Need some advice regarding a loan to pay off overdrafts please...

SmoggyTalisman

So I ran into some financial trouble over the past 6 or so months and have ended up going into my overdraft which is a planned overdraft.

I also have a loan with my bank that i pay back monthly and can do this easily, my problem is paying back the overdraft!

Is there any way I could take out a second loan to completely pay off the overdraft and then I would only have the monthly payments on the loan to pay. I am fairly new to all of this loan markets and such so any help would be ideal.

I would much rather just have a set amount to pay back each month off the loan rather than pay some of the overdraft back then risk using that money again and ending up back at square one.

I have no idea if a loan would be my best way forward or not, hence why I am now on here asking for any assistance at all.

Thanks in advance
Joe

SmoggyTalisman

The loan I currently have with my bank is for £3,500 and the overdraft is the same amount.
How likely is it that they would agree to a second loan to pay off the original loan and close that, pay off the overdraft and close that and then just have the one loan to pay off?

Seems to me like the best way but I'm wary the bank may decline it.

CLAPTON

If you get a loan and clear the overdraft; what is to stop you simply running it up again?

[Deleted User]

What are the amounts and rates/charges of the loan and overdraft?

SmoggyTalisman

CLAPTON wrote: »

If you get a loan and clear the overdraft; what is to stop you simply running it up again?

I'd plan on removing the overdraft facility from my account if possible

SmoggyTalisman

Deleted_User wrote: »

What are the amounts and rates/charges of the loan and overdraft?

I've just posted the amounts. the loan i pay back 160/month and the overdraft is around £3/day while it is over £3,000

CLAPTON

SmoggyTalisman wrote: »

I'd plan on removing the overdraft facility from my account if possible

Do you have a detailed budget?

Do you know exactly why you have a 3000 overdraft?

Unless you understand why you are in debt and address the spending you are likely to continue spending and run that overdraft up again.
If you simply cancel the OD and don't stop the spending you will then end up with two loans, an unauthorised OD incurring fees

fozmcfc

Your option are dependant on your credit rating.

Of course the best way, is to cut down spending, up income or sell unwanted items to bring in money and gradually pay it down.

If however, that is not 100% possible then you have a couple of options.

If you have a decent rating, you could go to the bank and say you would like a loan, which would clear your current loan and your overdraft.

To increase your chances, I would offer to close down the overdraft as well. One of the biggest problems with consolidating, is not changing lifestyle and ending up running up debts you paid off with the consolidating loan. Been there done that myself 2 or 3 times.

Another option is a super balance transfer credit card.

http://www.stoozing.com/credit-cards/super-balance-transfers.php

With these cards as an introductory offer, you can transfer money into a bank account for a one off fee usually 4% or 5% on top. You then pay back the money over a certain amount of months, without any further interest.

At the moment the longest 0% offer is for the Virgin card 26 months.

So for example, your overdraft is £1000, you apply and get the Virgin card, you transfer £1000 to your bank account and pay off the overdraft.

The card now has £1000 + 4% (so £1040) on it.

The minimum repayment to the Virgin card is £25 a month.

Each month you must pay at least the minimum payment back. In this case you have 26 months to pay £1040 back. So you could pay back 25* £25 then a final payment of £415. Or maybe £50 each month for 21 months or so. Or of course any amount above £25 a month and the more you pay the quicker it is paid off.

Just remember never to spend on the card, while you have the transfer on it, or you will end up paying interest.

SmoggyTalisman

CLAPTON wrote: »

Do you have a detailed budget?

Do you know exactly why you have a 3000 overdraft?

Unless you understand why you are in debt and address the spending you are likely to continue spending and run that overdraft up again.
If you simply cancel the OD and don't stop the spending you will then end up with two loans, an unauthorised OD incurring fees

yes i know why i have the overdraft, I'd rather not go into detail as to why but yes, I do know why. My spending is now at an extreme minimum, I now no longer need to spend as much as before and therefore, wouldn't need to go into an od again or take out another loan. I just want to clear it and consolidate it into one amount

SmoggyTalisman

fozmcfc wrote: »

Your option are dependant on your credit rating.

Of course the best way, is to cut down spending, up income or sell unwanted items to bring in money and gradually pay it down.

If however, that is not 100% possible then you have a couple of options.

If you have a decent rating, you could go to the bank and say you would like a loan, which would clear your current loan and your overdraft.

To increase your chances, I would offer to close down the overdraft as well. One of the biggest problems with consolidating, is not changing lifestyle and ending up running up debts you paid off with the consolidating loan. Been there done that myself 2 or 3 times.

Another option is a super balance transfer credit card.


With these cards as an introductory offer, you can transfer money into a bank account for a one off fee usually 4% or 5% on top. You then pay back the money over a certain amount of months, without any further interest.

At the moment the longest 0% offer is for the Virgin card 26 months.

So for example, your overdraft is £1000, you apply and get the Virgin card, you transfer £1000 to your bank account and pay off the overdraft.

The card now has £1000 + 4% (so £1040) on it.

The minimum repayment to the Virgin card is £25 a month.

Each month you must pay at least the minimum payment back. In this case you have 26 months to pay £1040 back. So you could pay back 25* £25 then a final payment of £415. Or maybe £50 each month for 21 months or so. Or of course any amount above £25 a month and the more you pay the quicker it is paid off.

Just remember never to spend on the card, while you have the transfer on it, or you will end up paying interest.

thanks! are there limits on these cards as to how much you can have on them? I only want enough to clear the debts and then be done with it. I have no need to pay for things with it at all so this sounds like a manageable method

thanks again

fozmcfc

SmoggyTalisman wrote: »

thanks! are there limits on these cards as to how much you can have on them? I only want enough to clear the debts and then be done with it. I have no need to pay for things with it at all so this sounds like a manageable method

thanks again

Of course every case is different and until you are accepted, you are still in the hoping stage.

I applied for a Virgin card, when I had debts of about £13k on a £25k salary back in 2009 and got accepted with a 6k limit.

Although I had a lot of debt, the main thing going for me, was that I had a long decent credit history with no missed or late payments, when I applied, just had debt from overspending

Virgin is backed by MBNA, which many report do offer high credit limits. It was my highest by a good couple of thousand.

Of course at the end of the 26 months, nothing to stop you transferring the remaining balance to another balance transfer card again for a small fee.

I ended up with £4300 on the card and managed to pay it off within about 20 months to avoid interest.

EDIT......They normally allow you to transfer upto 90% of the limit, so you'll need a £4k limit to clear the overdraft.

Good luck