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Consolidating loans

By (user no longer on site) OP over a year ago

Ok this isn't the best place for personal issues I know. But I cant ask family as they'll judge me for it and none of my friends have experience with it.

Basically the only debt I have is my overdraft 1200 and because I have gone over a couple of times my bank has made an appointment for me to have a consolidation loan. Apparently it will improve my credit rating and I won't notice the repayments. Everything the lady said made sense but I cant help thinking there's got to be a catch.

Does anyone have any experience with this? Any advice would be greatly appreciated. You can pm me if you'd rather not post here.

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By (user no longer on site) over a year ago

Wouldn't you be better taking a bank loan for the 1200 or even 1000 to wipe out the bulk of the debt and give you a bit of breathing space?

Don't sign anything on the day, just take the information and then think it over for a few days

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By (user no longer on site) over a year ago

Your real problem is it looks like you're spending more than you earn ie your overdraft.

Loans will sometimes work out alot cheaper than overdrafts but you really need to budget properly and take the loan over the shortest time span possible without causing excessive problems financially.

The "catch" as you put it is that your bank knows X amount of customers will take out the loan and then run up another overdraft and therefore need the next loan... Its the debt treadmill

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By (user no longer on site) over a year ago

"Wouldn't you be better taking a bank loan for the 1200 or even 1000 to wipe out the bulk of the debt and give you a bit of breathing space?

Don't sign anything on the day, just take the information and then think it over for a few days

Thats what thge banks call a consolidation loan !!!

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By *ugby 123Couple over a year ago
Forum Mod

O o O oo

I thought consolidation loans are to put all your debts in one place with one monthly payment. You have one debt. I am guessing she means give you a bank loan to pay off the overdraft which is probably cheaper interest than an overdraft? If it is it might be better with that, assuming you don't carry on using the overdraft after the loan as that would defeat the object

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By (user no longer on site) over a year ago

"The "catch" as you put it is that your bank knows X amount of customers will take out the loan and then run up another overdraft and therefore need the next loan... Its the debt treadmill

I was caught in this spiral having taking a loan out at 25 and still being in the cycle due to constant top ups whenever they were offered (who doesn't like free money

)

I've committed to not getting any more top ups, budget properly and I finish my payments next year

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By (user no longer on site) over a year ago

"Ok this isn't the best place for personal issues I know. But I cant ask family as they'll judge me for it and none of my friends have experience with it.

Does anyone have any experience with this? Any advice would be greatly appreciated. You can pm me if you'd rather not post here. "

They are good to get out of debt, BUT.. only if you dont then re-use the overdraft... all depends on how strict with yourself you can be.

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By (user no longer on site) over a year ago

"The "catch" as you put it is that your bank knows X amount of customers will take out the loan and then run up another overdraft and therefore need the next loan... Its the debt treadmill

I was caught in this spiral having taking a loan out at 25 and still being in the cycle due to constant top ups whenever they were offered (who doesn't like free money

)

I've committed to not getting any more top ups, budget properly and I finish my payments next year

"
.

as with most things..it's easier said than done, well done

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By (user no longer on site) over a year ago

Don't do it, they will try and talk you into having a bigger loan and claim it's to help you out and give you a bit of breathing space.

But you'll end up owing more money than when you went in! As well as the interest will be higher on the loan than your overdraft.

I would look at managing your money better, shopping around for deals with energy suppliers etc.

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By (user no longer on site) over a year ago

Also check to see if you can get a zero % interest credit card to clear the overdraft but be careful as not all cards allow a balance transfer from a bank account.

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By (user no longer on site) over a year ago

Sometimes better to take the loan than keep living in an overdraft. If you do take it get the overdraft removed so you're not tempted to dive back into it if you find yourself a little short one month.

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By *opping_candyWoman over a year ago

West Yorkshire

If the loan interest is less than the overdraft fees then it's a great idea. But if you pay off your OD you MUST remove it so you're not tempted to go back into it.

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By *amissCouple over a year ago

chelmsford

You will at least have fixed monthly repayments and then you need assistance to manage your money differently, so you don't run the overdraft up again, that's the hard part for some, living within your means. Also if you go over your overdraft limit, you start getting silly charges. A personal loan would normally be less interest, but don't be encouraged to take a bigger loan than your overdraft. Good luck OP.

