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Question
Posted by: Amy | 2011-05-31

Need financial advise please

Good day, I need financial advise please.

I have debt in total of R 17 000.00. My total monthly instalments are R 3 177.17 a month. I struggle to get thru each month. My plan is to be debt free in December 2011 by paying the R3177.17 till December. What if I get a personal loan or R 17 000.00 to pay the accounts and then I’ ll just have the one instalment of not more than R 1000.00 a month for 36 month and then I’ ll have R 2 117.17 extra a month? Is this a bad option? Or what if I apply for a kredit card with a limit of R 17 000.00 and use this to pay all my accounts and pay R 1000 each month for 17 month? ? ?

Thanks

Amy

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Our expert says:
Expert ImageMoney Expert

Hi Amy
In theory a consolidation loan is ok...but you need to look at the total cost of the loan. R1000 over 36 months is R36000 as compared to your current loadn of R17k. Find out about the interest rate and the total cost.
Whatever you do, dont apply for a credit card to do this - the interest rate is very high.
And most importantly, what is the reason that you are in debt? If you dont address that, you will probably end up in the same place again.

The information provided does not constitute a diagnosis of your condition. You should consult a medical practitioner or other appropriate health care professional for a physical exmanication, diagnosis and formal advice. Health24 and the expert accept no responsibility or liability for any damage or personal harm you may suffer resulting from making use of this content.

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Our users say:
Posted by: STRESSED | 2011-08-18

i was under debt review of which they never make any changes to my credit records i can say instead they mess up every thing cause i owe my creditors triple the amounts now and they don''t want the amount i m saying i can afford for now, single mom and i really really don''t wanna loose my house because of debts.

Reply to STRESSED
Posted by: mama | 2011-07-06

HI amy

i was suggesting that you call your creditors and extent the repayment, so that you can be able to live your normal life again.

Hoja

Reply to mama
Posted by: Liza | 2011-05-31

Consolidating debt can be a good idea and it can be a bad idea. If you want to take out a personal loan to do this, you will need to know what your current interest rates are for your various debts. If the interest rates on any of these debts are more than the interest rate on a personal loan, then it''s a good idea to rather pay the lower interest on the loan BUT if the interest rate on the loan is more than the old debt interest rate, it''s usually a bad idea to consolidate. You NEVER want to consolidate by using a credit card. It''s ALWAYS the most expensive option.

You also might have difficulty getting a personal loan since you''re obviously over-indebted - even if you''re going to use the loan to consolidate your debt.

You could also contact your creditors and try and arrange a longer repayment period. That way you reduce the amount paid per month and give yourself more breathing space financially without having to borrow more money. Most creditors are very open to this kind of arrangement because if you were to go on debt review, they''d be losing out.

Reply to Liza

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