Best Loan for merging debt

LynnW_3

I have a 7 year loan with the AA with 2 years 2 months to run, owing approx £3,500, for which I pay £169 per month. My bank has advised me to reduce my overdraft which is £1,500 and merge the two, but I don't want to extend the life of my loan too much and I can't afford huge payments either. I could extend to 3 years 6 months Max or less would be even better.

Any advice on the best deal would be great.
Cheers Lynn

CLAPTON

what is the APR of the loan?
what would the settlement figure be?

what is the APR of the OD?
why are the bank advicing you to refinance it?

what would the APR be of the new bank loan?

is the bank's advice in your interest or their's

why not simply let the loan run and work on reducing the bank loan?
why do you have a OD?

sdooley

You could switch your current account and overdraft to Alliance and Leicester's 0% for a year deal. They match your current overdraft facility. Then pay off £100-£150 overdraft per month during that year.

Consolidating loans is generally a bad idea.

Graeme7777

[Consolidating loans is generally a bad idea.]

Hi,

Is consolidation a bad idea in principle or because the options available to finance a merger of different debts are problematic? e.g. you have to secure previously unsecured debts against your home?

Thanks!

Rafter

Graeme,

Consolidating is generally a bad idea because, although you pay less per month, you generally pay more in interest over time and stretch your debt free date.

In addition you often pay redemption penalties on existing debts and 'consolidation' loans offered by some providers are at fairly high rates of interest.

Lynn, your bank probably wants the opportunity to sell you something - overpriced payment protection probably! Come up with a budget to repay your overdraft at say £50 a month and look forward to being debt free in 2 years time!

R.