When you need to consolidate debts and have a bad credit score it isn't always easy to know how to begin and pick the best deal.
If you have several loans, you may want to simplify things and have only one payment leaving your bank account. This makes budgeting a lot easier and will help you from being overdrawn. Your credit rating may also have improved, in which case you will want to take advantage and get one big loan at a lower APR than your current loans. Perhaps you want to pay more off each month, or less. Or perhaps you now have a partner and want to use their income to take out a bigger loan.
Whatever reason you need the loan, let's look at how to see whether it is worth doing. Depending on your objective, different criteria will apply. If you just want the lowest APR for your borrowing, then you will need to add up the cost of repaying all your current loans, along with any early repayment fees there might be. Then compare this with the cost of repaying the one big loan. A simple case of the lowest amount wins.
If you want to pay less every month then you will need to add up the current monthly cost of your loans, and compare this with the monthly cost of one consolidation loan. Don't forget your consolidation loan has to be big enough to pay off all your other loans, including any fees and still have a lower monthly repayment. If you need to borrow much more just to reduce your monthly total, then it sounds as though this is probably not a good idea.
If you do want to take advantage of your partner and increase the borrowing amount, take into consideration their credit score. If it's better than yours, then that is a good situation to be in, and should help you borrow more at a lower APR than if their credit score was worse than yours. If the score is worse, you should beware that this will affect what kind of deal you'll be able to get. It might be worth waiting a while before taking out a bigger loan, and checking your partners credit score for areas it can be improved would be a good idea.
To get the best deal, check which lenders do not use loan brokers, and visit them for a quote. Then go to a whole of market broker for a quote. This was you cover every loan option that is available to you. Always use a whole of market broker, as other brokers are tied to a certain group of lenders, which may exclude you from getting the best loan for your needs.
If you have several loans, you may want to simplify things and have only one payment leaving your bank account. This makes budgeting a lot easier and will help you from being overdrawn. Your credit rating may also have improved, in which case you will want to take advantage and get one big loan at a lower APR than your current loans. Perhaps you want to pay more off each month, or less. Or perhaps you now have a partner and want to use their income to take out a bigger loan.
Whatever reason you need the loan, let's look at how to see whether it is worth doing. Depending on your objective, different criteria will apply. If you just want the lowest APR for your borrowing, then you will need to add up the cost of repaying all your current loans, along with any early repayment fees there might be. Then compare this with the cost of repaying the one big loan. A simple case of the lowest amount wins.
If you want to pay less every month then you will need to add up the current monthly cost of your loans, and compare this with the monthly cost of one consolidation loan. Don't forget your consolidation loan has to be big enough to pay off all your other loans, including any fees and still have a lower monthly repayment. If you need to borrow much more just to reduce your monthly total, then it sounds as though this is probably not a good idea.
If you do want to take advantage of your partner and increase the borrowing amount, take into consideration their credit score. If it's better than yours, then that is a good situation to be in, and should help you borrow more at a lower APR than if their credit score was worse than yours. If the score is worse, you should beware that this will affect what kind of deal you'll be able to get. It might be worth waiting a while before taking out a bigger loan, and checking your partners credit score for areas it can be improved would be a good idea.
To get the best deal, check which lenders do not use loan brokers, and visit them for a quote. Then go to a whole of market broker for a quote. This was you cover every loan option that is available to you. Always use a whole of market broker, as other brokers are tied to a certain group of lenders, which may exclude you from getting the best loan for your needs.
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