Consolidation loans - where?

[Icarium]

I know a couple of people that have managed to get themselves into a bit of a tangle with short term, high interest debt. One of them eventually went the sequestration route and while she's still struggling, she's been dilligent and is making steady progress.

The other has been looking high and low for a consolidation loan, which even at 20% would almost halve his current loan repayments from R6k+ to R3k. Given how many places there are that advertise such loans, including reputable banks you'd think he'd find *something* that would suit his situation...

Yet every single place he's tried apparently turns him down based on affordability. It's almost as if the consultants or people that he ends up speaking to simply don't understand that the point of a consolidation loan is to replace his exiting loans, and not something that he would be paying off concurrently. Eg: Old Mutual advertises a specific loan to consolidate debt, of up to R120k and over up to 5years - which works out to a repayment of R3000 at a still high interest rate of 20%, but a lot less than what he pays now, and down to about 25% of his salary. He contacts a consultant, and gets turned down flat.

I just don't understand how anyone is supposed to qualify for one of these loans. Has anyone on here successfully applied for one?

 

[R13...]

Banks don't like to hear that you want to consolidate.

 

[Icarium]

Banks don't like to hear that you want to consolidate.

That's sort of the point of my gripe. They advertise consolidation loans yet invariably it's almost impossible to actually qualify for one. Heck, in many cases it's a mission finding anyone at a bank that even know what it is - they all just keep on trying to process it as a personal loan, which invariably ends up failing on affordability.

As for not liking to hear that you want to consolidate - why on earth would a bank *not* want to earn 20%+ on a loan? (In cases where the loans to be consolidated are not with the bank granting the loan)

Granted, his credit record may be littered with late or non payments (He says not) making him too high risk.

 

[MrR]

In my opinion external lenders - lender other than the place they originally obtained the credit from - should welcome a client that wishes to consolidate his/her loan as it means 'new' business for them.

Has he tried Capitec? Generally, the interest rates are high, but their other bank charges (monthly fees, debit order fees etc.) are fairly low in comparison with other banks.

I can understand that if he has a bad credit record (due to non- or late payments), but he also needs to consider his affordability position - will an external lender extend him credit when he in actuality cannot afford the repayment amount.

 

[RichardG]

I wouldn't recommend going consolidation route ever cause if you consolidate, your repayments are actually higher if you going to take out for example a R20 k loan once you finish your repayments nearly R32 K, worst part if to consolidate your fixed assets your house. Bond registration fee R20 thousand(roughly) then you've within a specific time frame to pay back the money example 1 year, R200 k, if you skip payment, you forfeit your property.

Banks don't do consolidation 3rd party aka loan sharks actually do it for you but they in return refer you to the banks cause somehow they manage to secure a loan for you.

I wouldn't try Capitec/African bank, sometimes they do give you credit but at very high interest rates.