s1lko

I'm in the process of arranging a loan, which I've had accepted at a rate of 7.9%. I've just completed the paperwork but have heard news reports that the Bank of England is under pressure to cut the base rate by up to 1%.

Question is, how likely is it that drops like this will be passed onto the loan market? Is it worth holding out? If so, how long do these things take to filter down?

Any help would be much appreciated.

Scooby Snacks 23

It should, but I doubt it will get passed on, quickly anyway.

It's more likely to be a 0.5% drop tomorrow.

stilover

As said in another thread.

If interest rate does drop, the saving interest will fall the same day. The loan rate will stay the same, or even go up, as has been the case recently.

How much is your loan for?
Reason being, is if it's just a few grand, then get a Credit card. There are lots of interest free credit around at the moment. I took out an Capital One card a few months ago. 0% till November 2009.

Bought a new car, and stuck a few Grand on that card. Will pay it off in full November 2009. But I'll be earning interest on that amount in my bank.

If you can't pay it off in full when the 0% rate ends, simply take out another card on 0% and transfer. Gives you time to save to pay it all off.

s1lko

Thanks for the suggestions.

I've tried being a card tart in the past but I'm useless at staying on top of when they end and avoiding spending on them. The truth is I was a bit carefree a few years ago and, with a view to starting a family, have now decided to get my act together.

Also, the loan is to cover two cards and an overdraft, which would total more than the credit limit I'd get on a new card. It's not a major debt by any means, but a little more than a few grand.

The problem I've had recently is a couple of unforeseen issues have taken me beyond my bank overdraft limit and incurred charges. These charges then mean the same happens next month, ad infinitum. Otherwise I'd be fine.

The plan is to have a single, fixed outgoing at the beginning of the month that is structured to pay everything off within a given time frame, while resetting my day to day finances to zero.

There are no arrangement fees and the interest rate is a lot less than the rate I'm paying on the 'spent' money on the cards. It just kinda made sense to do it this way, especially as I've seen how quickly a straightforward repayment schedule has whittled down my student loans. Plus there's something reassuring about working towards a tangible goal.

It also means cutting up the cards and drawing a line under the temptation to spend.

If you've made it this far, thanks!

stilover

Make sure you do. Had a mate years ago in the exact same situation. Maxed up to the hilt on 2 or 3 cards. Took out bank loan to pay cards off and pay for a holiday for himself & his girlfriend.

Payed cards off and had a nice holiday. Didn't cut up his cards though, and within 6 months was maxed up again. Plus he had the bank loan on top of all the card debt too.

chocolate_o_brian

iTrader: (22)

I've gone through a similar thing. Had a credit card, then took £4,000 loan out to pay most of it off. Thought, "will keep it manageable and under £1k." Before I knew it, it was £1,500, then £2,000 and so on until maxxed out again. So by then I had a loan and a credit card to pay. At the time, I could comfortably afford it, it just bit into the spare money me and my Mrs had each week/month. But obviously then my current siutation of unemployment set in and I'm now behind and considering bankrupcy as a total last resort

Live and learn, but definitely stay away from the "I'll keep it for emergencies" line, unless you're very strong minded - I wasn't but I'm learning the hard way now.


For the record tail end of last year I consolidated my old loan into a new one with the Halifax. Old one was £8.5k which was at 12.9% new one was £10k (paid for Scoobs knackered gearbox), and at 8.4%. So I'd say 7.9% in the current climate isn't too bad.

s1lko

Yup. Although I'm not maxed out, I've seen how easy it is to slip down that slope.

As I grow older, my priorities are changing. No more shredding statements without reading them... In fact, no more statements.

I don't know about anybody else but the whole spotlight on the recession has really done me a favour.

Before anybody hits the infract button for finding a positive in a negative, I've just seen a close friend made redundant. It's just that it's made me take a close look at what I am spending compared to what I actually need to spend. It's a real eye opener

fast bloke

7.9 is a good rate is you have a chequered history. (Actually, 7.9 is a good rate even with a clean history) I would go for it now, as it will probably be at least 6-8 months before there is any movement in the unsecured debt market

chocolate_o_brian

iTrader: (22)

A little off topic FB, but would you say a mortgage rate of 5.79% is good in the current market

Pm me if you wish

cookstar

iTrader: (6)

Ive just taken a fixed deal at 6.9% so I would say yes.

s1lko

Thankfully, I have a clean history with no missed payments.

The best rate I could find, regardless of history, was 7.8% but that didn't apply to using it for consolidation.

fast bloke

Yep - 5.79 tracker is the cheapest fee free deal available from the bigger lenders. You may get a better deal from a local bank or building society, but it won't be much cheaper

Dracoro

Problem is:
a) it's getting harder to get credit cards
b) it'll be getting even harder to find ones that are 0%.
c) getting approved for any that you do find is getting harder, even if you believe to have a good credit history.

What happens a year down the line if the cheapest card is 15% or the one you're on goes to 25% and you can't get onto a cheaper one as no-one is approving. It may well happen, and probably will.

stilover

Then you get a bank loan at 7-8% and pay off the 25% credit cards. Take advantage of any 0% rate while they last. Although 0% rates will always be around, as this is how they attract business.

A bad customer is one who pays off their loan at the end of the month/term. They hope that the customer starts racking up more debt and only pays minimum payments. This is a good customer. This is how they make money.

Being sensible and strick with yourself, you can take advantange of there offers.

Scooby Snacks 23

[QUOTE=chocolate_o_brian;8246518]I'm now behind and considering bankrupcy as a total last resort
QUOTE]

Make sure it is a last resort. If you don't own and only rent your house, it can be better in some situations - if you're a homeowner, steer clear if you can.

That said, bankruptcy doesn't tend to have the stigma it once did. You can be discharged in 12 months nowadays.

chocolate_o_brian

iTrader: (22)

[quote=Scooby Snacks 23;8246814]Could you pm me with soem details please, as I don't want this thread to turn into something it shouldn't (i.e. another slag fest on myself)

Ta

Dracoro

The point was, you don't know. Step forward a year, it may not be possible to get that 7/8% loan, who knows.

People should get what they can afford to borrow now, not hope that a 0% offer this and a 7% offer that, is still around in the future, they may not be. Take a 7% loan now for 2/3/4 years and you know, as long as you can afford the payments, you'll be ok.

Personally, I think some 0% will stay around to attract new business but for shorter terms (e.g. 3/6 months) and the acceptance criteria will be a lot harder, with special rejections of those they can trace "tarting" their credit cards every 9/12 months and never actually paying it back or paying ANY interest. THESE are the bad customers from a bank's perspective as they never get any money from them and take all the risk. The ones that pay back every month are not great as they don't make any money from them but they're also low risk as they pay back each month and bank earns interest if they don't.....