Should I Get A Loan?

Bitstring , from the wonderful person Strider said

Yes, it makes sense, but If, and Only If, you take steps (like cutting up that credit card) to make sure you are not just going to dig another hole on top of the £1000.

Also if you own £1000, why borrow £1500 .. do you have great plans for the extra £500, or you just want some safety margin, or whatever?? Unless you have a burning need for the £500, it's just more interest you are going to be paying, and more temptation you are putting in your own way.

Trouble with consolidating is that you end up paying more interest over time, and unless you are *VERY VERY* strict, then you could end up owing more. The trouble with consolidating debts is that as soon as you reduce your total outgoings to a (supposedly) manageable single payment, you suddenly feel richer and start spending again. You end up putting more money on credit cards, thinking you will just pay it all off at the end of the month. That will probably happen for 2/3 months and then all of a sudden, you'll find yourself not only with a loan to fork out every month, but 2 or 3 more credit card debts and an overdraft that never seems to clear. In 12 months time, you will back to square one or worse.

My personal choice would be to simply make best use of the overdraft, because every time you get paid, you won't be paying interest (unless your overdraft *exceeds* your monthly wage slip). If you simply spent a little less every month (similar to what you would have paid on a loan), then you will pull yourself back into line quicker than you think.

In the bedlam that is uk.finance

Neaco proclaimed...

I agree there is a danger of falling into a degenerating cycle and I was aware of that. Thanks for the feedback Neaco.

In the bedlam that is uk.finance

GSV Three Minds in a Can proclaimed...

Thanks

How so? All you're doing is changing to a lower interest rate, but without necessarily committing to a longer-term repayment schedule. Hence whatever existing cashflow goes towards reducing the debt at the higher rate, will do so faster at the lower rate.