Loan for huge overdraft.
Hi, I was wondering if anyone is able to offer any advice at all on this please?
Myself and OH are in the middle of clearing debts we've racked up over the past 10 years or so through our own fault and impulsiveness and we're in the process of clearing these down. We've cleared down by various means but we still have a combined debt of ~30k
Things have been going great and we've been mostly reducing things over the past year, we now come across a pretty big problem in the form of this new overdraft fees debacle.
My wife at the moment spends ~120 or so a month on interest fees for her 7k arranged overdraft, god knows how it was even allowed to go that high when that was nearly half her annual income at the time when it got to that point! We've been OK with this "lost money" whilst reducing other debts which would make this one a piece of cake to clear off last.
With these new rules adding on around £100 a month or so in fees this is a significant difference and will make reducing costs across the board significantly more challenging. Neither of us have an affordability rating high enough to take out a traditional loan to consolidate the debts despite the fact this would save us hundreds a month.
Now I've not really been able to find answers with regards to this anywhere, but if we're to take the fact that banks are to be sympathetic to your cause etc....
Where do you stand (talking solely about the overdraft here) if you're to ask your bank to switch this borrowing from an overdraft to a personal loan - it would cost roughly the same monthly amount to completely clear this debt in 4 - 5 years as a personal loan as it would to simply pay these new overdraft fees?
As it stands they already lend you the same amount of money - just as a different service. Surely there is no way they should be able turn you down for trying to improve your financial situation with them? This hasn't happened, it hasn't been attempted yet but I'm curious as to what advice anyone with any knowledge or previous experience of this can offer?
And my sincere apologies for the long post, I just wanted to paint a picture of the scenario.
Myself and OH are in the middle of clearing debts we've racked up over the past 10 years or so through our own fault and impulsiveness and we're in the process of clearing these down. We've cleared down by various means but we still have a combined debt of ~30k
Things have been going great and we've been mostly reducing things over the past year, we now come across a pretty big problem in the form of this new overdraft fees debacle.
My wife at the moment spends ~120 or so a month on interest fees for her 7k arranged overdraft, god knows how it was even allowed to go that high when that was nearly half her annual income at the time when it got to that point! We've been OK with this "lost money" whilst reducing other debts which would make this one a piece of cake to clear off last.
With these new rules adding on around £100 a month or so in fees this is a significant difference and will make reducing costs across the board significantly more challenging. Neither of us have an affordability rating high enough to take out a traditional loan to consolidate the debts despite the fact this would save us hundreds a month.
Now I've not really been able to find answers with regards to this anywhere, but if we're to take the fact that banks are to be sympathetic to your cause etc....
Where do you stand (talking solely about the overdraft here) if you're to ask your bank to switch this borrowing from an overdraft to a personal loan - it would cost roughly the same monthly amount to completely clear this debt in 4 - 5 years as a personal loan as it would to simply pay these new overdraft fees?
As it stands they already lend you the same amount of money - just as a different service. Surely there is no way they should be able turn you down for trying to improve your financial situation with them? This hasn't happened, it hasn't been attempted yet but I'm curious as to what advice anyone with any knowledge or previous experience of this can offer?
And my sincere apologies for the long post, I just wanted to paint a picture of the scenario.
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Comments
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They're under no obligation to do it and more than likely won't.
I suppose it's "if you don't ask you won't get" but I'll put money on it that they won't consolidate for a lower rate than the overdraft. Sorry.0 -
You can ask if they will turn the OD into a loan but I wouldn't tell them you are struggling, just put it that the new OD rates are much higher than you had planned for and you want to know if the bank will help you out.
Whether they turn you down or not the procedure would be the same. Set out your debt apr hierarchy and pay the highest apr first with minimum payments to all the rest. If you are turned down then the new 40% OD rate should make the OD the priority to pay off.
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What are the comparative rates? It maybe that the overdraft, if it is going onto the new 40% rate has to take precedence over the other debts, as it maybe the most expensive one.
Any credit cards with spare credit limits making you transfer offers?0 -
I don't think any bank would just convert it into a loan without a full blown loan application and the neccessary checking required..
I think you have made a mistake by focusing your attention on the other debts as the overdraft is one of the few debts that could be 'called in' at anytime.0 -
Just apply for a loan, if your accepted then the money will go into the account and clear the overdraft.
Best cancel the overdraft facility after this happens though. Good luck and report back when you have applied with the rates you get offered.0
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