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Taking out a personal loan for emergencies

royal1990

I've gone and done the silly thing and taken out a personal loan with my bank.

I did this because I had some very expensive costs come at once (which I couldnt afford), plus fact I earn very little after rent, credit card repayments, household utilities.

I recently moved into a new rented home with increased rent, because the house is central heated (is no damp or structural issues). Landlord charges, vet bills, CC repayments and other bits have meant I had to take a loan.

I have taken out a 8.5k loan (paid over 4 yrs), with regular monthly payments of £220 to pay off.

I figured that I could use the loan to offset our debts, pay off my credit card debt (as is lower apr rate with fixed interest), pay bills in advance, cover shortfalls and save some.

Is this a smart move?

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Financial commitments:

1k credit card debt (paid in full now)

£240 pcm rent contribution

£40-80pcm electricity/heating/energy

£77 pcm virgin media

Vet Bill upto 1k to budget for cover (inc to insure)

£15pcm 02 phone bill

£18 pw bus ticket

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Reply 1

claireestelle

Original post by royal1990

If it's a lower APR and you know you'll comfortably pay it off, it's not the worst idea, £77 is lot for virgin if you aren't willing to cancel it then why not haggle a lower price with them and you can get pet insurance for just over a fiver with more than a grands cover with it. If you're putting the central heating on then £80 a month might not stretch it over winter, our energy and water bill is about £120 a month for two of us and i refuse to turn the heating on (we do have a very old boiler which isn't very efficient).

Reply 2

Tiger Rag

Would a monthly bus ticket be cheaper than a weekly one?

You've posted before about your financial issues and you need to look at a long term plan. As Claire says, £77 for Virgin Media if you can't afford it is a lot. Would BT or Sky, for example, be cheaper?

Reply 3

ch0c0h01ic

Original post by royal1990

Original post by claireestelle

...and you can get pet insurance for just over a fiver with more than a grands cover with it.

You very much get what you pay for with pet insurance.

If you're only paying £5/month for insurance it's unlikely to be worth the price of the paper it's printed on (eg; "accident only policy", high excesses, lots of T's & C's to prevent claims).

I am aware that circumstances can change however many people get pets or have kids without the means to look after them.

Reply 4

Dez

Taking out a personal loan isn't the end of the world and is certainly a lot better than paying credit card levels of interest on your debt. I agree with the poster above though, you definitely ought to look at reducing your expenses. What if another emergency hits you and you need to fork out cash you don't have and can no longer borrow?

Reply 5

del1rious

You shouldn’t need to take out a loan to cover your expenses, that will in time end you up in a mess and suggest you are living beyond your means. As PP have said £77 is a lot for virgin media what kind of package do you have?

Also it would help if you gave us your income so we could calculate better.

And FWIW unless you are paying the £100+ pcm pet insurance it really isn’t worth it. We have a £5k overdraft for vet emergencies which (touch wood) we haven’t yet had to use.

Reply 6

royal1990

Original post by del1rious

I earned £11747 after tax last year so between 10-11k pa. My partner earns about 17k a year but is saddled with more debt than me (well priority debt), so her disposable income jusy covers rent, food and electricity (if she takes no time off or sick days).

Reply 7

Tiger Rag

Original post by ch0c0h01ic

It's not you. I do understand taking out a loan for an unexpected expense, such as replacing your car. But day to day living costs as you've said, makes no sense.

Are you making note of where every single penny goes?

Reply 8

royal1990

RE: Virgin Media package;

I have the Fun bundle. At first when I signed up I paid £35ish a month (on an offer). After 12 months the price hiked upto £55, and found I was been charged premium rates for movies. Turns out Virgin had misrecorded my email address so all my invoices were been sent and bounced, so I had no idea about what was paying. After getting told by customer services they had correct email, I argued I had no emails in my account. Turns out they recorded it in capitals! By this point I couldnt pay myself out of it, so I now pay £77.

I recently just moved and they also charfed me £120 for engineers fee and reactivation!

Reply 9

ch0c0h01ic

Original post by royal1990

However you spin it it's a luxury you cannot afford - I would seriously consider cancelling it.

I lived most of the last decade without a TV license as a student and as a recent graduate by taking advantage of on demand tv, borrowing DVDs from friends and a cheap movie club subscription (between £8-12/month).

I've even gone without broadband at home at times relying on free WIFI at work or in a local cafe to check emails - it can be done if you are serious about reducing your debt.

Reply 10

del1rious

Your expenses round up to about 640 so with the 1k which is untouchable for vet bills you should have around 755 disposable income- which is certainly doable.

What else does your money go on- food, leisure, do you smokey etc?

Reply 11

ch0c0h01ic

Original post by royal1990

I've gone and done the silly thing and taken out a personal loan with my bank.

Is there any scope to repay part of the loan early, without penalty, or a "cooling off" period?

There is some merit in a small personal loan to repay a high interest credit card (assuming you couldn't have done a cheap or free balance transfer) but there is no sense in plunging yourself substantially further into debt (ie; an extra £7500) even if it is relatively cheap in comparison to your previous credit card deal.

Reply 12

claireestelle

Original post by ch0c0h01ic

Am I the only one that sees this as incredibly unsustainable?

If you have to take out a £8,500 loan over 4 years to fund your day to day expenses you need to seriously revise your spending and/or earning potential.

You spend £924 a year on Virgin Media! You could have pretty much paid off your credit card debt by now just by cutting back on that luxury without needing to take out such a massive loan.

You very much get what you pay for with pet insurance.

If you're only paying £5/month for insurance it's unlikely to be worth the price of the paper it's printed on (eg; "accident only policy", high excesses, lots of T's & C's to prevent claims).

I am aware that circumstances can change however many people get pets or have kids without the means to look after them.