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By *amissCouple over a year ago

chelmsford

"Also check to see if you can get a zero % interest credit card to clear the overdraft but be careful as not all cards allow a balance transfer from a bank account."

Sometimes, these are only 0% interest for a limited time, then the interest rates can then be high, at the end of the term.

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By (user no longer on site) over a year ago

The bank is biased towards themselves. Speak to a free debt helpline and see what they suggest. A loan may well be cheaper but if you go down that route then pay off the overdraft and reduce it to say £100 so you don't just run it up again, that's the catch, you pay it off then use it again so you'll have two debts, it's just too easy to do. If all you have is £1200 of debt then I'd say you're doing ok.

The banks will sell you what's best for them. My 18 year old set up an account recently and they talked him into getting a Barclay card with 34.9% interest, they said it would help build his credit record. Bastards, I cut his card up and he got a Tesco card at half the Apr which has 17 month interest free on purchases. The bank didn't tell him he could get a better deal elsewhere and neither will yours.

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By *utie91Woman over a year ago

Hitchin

Budget better?? sounds like ur spending more than you earn.....

consider cutting things like tv packages, gym memberships etc

Stop the fast food... make meals in bulk and freeze them

Before anybody starts.... I am currently in £32k worth of debt... after already paying off £14k

So it can be done. I just work my ass off every month working lots of overtime, not having a social life. Hardly any alcohol.

I do treat my self occasionally... but I still manage to pay off £1k a month.

And I work for the NHS so my wage is rubbish.

Donations exepted.... jk.... it's my mess and I'm sorting it

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By (user no longer on site) over a year ago

" it's my mess and I'm sorting it"

Fair Play!

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By *amissCouple over a year ago

chelmsford

"Budget better?? sounds like ur spending more than you earn.....

consider cutting things like tv packages, gym memberships etc

Stop the fast food... make meals in bulk and freeze them

Before anybody starts.... I am currently in £32k worth of debt... after already paying off £14k

So it can be done. I just work my ass off every month working lots of overtime, not having a social life. Hardly any alcohol.

I do treat my self occasionally... but I still manage to pay off £1k a month.

And I work for the NHS so my wage is rubbish.

Donations exepted.... jk.... it's my mess and I'm sorting it"

Very good advise

and well done for managing your debt so well!

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By *utie91Woman over a year ago

Hitchin

" it's my mess and I'm sorting it

Fair Play!

Well... my mess and several things gone wrong in my life over the past few years... the biggest being basically throwing £18k in the bin... I'll be paying for that until 2020

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By *amissCouple over a year ago

chelmsford

" it's my mess and I'm sorting it

Fair Play!

Well... my mess and several things gone wrong in my life over the past few years... the biggest being basically throwing £18k in the bin... I'll be paying for that until 2020"

It just goes to show, it can be done though

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By *utie91Woman over a year ago

Hitchin

" it's my mess and I'm sorting it

Fair Play!

Well... my mess and several things gone wrong in my life over the past few years... the biggest being basically throwing £18k in the bin... I'll be paying for that until 2020

It just goes to show, it can be done though

Yep... so people ur only allowed to moan if in a worse state than me lol

Also on top of that debt I also have a £23k student loan.... but nobody counts that. Haha

I'm currently working on getting rid of my overdraft... It was £2000 now £900

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By *amissCouple over a year ago

chelmsford

" it's my mess and I'm sorting it

Fair Play!

Well... my mess and several things gone wrong in my life over the past few years... the biggest being basically throwing £18k in the bin... I'll be paying for that until 2020

It just goes to show, it can be done though

Yep... so people ur only allowed to moan if in a worse state than me lol

Also on top of that debt I also have a £23k student loan.... but nobody counts that. Haha

I'm currently working on getting rid of my overdraft... It was £2000 now £900

Wow, I'm impressed! I used to work in banking and have seem some horror stories. Some will listen to advise, as you obviously have and others continue to bury their heads in the sand. Not everyone can be helped, unfortunately.

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By *utie91Woman over a year ago

Hitchin

" it's my mess and I'm sorting it

Fair Play!

Well... my mess and several things gone wrong in my life over the past few years... the biggest being basically throwing £18k in the bin... I'll be paying for that until 2020

It just goes to show, it can be done though

Yep... so people ur only allowed to moan if in a worse state than me lol

Also on top of that debt I also have a £23k student loan.... but nobody counts that. Haha

I'm currently working on getting rid of my overdraft... It was £2000 now £900

Actually no advice taken.... just common sense.... and the desperate need to hide it from my mother... she knows I owe money..... just not completely how much.

