the debt. You will get through this without taking another loan!
• Hi happybutterfly, thanks for taking the time to reply.
  I can kind of see what you are saying but looking at the interest charged on credit card this month kind made me really want rid of it.
  That is why i thought it would be better to get a loan at a better rate than the others (assuming i was accepted), i thought i would be doing the right thing from looking at the APR's, maybe i was wrong.
• Dammit! I just spend 10 minutes typing you a reply and lost it. Ruddy laptop! Anyhoo.
  I know it's not what you want to hear. My advice comes from experience and you only have to read the threads/posts on here and you will see that consolidation loan supporters are as rare as hen's teeth! Unless you have your spending under control, it will never work. My last consolidation loan - the lenders even sent my creditors cheques to clear my debt. Great! I thought. Problems solved. Nope - I hadn't addressed my issues and just ran up more debt in the form of store credit. Same thing with Balance Transfers - the limit on these introductory cards was never high enough so all I was doing was getting another card as I couldn't close the other ones because there was still a balance.
  Don't do it. That's my advice.
• But if you look at snowballing your existing debts then you may be debt free sooner and save on interest overall.
  I consolidated several times........end result owed 78k. That's not to say that it can't work but you have to then live to a sensible budget and close credit card accounts or else they tend to build up again.
  Good luck with whatever you decide.
• Even if you do decide to go with the consolidation (I did, twice) you will still need to get your income and expenditure under control, or you will end up like the rest of us, having run the debts back up. If you are absolutely sure that you know what you need to have in the bank, can cut up the cards and close the accounts so you never use them again, you might have a chance!
  It isn't a magic bullet, you might save some interest, but unless you have a reign on your life it will end up back out of control. If you prepare the statement of affairs, you will see where your money is going. Use the snowball calculator to work out which debt to throw all the spare money you can find at first.
  Do that now, and then add the extra you can pay from your wife's income when she returns to work. If you plan things well, you might be able to close out the card more quickly that you anticipated, and reduce the interest you pay that way.
  If you do anything, look at a low-life-of-balance or 0% card and switch the debt to that - but you must close the old account!
  Good luck
• Hi inbetweener. I appreciate your position as I was in your situation at the start of the year. I owed Ј12k to 3 creditors and because of minimum payments etc I was really struggling. I applied to my bank HSBC with a good credit score for a loan at 6.9%- they offered me 13.5%! After arguing the toss and threatening to close my accounts they reduced the APR to 13%. I had to pay my mum off quickly so sucked it up and took the loan, which meant my debt went from Ј12k to Ј15k :-( but it felt like a lot of pressure off knowing I had only one creditor. So, do shop around before you apply but be prepared to not be offered the representative APR.
  I must echo what other posters have said, you must be prepared to close all your other accounts to avoid slipping into bad habits, and do an SOA to see where you can make savings, budget for the odd treat (you'll go mad otherwise) and make overpayments where possible.
  GOOD LUCK!
• Thanks everyone for taking time to reply which your advice and thoughts, will have to mull it over a bit more and decide what to do
• seriously don't do it. if it hepls work out the total interest on the loan verses what you will be able to pay off once you have 2 incomes again the difference will be huge and you will be debt free much quicker. All you have to do as a couple is work together to budget your way into the new year then use the extra income you will have to destroy the debt.
  A loan now will be short term gain long term pain
• Dont do it as stated weve all said when the lending was free and easy well not free anyway. I keep trying to tell myself its not going to be like this forever well with me another 2 years, and when i look back what have i actually got to show for it. Yes it can work but im just sick and tired of seeing everyone else with money having holidays and nice cars etc while im working 50 hours plus a week and havent got Ј3 at the end of it thats mine.
• So i went to my bank yesterday to discuss a loan and what rates i could get if i did decide to take out a loan (just testing the water).
  On a 8.8k loan the rate would be 19.7% over 4 years paying back total of 12.4k,
  On a 10k loan the rate was 17.9% over 4 years paying back 13.7k.
  I mentioned i had seen rates available online that were a lot lower and the guy said only 1% of people actually get the rate on offer.
  From reading on here i am aware that there is a certain element of truth in this but was wondering if he was just telling me this so i would lean towards taking a loan out with him?
  I could see that my risk rate with them was 3 out of 10 which to me does not seem too bad.
  In your opinion would i be likely to be accepted for a better rate elsewhere?
