Advice please-re applying for loan

[custardismyhamster]

I've got an overdraft of £1000, and every month I am in the red and ending up paying £150 in interest (I did open new account with new bank which promised to match overdraft interest free for 12 months, so i thought brilliant, pay off one with charges and close account, then pay £50-£100 off per month depending on outgoings and get my overdraft down a lot or fully paid off before I start to pay interest-however new bank refused to match overdraft and will only give me £150, so not helpful)

I can't pay anything off my overdraft as the £150 a month charges are crippling me, I just can't afford anymore than that (I can't afford that actually but hey ho, have no choice!)

So I've applied for a loan with first bank (as been their customer for years) of £1500, to pay both overdrafts and the arrears off. It said I'd hear within 3 working hours-so tomorrow at some point. This is over 2 years at £70ish a month, which will go out of my account on payday by direct debit. I will be closing both accounts that have overdraft facilities and opening a new 'easycash' account which will not allow me to have an overdraft.

I am slightly panicking that I will be turned down for this loan because of the 'arrears' every month. No other debt apart from this, no bad credit history. Does anyone know what I can do if they decline this loan? I have told them in the application WHY I want it.

Any help appreciated so much!

If you go and see the CAB they will negotiate with your bank and can get the interest stopped so you can just clear the debt. I think this is your best bet.

I think if I can't get the loan I am going to do that-possibly go and speak to the bank manager on my day off next week first.

Thanks for the reply, I was really panicking and guess I just needed someone to point out that it CAN be sorted.

Thanks x

There's always a way. Don't let the bank sign you up for a debt management loan to repay the overdraft though as the interest rates are high, it'll take ages to pay it off. Your best bet is the CAB, they will go through your income and expenditure with you and will be able to sort out the repayments and the interest on your behalf.

National Debtline gives a free independent advice on debt. A friend of mine used them recently and found them really good

www.nationaldebtline.co.uk/

They're better than CAB IMO because you can talk to them easily - they actually answer the phone and will go through your situation with you.

(I haven't forgiven CAB for making me queue for 40 minutes outside in the bitter cold and snow with DS then aged 4mo, only to tell me to come back later, only to then make an appointment for another day, then to give me crap advice).

Thanks all. I am lucky in a way because I'm not at the point where I am going under-my wage gets paid into a different account, I live at home and have an ok job, so I'm not like some who can't eat-just don't want to get more and more into debt here. The loan is ideal because I'm quite happy to pay the £400 interest (which is over 2 years, £70 a month I can afford the repayments) and just know it goes by direct debit every month. Thats my problem solved IF I get the bloomin loan. Only a worry if not really.

Thanks all for reading and replying I love mumsnet!

Which bank is it? Is the £150 interest or fees and charges? Can you go in and tell them the fees are crippling you and they are forcing you into a vicious circle? I think if you check on Martin's Money Matters this is one of the reasons you can get a refund on some bank charges, might be worth a try?

1. You're in financial hardship

Under both standard banking regulations and the Lending Code (an agreement that all major banks have signed up to) banks must treat you fairly and be considerate if you are in financial difficulty.

We have therefore used these criteria as well as guidance from the Ombudsman to try and give some ideas as to what would count as hardship:

Can?t pay for necessities. You?re struggling to meet basic necessities eg mortgage, council tax, food, utility bills
*

Can?t pay debts. You?re struggling to make loan and credit card repayments
*

Income eaten by charges. Your income?s being eaten up by repaying charges (eg you?re being asked to pay £50 of charges from a £100 weekly benefit income)
*

Payments regularly returned. Your payments regularly get returned unpaid as you?ve not enough money in your account
*

Substantial drop in income. For example, you?ve lost your job, started a lower paid job, needed to take parental or carers leave, your partner has died, you?ve separated from your partner, you?ve started full time education or you/your partner has been/gone to prison
*

Disability or illness. You?ve needed to increase spending on something due to a disability or serious illness
*

Going bankrupt or into debt management. You?re going bankrupt, getting an IVA or Debt Relief Order or are in a debt management plan
*

Continually living off credit. You?re living off credit and regularly need to increase your credit limit
*

Regular credit card cash withdrawals. You are using regular cash withdrawals from credit cards to make ends meet
*

Frequently over overdraft limit. You frequently go over your overdraft limit. In earlier incarnations of hardship rules this was explained as having more than £500 of charges a year ? so that seems a good benchmark

• Bank charges have hurt your situation. The charges have contributed to making your financial hardship situation materially worse

Disproportionate

1. The charges are disproportionate

If you unintentionally slipped over your limit by a few pounds and the charge is a lot higher than the ?offence? eg you go £1 over but are charged £35.

The FOS stresses these cases are not "black and white" and those who continually slip over their limit, not in hardship, are not guaranteed to be successful.
Cycle

1. You are / were stuck in a cycle of charges you cannot break out of

This is known as snowballing and effectively means you?ve had charges on charges, so you?ve been stuck in a trap of not being able to clear charges before new daily or monthly fees are added on top.

This is very common for those with larger reclaims, and is often the reason why some people are being paid back many £1,000s. Of course it tends to go hand in hand with being in hardship.

Cut and pasted from Martin's website link here