We’d like to remind Forumites to please avoid political debate on the Forum.

This is to keep it a safe and useful space for MoneySaving discussions. Threads that are – or become – political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.

📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!

Impossible overdraft

I took out a business overdraft approximately 15 years ago to cover wage bills etc. After falling foul of a vat confusion I ended up restructuring my business but the 10k overdraft is still at 10k as a result of only ever being able to keep up with the charges they keep putting on it.
At one time I was paying over £300 per month in interest and charges. I have been called into the bank to see my small business manager on at least 3 occasions ( every time I get a new manager basically) and I have also asked on several occasions to get it switched to a business loan. Each time the manager has said that this is obviously a good idea but the computer always returns the same result. I can't afford the loan, even though I would be paying less per month than the cost of the charges and interest.
To date I think that I have paid more than £30,000.00 to service this overdraft and cannot see anyway where I will ever be without it even though I never use it.
I think that this is unreasonable as I could have paid off a loan at least twice over.
Any advice ?
«1

Comments

  • le_loup
    le_loup Posts: 4,047 Forumite
    Try getting a loan from another bank?
  • AWCONSMAN
    AWCONSMAN Posts: 10 Forumite
    Third Anniversary First Post
    Thanks. Was asking more whether their being fair to me. I thought they had to do whatever possible to be reasonable and help ensure I repaid with the best possible deal.
  • IAmWales
    IAmWales Posts: 2,024 Forumite
    The bank have to be responsible when lending. I can see your logic, but from their viewpoint lending to someone that has been in debt for years would not be responsible.

    The best thing for you to do is overpay. You need to find ways to increase your income and decrease your outgoings. What are you doing work wise now? If you post a statement of your outgoings people can help you get these down - often a third party can see ways to cut back that you have missed.
  • AWCONSMAN
    AWCONSMAN Posts: 10 Forumite
    Third Anniversary First Post
    But to have paid back over £30k for £10!k is reasonable ?
  • IAmWales
    IAmWales Posts: 2,024 Forumite
    AWCONSMAN wrote: »
    But to have paid back over £30k for £10!k is responsible ?

    Unfortunately that will happen when you take fifteen years to repay what should be short term borrowing.

    Work on finding ways to overpay, then you'll be getting the capital down rather than just the interest. The lower it goes the less interest you'll be paying, and the quicker the capital will diminish.

    Do you have any assets or capital?
  • mt99
    mt99 Posts: 472 Forumite
    Not sure obviously what your situation is, but you could go bankrupt...
  • jonesMUFCforever
    jonesMUFCforever Posts: 28,898 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    OP has your accountant been deducting the interest charges from your net profit so ultimately reducing your tax bill?
    You can't have it both ways.
  • AWCONSMAN
    AWCONSMAN Posts: 10 Forumite
    Third Anniversary First Post
    jonesMUFCforever
    Fair comment. Not something I'd thought about. But still think they could do better.
  • GarthThomas
    GarthThomas Posts: 164 Forumite
    If it's only £10,000 then can't you take on an extra job to pay it off? Bar work, security, pizza delivery, all will let you raise £10k in a year.

    Have you a car you can sell, things you can eBay, or can you think of any way to increase your profitability.

    If you're that bothered by it, then you could have removed it long ago, but there's no time like the present; get out there today, Saturday nights are busy, see which bars need staff, sign up as an Uber driver, or get on the phone to your local takeaways.
  • eskbanker
    eskbanker Posts: 38,022 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    AWCONSMAN wrote: »
    To date I think that I have paid more than £30,000.00 to service this overdraft and cannot see anyway where I will ever be without it even though I never use it.
    I think that this is unreasonable as I could have paid off a loan at least twice over.
    AWCONSMAN wrote: »
    Thanks. Was asking more whether their being fair to me. I thought they had to do whatever possible to be reasonable and help ensure I repaid with the best possible deal.
    AWCONSMAN wrote: »
    But to have paid back over £30k for £10!k is reasonable ?
    I may be wide of the mark here but it comes across as if you're hoping that someone's going to say "poor you, yes, you've been shafted by the nasty bank and here's how you can reclaim" but that's not going to happen.

    You won't be the first or the last to take the view that paying back more than the original capital value in charges must be unfair but, as pointed out earlier, you haven't made any inroads into your debt for fifteen years and it's unreasonable to see that as the bank's fault! £30K over those fifteen years means that you've been charged circa 20% p.a. interest on the overdraft on average, which is hardly Wonga territory....

    You mention the overdraft originally being needed "to cover wage bills etc" which clearly suggests that this isn't just a self-employed sole trader type of business, is the business actually viable if it's only just covering the servicing of a long-term overdraft? How are you making a living from it?

    What do the bank's business managers suggest once it's clear that they're not in a position to provide a loan?
This discussion has been closed.
Meet your Ambassadors

🚀 Getting Started

Hi new member!

Our Getting Started Guide will help you get the most out of the Forum

Categories

  • All Categories
  • 352.1K Banking & Borrowing
  • 253.5K Reduce Debt & Boost Income
  • 454.2K Spending & Discounts
  • 245.1K Work, Benefits & Business
  • 600.7K Mortgages, Homes & Bills
  • 177.5K Life & Family
  • 258.9K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 16.2K Discuss & Feedback
  • 37.6K Read-Only Boards

Is this how you want to be seen?

We see you are using a default avatar. It takes only a few seconds to pick a picture.