Overdraft V Loan

One_step_forward

Hi

In need of some advice please.... My husband is Self Employed, sole trader and unfortunately broke his wrist back in May 2007. He was unable to work from May through to August. The bank was very good, allowed us an overdraft of £10,000 all the bills were paid etc etc. Hubby was back at work from Sept through to December although not making a dent in the overdraft.
In Dec he had to have an operation to remove plates and pins from his wrist and has been off work again until 1st Feb.

Obviously with the big tax bill in January to add to our troubles its going to be ages before we can make a dent in the overdraft and get back into the black.

We have an appointment with the bank manager this afternoon to enquire about changing the overdraft to a loan so that we are at least making some headway with it.
Our idea not the bank insisting we do this....

Just want to know a. if this is a good idea or b. if not, why not?

Just want to be prepared for this afternoon....

Thanks for looking

Bismarck

For your own peace of mind I can understand why you'd like a loan as I doubt it can be repayable on demand.

...it's just I don't understand why you are not making any headway in clearing the OD? At least with a n OD you can overpay directly to whittle it down when you can, rather than guaranteeing that you'll pay X amount of interest over a period...therefore giving the bank probably more profit...depends on the interest rate they're offering o nthe loan...a 7% deal over 7 years would not necessarily be as good as a 10% OD over 3 years or whatever it took to pay off...

if they could guarantee the OD until,say 2 years and it's paid paid off then I'd go for that for the flexibility but it really depends on the interest rates....

Bismarck

PS, hope you get this reply in time!

good luck and don't feel pressured!

Bismarck

Hi,

how did it go?

simongregson

Hi,

It may be too late, but could he claim incapacity benefit while unable to work?

One_step_forward

Hi

Thanks for your comments.....
Saw the bank manager to see what options are available....
Option A - Bank happy to continue with overdraft.....
Option B - Convert to a business loan
Option C - Convert part to business loan and continue with rest as overdraft.

After discussion with hubby think we will probably go with option C as hubby is back at work now, and that way I know we will be making a headway....

Have not signed anything yet though so if you guys disagree......

Not able to claim incapacity benefit as back at work now... did enquire when he was off work but was told not eligable.....

Thanks again