Using loan to pay off overdraft?

RTSFirebat

Hello everyone.

I really need some down to earth advise.

I've recently lost my job, but managed to find work where I use to, however I've taken a £3000 a year pay cut and its really starting to take its toll on me. :mad:

Currently I earn just over £1000 a month, I do rent privately and my girlfriend is currently in college and doesn't have a steady income at the moment.

I have a £1500 + £100 of overdraft, plus £450 on a credit card. In addition to that my girlfriend also has £250 of overdraft as well.

I've spoke to my bank advisor and they suggested a low interest loan would be a idea.

Therefore I was wondering, is getting a loan to pay off overdrafts, ect.. a bad thing? As long as I keep up with the repayments and they interest is lower?

I'm tired of getting paid into my overdraft and constantly not getting anywhere with my debt.

Any advise is welcome. Thanks.

Lucy1982_2

Hi

I can only advise from my own experience. I took out a loan to cover my OD in Feb 07. And as you can see from my sig I still have an OD, part is sat in an interest free A and L account and the rest is back in my Lloyds account.

Taking out another loan just got me into more debt as I didn't need to face why I was in my OD in the first place.

Have you spoken to your bank about reducing it gradually? I now have my set to reduce by £50 each month and I've helped a friend do hers by £100 a month. It means that you can pay if off little by little without taking out a loan. As effectivally it behaves like one.

I don't know if that's any help, but if you decided to take out a loan make sure that they removed your OD as you may end up in this situation again. I know I did.

Good Luck

madmoney_2

Hi There
First of all you say that your girlfriend is in college, surely she could get a part time/saturday job to help with the weekly shop or something?
2ndly, I would advise not to get a loan to pay the overdraft, I know where u r coming from but u r more likely to be in debt for longer if u get a loan, my advice would be tell your bank to drop the od limit by 50 quid a month or lower depending on your budget, why not pop ur SOA up so we can have a look at ur budget?
hope this helps xx

madmoney_2

Just had another thought... have you got anything you could sell on ebay? might earn you a few extra bob xxx

Storm

People on here generally do not recommend consolidation as it doesn't address the initial problems of overspending, you can end up with the loan & then running up the OD & CC again etc.

Often you'll pay back more in the long term because even though the interest is lower it's over such a long period - but as your monthly payments are reduced you relax & that's when it's easy to start overspending again.

If you pop up a SoA (see SouthernScousers sticky) we'll be able to advise you more specifically.

Lucy1982_2

Or Alliance and Leicester are doing a 0% interest OD for a year, I got £450 no questions asked (and I didn't switch my account) you could move part of your OD and then worry about paying off the interest earning amount first. You just need to pay in £500 a month into the A and L account.

RTSFirebat

Thanks everyone. Its given me a lot to think about. If anything, i was to get a loan, it most likely would only to be partly now, not for all of it.

Thanks

immoral_angeluk

What are the APR's?