  Thanks in advance
• I wish someone had told me not to consolidate my loans before I did so. In the end my debt was over Ј120,000 - the consolidations never worked and I just got deeper and deeper in debt. It has taken me 7 years and much heartache to have finally paid off, some in full and some in full and final offers.
  My advice - don't consolidate.
• Hi poppy52, im not saying i will i was just wondering if i would be eligible to be accepted for a better deal (always nice to know if your bank is being honest with you) than what i was offered
• Its 51% of people who are accepted who are offered the advertised representative rate.
  What percentage of people who apply are declined is not known, but likely more than half are declined. So maybe overall the % of people who apply who get that rate might be something around 20% ish?
  Whether you might get a slightly better rate elsewhere would be impossible for anyone to know. Lenders do have slightly different criteria, slightly different ideal customer profiles, but of course they are not known.
  But if you make several applications that will decrease your risk of acceptance in the short term.
  Generally your own bank is more likely to lend when others will not, I'd guess you would be unlikely to get a substantially better rate elsewhere.
  Presumably you won't think of consolidating a debt thats currently at 10% at a rate substantiallty higher. Your loan is a decent rate. You might want to consider seeing if you could get a 0% balance transfer card to transfer some (or all) of your card debt to, if you haven't considered that yet?
• Thanks for taking time to reply tixy, yes my current loan i have is at a good rate so didnt want to increase that.
  I would imagine if i got a loan of 5k to pay off the credit card it would be at a really high rate, maybe just need to keep my head down and try and chip away at the credit card debt when i can each month
• I have to agree with the other posters who say Don't Do It.
  Hang in there and wait untill your wife goes back to work, then you can work on bashing those debts out!
  I know (from experiance ) consolidating is not the way to go, it's a slippery slope that takes you on a longer journey than intended!
• So here i am 5 months on, due to unforseen circumstances its looking like it is not going to be until the summer when wife goes back to work part time.
  The credit card now stands at just over 6000k so roughly having to add 200 a month to it, the limit is 6850k, now i have no reason to beleive i couldnt extend it if push comes to shove but i really dont want to do this.
  Its got to the point now when the first thing i think about and last thing before i sleep is the 6k, i have always been a bit of a worrier but it is now beginning to get me down.
  I wouldnt say im depressed but i do find it hard to stay positive and it is affecting my marriage, part of me says 'live for today, you have a wife and 2 beautiful babies, things will get better', but it doesnt last and im soon thinking about it again!
  The credit card statement came through yesterday and the latest payment is 150 with 90 interest!
  I know you are going to ask me to post a SOA but i really have done everything to cut back, doing overtime when i can etc.
  Reading through the forum maybe my only relief may come from a balance transfer.
  Question is can you still spend on the new card?
  Any advice would be great, sorry to be so depressing on a bright sunday morning but this is eating away at me
• Hi yes you can spend on the new card (unless you max it out with the balance transfer) but the new spending wont necessarily be at 0%. The key to sorting this out though is never going to be looking at ways to find more credit, (believe me!) if you are overspending your budget by Ј200 per month you really need to find out where you can either save or find an extra Ј200. I know its not what you want to hear. IMO the best bet would be to find a 0% transfer deal, close your old cc account and then just chip away at it. Have a really good clearout ebay some stuff just to get a good start on it. Maybe keeping receipts for a month both you and your wife may help to see where some of the money is going. Then i'm afraid its a change of lifestyle for a while, downbrand, no booze etc. Please dont think i'm being harsh i've been there (as many on here have) and the only way to get rid of debt is address spending, rubbish I know!
• But if you're adding Ј200 a month then by July that Ј6k that's stressing you out is going to be Ј7k.
  It's fine if you don't want to post a SOA (although I suggest you do), but clearly you are living beyond your means and that cannot continue. What will you do if your wife can't get a job?
  I'm sorry if I sound a bit blunt, but I did the whole buy-now-pay-later thing while my husband was off work sick for almost a year, and I was on maternity leave. I hadn't forseen that situation coming, and my debt that was about 14k at the time went up to almost Ј30k. It came to a head because I couldn't get credit anywhere any more and I had to admit defeat. I wish I'd cut back on outgoings sooner though as I'm still paying it back 3 years later. And we have learned to live within our means, and we have a pretty ok life with the money we have. Yes, we've cut back but we can still do things... and I'll tell you something else, nothing beats the feeling of being able to sleep at night without waking up and stressing about money.