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By *oodmessMan over a year ago

yumsville

I would offer caution though have you considered a 0% balance transfer to a credit card.

There will be a fee to transfer and new purchases will have interest on them, but the balance itself will not incur any interest for a period of say 18mths or sometimes up to 24mths.

Once you've paid it off either at minimum payment or higher sums, close the account so you are not tempted to use it as the interest on purchases does get you into debt but the 0% transfer window could give breathing room and not tie you into a loan. I think you can transfer up to 80% of any balance.

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By *amissCouple over a year ago

chelmsford

" it's my mess and I'm sorting it

Fair Play!

Well... my mess and several things gone wrong in my life over the past few years... the biggest being basically throwing £18k in the bin... I'll be paying for that until 2020

It just goes to show, it can be done though

Yep... so people ur only allowed to moan if in a worse state than me lol

Also on top of that debt I also have a £23k student loan.... but nobody counts that. Haha

I'm currently working on getting rid of my overdraft... It was £2000 now £900

Actually no advice taken.... just common sense.... and the desperate need to hide it from my mother... she knows I owe money..... just not completely how much. "

All the more credit to you then!

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By *uckandbunnyCouple over a year ago

In your bed

If you are seriously considering a loan to wipe out the overdraft, then shop around. It's possible but unlikely that your bank will have the best rate on a loan.

Although that will depend on your credit rating.

The best advice on here is what ever you choose you need to set out your budget on paper. See what you can cut to make income match expenses more closely.

Money advice service have an online tool for this.

I'd always over estimate expenses and underestimate income.

So if food is £100 a week put down £120 for all those extra bits you would be tempted to add to the shopping trolley that no one really needs.

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By *utie91Woman over a year ago

Hitchin

For my overdraft I try to leave abit of money at the end of the month... e.g. £100 ... and then reduce the overdraft by that amount... that way I force my self not to spend the month the next month, as I am determined not to be overdrawn

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By *amissCouple over a year ago

chelmsford

"For my overdraft I try to leave abit of money at the end of the month... e.g. £100 ... and then reduce the overdraft by that amount... that way I force my self not to spend the month the next month, as I am determined not to be overdrawn"

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By *ieman300Man over a year ago

Best Greggs in Cheshire East

Not read full thtead so apologies if i repeat.

Loan apr is better than an overdraft. Get an affordable one if you dontt think you can clear the overdraft quickly which im guessing you cant.

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By (user no longer on site) over a year ago

"Also check to see if you can get a zero % interest credit card to clear the overdraft but be careful as not all cards allow a balance transfer from a bank account."

This is what I would do.

Virgin do one interest-free for 28 months meaning you only have to pay minimum of £43 a month over that period and you also won't be incurring any interest fees.

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By (user no longer on site) OP over a year ago

Thank you so much for your advice and messages. Sorry its late, busy day.

If I do take the loan option I will definitely be reducing my overdraft as I don't want to fall back into this state again,I've just had a rough few years financially and want to get back on track. I will definitely look into the 0% credit card option too. I just wanted some non-biased opinions before the bank lady convinces me to sign my life away

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By *amissCouple over a year ago

chelmsford

"Thank you so much for your advice and messages. Sorry its late, busy day.

Good luck!

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By (user no longer on site) over a year ago

" All the more credit to you then!

NO! that's what got her in the shit originally

In all seriousness OP you're taking steps to sort it out and that's brilliant, maybe check Martin Lewis's money saving expert for more in depth advice.

About 8/9 years ago I was further in the hole than you are now and came out the other side and I've no sense at all so it can be done. Good luck

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By (user no longer on site) over a year ago

"The "catch" as you put it is that your bank knows X amount of customers will take out the loan and then run up another overdraft and therefore need the next loan... Its the debt treadmill

I was caught in this spiral having taking a loan out at 25 and still being in the cycle due to constant top ups whenever they were offered (who doesn't like free money

)

I'm in the same boat, repayments over next year and that worry off my mind. Some lessons you have to learn for yourself.

I've committed to not getting any more top ups, budget properly and I finish my payments next year

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By (user no longer on site) over a year ago

"Thank you so much for your advice and messages. Sorry its late, busy day.

Good luck

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