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Loan to cover overdraft?

8 replies 322 views
waitykatiewaitykatie Forumite
1 posts
MoneySaving Newbie
Hi, sorry am a newby but hope for some advice? As many others who are not great with money I seem to live permanently in my arranged overdraft facility which am trying albeit slowly to bring down by working extra shifts etc when available.  However have heard that they are going to start charging large interest rates due to some ruling re: arranged and un-arranged overdrafts.   Is it likely to be a good ie cheaper idea to take out a loan to cover the overdraft and a month's salary in addition to keep me out of the overdraft facility? Or am i just kidding myself?  As i seem to make what end up as bad decisions despite debating for long periods, I no longer trust my own financial judgement. Thanks in anticipation. 

Replies

  • MallyGirlMallyGirl Forumite, Board Guide
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    If you can get one then a loan to move the overdraft into a lower fee product might help. As well as the fees increasing, banks can recall an overdraft at any time and it doesn't sound like you could manage that. Don't borrow more than you need - why would you also borrow a month's salary?
    I'm a Board Guide on the Debt-free Wannabe, Loans & Credit Cards boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Board guides are not moderators and don't read every post. If you spot an inappropriate or illegal post then please report it to [email protected]
    Any views are mine and not the official line of MoneySavingExpert.com.
  • edited 6 March at 4:14PM
    Willing2LearnWilling2Learn Forumite
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    edited 6 March at 4:14PM
    Hi waitykatie and welcome to the forum  :)

    If you are constantly living within your arranged overdraft, then you have been living beyond your means.  A consolidation loan does not address this fundamental problem and you would be at risk of your level of debt increasing with a loan.

    Please can you post up your Statement of Affairs (SOA), so that we can see all your monthly income, expenses, debts and assets listed.  Please remember to click on the 'Format for MSE' button, near the bottom of the online form, before pasting the whole lot into this thread.  Once we have the SOA, then we can give you advice, support and guidance.  :)
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  • JenCeeJenCee Forumite
    7 posts
    Name Dropper First Post
    MoneySaving Newbie
    If you’re going ahead with the loan, my main advice would be to cancel your overdraft as soon as you have paid it off with the loan money so that you don’t end up slipping back into it. I’m not sure why you are also wanting to borrow a month’s salary-  only borrow what you need. You won’t need to make the first payment on the loan until one month after receiving it so make sure you take out the loan on a date that will suit your repayments as that will be your monthly payments date in the future. 

  • foxy-stoatfoxy-stoat Forumite
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    You need to address how you got a month behind, or you will get back there + the amount of the loan and be in twice the mess/stress.

    Do you do a monthly budget?
  • CreditLimitsCreditLimits Forumite
    1 posts
    First Post
    MoneySaving Newbie
    It is a;way a bit risky to cover a an overdraft with a loan as it involves financial commitment with legal consequences and iif you situation is not stable enough you could be facing financial debt build up. debt recovery agency or law firms can then step in and in that case professional advise is generally recommended.
  • DCFC79DCFC79 Forumite
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    Its a good idea but would you be able to keep up with the payments ?
    Maybe you should look at your spending and cut back, lose the expensive subscriptions etc.
    Maybe post over on the debt free wannabe board amd post an soa.
  • enthusiasticsaverenthusiasticsaver Forumite, Board Guide
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    No I would not take a loan to cover an overdraft and most definitely not a months salary. If you are overspending you will soon be in the same position but with a loan to boot. You need to learn to budget better and stop overspending. Go through your outgoings and cut back. The least worst option is a 0% money transfer card to clear the overdraft before the 40%+ interest rates kick in. 
    Early retired in December 2017

    I'm a Board Guide on the Debt-Free Wannabe, Mortgages and Endowments, Banking and Budgeting boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of moneysavingexpert.com. Pease remember, board guides don't read every post. If you spot an illegal or inappropriate post then please report it to [email protected]
  • yksiyksi Forumite
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    Most people in debt think they aren't overspending and can't see any way to cut back, but the thing is, it's not about whether it's spending on "silly" things, it's purely that you are spending too much compared with your income. The debt-free wannabe boards are great because you'll soon see that there are a thousand tiny ways "not" to spend and lots of people are in the same situation. It will come down to pinching every single penny and saying no to yourself on all the small items which eat up your money. Good luck.
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