should I get loan to clear o/d and new car?

danielson81

Hi there,

Barclays have reduced my overdraft at 0% to £500 from £1500. I;ve had a graduate overdraft for four years and I should of expected this. Before I was only paying around £4 a month interest on my average -£2000 balance. Now its shot up to £15 a month. The interest is now 9.9% APR

Also my car is about to die, and it needs replacing. I was wondering if a £6000 loan at 8.8% paying back £123 a month for 5 years would be wise? £2000 for Overdraft and £2500 for a new car.

I also have £1500 on a 0% balance transfer credit card, paying back £100 a month. However I would like to clear all debts and just have one payment.

The end result being paying back £125 a month instead of £100 to credit card, £15 to barclays and having a new car. Instead of carrying on as I am and risking my current car failing completely in the future.

I earn £16k a year and take home around £1080 a month and I'm left with about £500 after all bills, insurance and rent is taken out. Of this £200 goes on food, £200 on socialising/anything not food! and £100 in to a different account for emergencies.

Toto

Personally I would consider cutting down on spending as much as you can for the next few months and using this money to clear the overdraft.

Why not post your SOA and we'll take a look.

How much do you have in the emergency accounts? I would throw that at the overdraft too if possible. Once the overdraft and the credit card are gone then I would save for a newer car.

yorkshire-lad

I wouldn't take out a loan,if you cut ur spending habits,you could save up for a car in a few months and pay off your debts very soon after.

I am talking from experience,I just wish I learnt all this before I got in debt.
Taking out a loan for a car,and I'm still paying for that loan even though I got shut of the car,aswell as finance on another. I learnt the hard way:(

Tixy

Hi

Agree with the others - just taking out a new loan will ultimatley end up with your having more debt. Better to work through your income & outgoings to see where you spending can be cut.

Plus it would be crazy to move 0% debt from your CC and part of your overdraft to 8.8%.

I understand about feeling 1 payment is easier to manage but maybe you would be better getting more organised with your finances instead. Your monthly payments may be less but as you are planning on taking out extra for a new car that can only be because you will be paying it back far longer.

As a suggestion work through this detailed financial statement of affairs (like a monthly budget) to get a true picture of your current position. http://www.makesenseofcards.com/soacalc.html

Can you not use some of your emergency money for car repairs on your current car or alternatively you can get a car for substantially less than £2500 that will be reliable and economical.

chalkie99

danielson81 wrote: »

I;ve had a graduate overdraft
.........

I was wondering if a £6000 loan
.........

I would like to clear all debts and just have one payment.
...........

During which part of being a graduate did you "learn" that borrowing money would clear your debts?

What is so special about having one payment or several payments? Surely all that matters is the total cost?

brokemedic

Don't get a loan. I did (for a different reason) and I wish I hadn't as it's this huge chunk out of my monthly income. I wish I had addressed the root cause of my problems at the time as I wouldn't be in this mess now. But you learn and hopefully pass on the experience..

Post up a SOA and let the good people on here take it apart - in a good way I hasten to add.:rotfl:Always keep in mind that whatever opinion is passed on your SOA it's with the intention of getting you debt-free. Also once your SOA has been posted and commented upon, you could probably end up saving for the car. How satisfying would that be?

I can understand your comment about having the one payment. I have 8 (used to be 10) different payments to various debts leaving my account every month. But just get more organised - SOA, spreadsheets, savings etc - surprisingly addictive.