Personal loan to pay overdraft

yksi

Taking a few years to clear 4k of debt isn't pathetic, but what it does indicate is that you're very close to the line and haven't got much spare cash to throw at it.

If you can get a 0% transfer or two, do those to give yourself some breathing space on some of the credit card debt. That will give you more free cash to throw at the overdraft while paying minimums on the cards. Make sure you don't re-spend on the credit card(s) that you clear with the 0% transfers.

If you've read around here a bit you know that consolidation is not usually a solution. You seem aware of the pitfalls of having more credit available, but just keep in mind that it's a very predictable pattern and smarter people than you & I have fallen back into further debt, which is the reason we normally advise strongly against it.

PS. Join Prolific and see if can manage a few extra quid to tackle that nasty overdraft.

sourcrates

-taff wrote: »

Congratulations on the MSE Most Useless Post of the Day, only posted to make yourself feel better and castigate someone whose circumstances you know nothing about.


OP, paying minimum payments on other debts? Are these debts 0%? I hope so!
If not, go to the debt free wannabe board and post a SOA.
As long as you're going to pay off the overdraft with it and not incur any more debt, you have costed the amount you're paying in interest ove the total life of the loan and the total life of the overdraft, and further down the line if you do decide to have the loan,you look for another less interest heavy loan to replace it, absolutely only borrow the amount you need [ not more to 'give you a cushion'] itshould be fine.



Have you spoken to the bank about reducing your overdraft facility by a certain amount each month?

@ 4.06 am as well, late night bolshyness, or early morning blues, well you decide......good advice about reducing the OD each month, this is probebly your best bet, pay off as much as you can comfortably afford, thus reducing your borrowing.


Its very rarely ever smart to consolodate debt, banks only offer this service as its highly profitable for them, always better to pay it down rather than resort to the credit trap again.

Jami74

mattrattley wrote: »

The biggest problem I can see is, what if I end up with both a loan and my overdraft if I'm ill disciplined...

I did what you're suggesting, although things were a bit simpler for me. The overdraft was the biggest/worst debt (other was at 0% and being paid monthly to finish before the promotion ended) and the interest rates were much lower than yours.

Before I got the loan I had already stopped using that account for any personal spending, the only things coming out were fixed payments like rent, council tax, TV licence etc so the outgoings were/are exactly the same each month and the correct amount is deposited each month (rounded up to the nearest £10). The loan went into the bank and the fixed loan payments came out. I then reduced the overdraft facility to an amount equal to one months rent. It felt more manageable to have a monthly payment of £155 rather than a nearly £5000 overdraft that I couldn't reduce. It worked for me, I think mostly because I'd already made the changes to ensure that I wouldn't slip back into overdraft territory.

I was very lucky that my circumstances changed for the better and I was able to pay the loan off after a year.

Thrugelmir

sourcrates wrote: »

Its very rarely ever smart to consolodate debt, banks only offer this service as its highly profitable for them, always better to pay it down rather than resort to the credit trap again.

In the interests of the lender to make full recovery of the debt without fuss. Administration of accounts in default is a cost to lenders. Best advice is to deal in person. Be open and transparent with regards to the state of your finances. I'd say go as far as taking a fully drawn up budget with you. Financial relationships are built on trust. Trust has to be earnt.

BooJewels

Can I just add a wee spanner into the works to assist your calculations - to pay off an overdraft, you actually need to find more money than the amount of the overdraft. You need to go from minus numbers, to plus numbers.

So, for arguments sake, if your overdraft is 4k and it costs you 1k per month to live, you need to find 5k to stay out of the overdraft.

I'd also suggest a personal conversation if possible - we were in the process of sorting some borrowing out on-line a little while ago, came up against some detail they wanted that we didn't have and it asked us to ring them. By the time we were done, we'd secured the borrowing on more favourable terms than we were applying for.