Whats the best advice?

sarahc1986

Hello,

Been reading through the site and was hoping someone out there may be able to help me. I'm nearly 22 and have a car on HP as I occassionally need to travel long distances for work. Everything was fine until I hit an unexpected bill earlier this year and increased my overdraft limit to £450. I'd love not to have an overdraft as everytime i'm paid it seems that a large portion of my wages are being eaten up.

I'm currently with HSBC and was wondering if I cancel my overdraft does this mean my wages will go in the balance will be cleared and i'll be £450 short or does it become like any general debt? I constanyl feel like i'm robbing peter to pay paul. I can comfortably manage all my repayments and have never defaulted and was wondering whats the best way ie changing banks then would it become a debt owed? Transferring to a credit card? Or just closing it down?

Any help/advice is greatly appreciated

jonesMUFCforever

I'm not really sure whether you have a problem or not.
Do you use your overdraft up to its limit every month?

If you cancel the overdraft and go overdrawn then you will incur huge bank charges - at least you have this safety net and the interest charged is relatively low.
Who not go over to the budgeting board and prepare a statement of assets and liability to see where your money goes every month and where you could save.

LittleMissRolo

sarahc1986 wrote: »

Hello,

Been reading through the site and was hoping someone out there may be able to help me. I'm nearly 22 and have a car on HP as I occassionally need to travel long distances for work. Everything was fine until I hit an unexpected bill earlier this year and increased my overdraft limit to £450. I'd love not to have an overdraft as everytime i'm paid it seems that a large portion of my wages are being eaten up.

I'm currently with HSBC and was wondering if I cancel my overdraft does this mean my wages will go in the balance will be cleared and i'll be £450 short or does it become like any general debt? I constanyl feel like i'm robbing peter to pay paul. I can comfortably manage all my repayments and have never defaulted and was wondering whats the best way ie changing banks then would it become a debt owed? Transferring to a credit card? Or just closing it down?

Any help/advice is greatly appreciated

Sorry this may sound very simple but could you sell the car, pay the loan and buy a small car cash for £800-£1000 (i.e a fiesta) and have the satisfaction of knowing you don't owe anyone anything. You'll own your own car and have a clear balance every time you're paid.

I've always had my own car since i passed my test and though it's only cheap, it does the same job as the brand new car my friend is driving and paying well over the odds for. She's basically renting her bcar as she has it on finance and everytime i look at her i think yeah ok you drive a nice car but you're renting, i own, and both get us from A to B only mine isn't costing me £250 a month just to get in it

Don't get me wrong i'd love to own a new or nearly new car but what i can't afford, or don't believe in paying for i wont. Im saving for an Audi A3 (about £7k) alongside my deposit for my house. I'll get there one day and have the house of my dreams AND my dream car

sarahc1986

Well i'm now very happily overdraft free. HSBC came to an agreement of a fixed monthly payment to reduce my balance on a monthy basis. This has now completley been cleared and will never be offered an overdraft facility as long as I bank with HSBC. Yes i've repaid whats due and i'm now in a very comfortable position each month wereby I pay for my car finance, insurance, tax, insurance, rent etc even entered into a SAYE scheme at work with some of the additional cash.

As for the previous advice I can easily afford my car finance and have the reassurance of a very reliable car. I originally started out with a smaller cheap car however had nothing but trouble. Only another 12 months then the car is mine and will be until its death.

jambosans

sarahc1986 wrote: »

As for the previous advice I can easily afford my car finance and have the reassurance of a very reliable car. I originally started out with a smaller cheap car however had nothing but trouble. Only another 12 months then the car is mine and will be until its death.

Happy to hear you sorted out your finances. BTW the previous advice was mince, if you have a car on HP you have to agree with the finance company before you can sell as the finance is secured against the car. Also, if you were able to sell the car, more often than not this would put you in to negative equity, meaning you sell the car for less than the remaining finance. So you would have no car and still a loan to pay off, pointless.

I had a cheap car, same as yourself, and similarly chucked it for a newer car on finance. Biggest regret was buying from Arnold Clark on HP, but I've paid off the car now with a lower APR unsecured personal loan. Meaning if I run in to trouble I am free to sell the car and clear some of the loan. Anyways, that was a bit of tangent, congrats on only have 12 months, I have 4 years.