refinance loan should I take it. Lloyds TSB

Chrysalis

Currently got a credit card debt of just over £1100 and a £440 loan balance, the loan balance has my account in lloyds tsb collections department as its made up of missed payments of a previous loan, the credit card is a closed card balance. My account has a £200 overdraft facility which is used every month I am currently in credit tho.

I am currently paying £15 a month on my credit card and frozen interest however this deal ends this month and they have sent me a expenditure form out so it can be renewed.
Also paying £15 a month on the loan balance but no interest freeze so the balance is barely moving.
The overdraft I expect is cheap credit and my bank want to remove it from my account.

They proposed a loan to cover the credit card + current loand and my overdraft totalling around £1800, the payments would be £30 a month so paying the same as now but I managed to get him to divulge the interest rate which is 18% and this would take 11 years to pay off.
In the post already is another offer where its £15 a month and covering just the loan and overdraft so much smaller amount.

Taking the refinance loan would get my account out of collections and back to branch fixing my credit rating and improving my status but I see the interest is enormous and I know why debt advice charity warned me of this.

I havent agreed to anything yet and have just been talking with them.

Ideally what I should be doing is paying off the current loan balance in full to recover my account and keep my overdraft facility since I know the bank knows the loan is much more profitable then an overdraft, also I think bearing in mind I could probably keep the credit card on frozen interest for a while. So transferring that itself to a loan seems a very bad idea.

I seem to have the following options.

Take the full refinance loan which consilidates everything but 11 years of high interest loan payments.

Take the lesser loan just for the current loan and overdraft (I think bank wont do it without the overdraft been put in) but this means if the credit card agreement was to end I would have to pay over the total £30 a month.

Refuse the loan altogether and limp on with my current payments assuming the bank allows it.

Think sod it default on all the debt and lose my debit card as a result and take on a CCJ.

I was initially told when all this started the refinance loan would be lower interest then the current loan which is what got me interested in the first place as well as it getting me out of collections but once again I see they are trying to take advantage and the £200 overdraft which is currently nowhere near that amount of interest would end up going in adding more to it.

Do you guys think I am right in thinking that the CCJ defenitly looks like an attractive alternative since that itself expires much earlier then the loan would and I would be better of for it, what disadvantages are exactly associated with a CCJ? is there anything else I can offer to my bank?

No family or anyone will pay my loan off for me so I am on my own with this.

Incase anyone hasnt guessed yet getting a new credit card to transfer the balance isnt an option my credit rating is currently bad as a result of the above debts.

jonesMUFCforever

Go and see CAB or similar if you have not already done so. They should be able to advise how to get the interest rate on this new 'loan' down.

rog2

There are other alternatives to 'Consolidation Loans', such as DMPs. Consolidation Loans look attractive because they have the effect of 'reducing' your monthly payments - what the salesmen (which is, after all, exactly what the bank employee is) do not dwell on, is the length of time that this can extend your payments, or the interest rate (as proved by your experience). Both of these factors show that the actual total amount that you will end up paying, under a consolidation loan can be far more than you would pay under your current payments. The winner is - you've guessed it - the Bank!
If you are experiencing problems, then, as previous poster suggests, go to CAB or talk to Consumer Credit Counselling Service (CCCS) or PayPlan. These are registered charities that deal with your type of problem - their advice is free and impartial. Beware, however, of any private debt management company that charges fees.
Also - have a look over at the Debt Free board to see how others, with similar problems, are dealing with debt. You will find better advice there than you appear to have been given.
Regarding the possible CCJ - this can only happen as a result of a County Court hearing. You would need to be issued with a summons and, even then, you would have the opportunity of making an offer of payment. Although best avoided - a CCJ is not the end of the world. It will remain on your file for 6 years and MAY (since the final decision rests with the lender) affect your chances of borrowing during that period.

Chrysalis

thanks will check the other section.

Today their original proposal arrived and was just the current loan and overdraft and is for around 6 years at £15 a month, but this of course doesnt touch the credit card.

Chrysalis

I got the 2nd proposal now which includes the cc debt and was for 11 years, it also had a nasty term where if a payment ever was missed I would be charged £25 admin fee for the letter sent out.

I have rejected both loans now and the bank has agreed to extend my current agreements and I keep the overdraft. When I spoke about why they wanted the overdraft included it was explained to me they have to be seen to not putting me in new debt and as such have to remove all credit facilities.

The only advantage I could see by taking this loan is my credit rating would have improved but the long term hit in interest was too much so I have left it, and hopefully soon I will come into some money which will pay off the current loan around £400 and I will only have a interest frozen cc balance to deal with.