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Is it worth trying to get a loan?

Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
I have currently some debt to clear and some life I would like to live, I currently get paid about £750 a month to live on and I pay the following

£150 – Rent each month
£2000 – I need to be pay this to my mum by June
£500 – remaining credit card bill (which should be cleared by June)


I was wondering if it’s a good idea to get a load of £5000 in which I can clear the above debt and I wouldn’t mind travelling for a couple of months, else it will be too late.

The monthly repayment will be £237.99
APR 13.9% fixed
The amount we would lend is £5,000
The total amount repayable is £5,711.76


To sort out my life/clear (in my opinion unpayable debt towards my mum) debt so that she will find it easier to pay off her credit cards etc.

Is it worth trying to get one in this climate? I can easily pay £237 rather than £700 a month (my whole wages!)

Comments

  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    better to owe your mum than a bank at 14% interest tbh, to put it in perspective £237 is a 1/3rd of your monthly wage. much like the world is finding out the hard way, getting into more debt to get out of debt is just kicking the can down the road, it doesn't fix anything.
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    .
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    Fail to keep up repayments to the bank of mum? Not really much will happen.

    Fail to keep up loan repayments? The bailiffs come round and take your stuff.

    No brainer really, you've got enough money to live, it might not be much but it's better then owing money to a bank.
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    I was wondering if it’s a good idea to get a load of £5000 in which I can clear the above debt and I wouldn’t mind travelling for a couple of months, else it will be too late.

    Why would it be too late to go travelling?
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    no no no no no no.

    im in pretty much the same situation as you right now. i have got myself into £8000 of debt and i considered doing the same thing. however, after looking into it, i realised i'd be much better off paying off what i could each month rather than getting out a loan. the interest rates on loans are ridiculous and as you are on a low wage, the interest rates will be high. the apr advertised probably won't be the one you are offered if you don't own a home or anything. the banks always offered me one higher. you'll end up owing more than you do now and repaying your debt over a much longer period of time. if you just clear your debt as you are now, you'll be debt free by the end of the june whereas you'll be paying off a loan for years!!!
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    Could you not pay your mam back in installments I'm sure she won't mind if she gets it a bit later than June. Work out how much you can give her once a week. Much better to owe her than a bank.
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    i must be clueless about money/loans

    The monthly repayment will be £237.99
    APR 13.9% fixed
    The amount we would lend is £5,000
    The total amount repayable is £5,711.76


    I allways thought that ill get £5,000 and ill have to pay £238 a month, if i dont or am late with payements they will add a 13.9% fee. no?
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    no you're paying the 13.9% for the pleasure of borrowing money from them.

    hence you are paying £711.76 for borrowing the money.
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    Josh, you are thinking of credit cards. They will let you borrow money at 0%, but will incur a percentage if go over by X number of months. Percentage and number of months vary between banks.
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    no you're paying the 13.9% for the pleasure of borrowing money from them.

    hence you are paying £711.76 for borrowing the money.

    and the loan is usually structured so that at the beginning a much higher % of the monthly payment goes on paying the interest instead of the principal, so you get stung straight away in case you decide to pay it off early.
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