Could I use a loan?

Nay_2

Ok, I was just wondering if getting a loan would be a good idea for me personally.
I'm 20 and to be honest a bit clueless about money at the moment. I work full time and live in a shared flat, I am with Lloyds and £1400 into my planned overdraft (my limit is 1500 and they won't extend it) anyway I'm a bit annoyed about the planned overdraft charges that are being enforced in December. So I want to Pay off my overdraft and change bank accounts.
I also bought a car on finance this year borrowing £6000 at 24% interest as I didn't have a credit rating. Would it be wise to get a loan and pay off the two at once? Is that possible? And would my interest rate still be through the roof?

HappyMJ

Nay wrote: »

I'm 20 and to be honest a bit clueless about money at the moment.Would it be wise to get a loan and pay off the two at once?

Clueless....hmmmm. I don't see why not.

Nay wrote: »

Is that possible? And would my interest rate still be through the roof?

Yes it's possible and yes the interest rate would be quite high but it may be less than 24% so it may just save you some money but you really need to get clued up before trying to do this.

Peelerfart

Consolidation loans,which is what you're after, are not easy to get these days.

I know you're going to use the money to pay off the overdraft, and the car, and so do you.
There are however,some very suspicious people out there who think you might just blow the money.

Good Luck

PF

CLAPTON

7,400 is a very large debt especially for a 20 year old

you need to look at your income and spending and to live within your means
work out a proper budget ..this is a good format
http://www.makesenseofcards.com/soacalc.html

post up the results; its dificult to offer advice without knowing the full facts

Nay_2

Statement of Affairs and Personal Balance Sheet
Household Information
Number of adults in household........... 3
Number of children in household......... 0
Number of cars owned.................... 1
Monthly Income Details
Monthly income after tax................ 900
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 900
Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 258
Management charge (leasehold property).. 0
Council tax............................. 38
Electricity............................. 20
Gas..................................... 13
Oil..................................... 0
Water rates............................. 20
Telephone (land line)................... 0
Mobile phone............................ 45
TV Licence.............................. 4
Satellite/Cable TV...................... 14
Internet Services....................... 0
Groceries etc. ......................... 40
Clothing................................ 2
Petrol/diesel........................... 100
Road tax................................ 10
Car Insurance........................... 33
Car maintenance (including MOT)......... 5
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 7
Presents (birthday, christmas etc)...... 10
Haircuts................................ 0
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 619

Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 6000
Other assets............................ 0
Total Assets............................ 6000

No Secured nor Hire Purchase Debts
Unsecured Debts
Description....................Debt......Monthly...APR
car............................6000......160.......24.9
Total unsecured debts..........6000......160.......-

Monthly Budget Summary
Total monthly income.................... 900
Expenses (including HP & secured debts). 619
Available for debt repayments........... 281
Monthly UNsecured debt repayments....... 160
Amount left after debt repayments....... 121
Personal Balance Sheet Summary
Total assets (things you own)........... 6,000
Total HP & Secured debt................. -0
Total Unsecured debt.................... -6,000
Net Assets.............................. 0
Created using the SOA calculator
Reproduced on Moneysavingexpert with permission, using IE browser.

CLAPTON

Well done on posting up the SOA so quickly

you're presumably earning around 13k per annum
debts of 7,400 are more than half your yearly income and are very very high
a lender is unlikely to lend you any more; although you may intend to pay off the existing loan there is no certainty from the lenders point of view

clearly you do not really have 121 spare each month

your major problem is that your income is low and your spending on the car is high (160+ 100+10+33= 303 plus MOT and any repairs)

can you increase your income .. maybe parttime job as you will struggle to reduce your overdraft with your existing spending)
sadly spending 6k on a car was a bad decision

Robert00

I think that its possible that you can use the loan, I would say that the information you have given is very much reliable, its good.

LeeSouthEast

The problem will be no lender with anywhere near reasonable rates will loan you any more money, I suspect. You need to reduce your current spend and attack what you already have without taking out further credit.

LeeSouthEast

Nay wrote: »

Statement of Affairs and Personal Balance Sheet
Household Information
Number of adults in household........... 3
Number of children in household......... 0
Number of cars owned.................... 1
Monthly Income Details
Monthly income after tax................ 900
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 900
Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 258
Management charge (leasehold property).. 0
Council tax............................. 38
Electricity............................. 20
Gas..................................... 13
Oil..................................... 0
Water rates............................. 20
Telephone (land line)................... 0
Mobile phone............................ 45 - Can you reduce this??
TV Licence.............................. 4
Satellite/Cable TV...................... 14
Internet Services....................... 0
Groceries etc. ......................... 40 - Very good. Is this accurate?
Clothing................................ 2
Petrol/diesel........................... 100 - Quite high. How come?
Road tax................................ 10
Car Insurance........................... 33
Car maintenance (including MOT)......... 5
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 7
Presents (birthday, christmas etc)...... 10
Haircuts................................ 0
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 619

Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 6000
Other assets............................ 0
Total Assets............................ 6000

No Secured nor Hire Purchase Debts
Unsecured Debts
Description....................Debt......Monthly...APR
car............................6000......160.......24.9
Total unsecured debts..........6000......160.......-

Monthly Budget Summary
Total monthly income.................... 900
Expenses (including HP & secured debts). 619
Available for debt repayments........... 281
Monthly UNsecured debt repayments....... 160
Amount left after debt repayments....... 121
Personal Balance Sheet Summary
Total assets (things you own)........... 6,000
Total HP & Secured debt................. -0
Total Unsecured debt.................... -6,000
Net Assets.............................. 0
Created using the SOA calculator
Reproduced on Moneysavingexpert with permission, using IE browser.

Do you really have £121 left in the bank every month? I suspect not. If you did, your overdraft would be clear in a year. You need to keep a spending diary and work out where your money is going each month. Cut your existing outgoings a bit, and keep your head down for a year. Sounds hard, but you're young enough to recover this situation IF you act now. So well done for taking the first step :T