Where Can I Find Out About Typical Overdraft Rates

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I am talking to my bank about a secured - against property - overdraft

They are talking about an interest over base of 5% and an arrangement fee of 1.75%

Maybe it is fantastic - maybe it is shocking - and I have no idea

I have business banked with them for years but never needed to / wanted to borrow - gone overdrawn - bounced a cheque etc - so should have a reasonable credit score - but held down by no borrowing and pay back evidence

Is there a web site maybe where I can see what others are typically charging in the real world

Or if not can anyone comment on these rates

 

[businessfunding]

Web comparisons will give you the figures the bank want to put out

Why not contact a couple of other banks and discuss with them?

 

[cheaper accountant]

Take a look at moneyfacts.co.uk

Personally I think 5% above base is high. Consider the rate you will be paying if rates rise to 3% or 4%!

The best rate is very low right now but that won't be the case forever and over the term of a typical loan it is extremely likely to go up. The base rate was reduced very quickly when the recession began and will increase just as quickly when growth returns.

I would advise you to use a broker who can find you the best deal for your circumstances.

 

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Well it is a time thing really

If I contact another bank it will takes ages to go through the process - which is fine if it might make a difference but if they are then liable to just say the same figures - well it is a lot of time for nothing

The trouble with published figures is that they say from ...
And wont go further unless you then - well read above

 

[cheaper accountant]

I was just thinking that if you plan to simply dip in to the overdraft from time-to-time and repay in full then the rate won't really hurt.

However, if you plan on going overdrawn for a significant period of time I think you should look at other options.

 

[Adauxi]

5% over base seems OTT to me. 3-3.5% seems better - and you may get lucky and get something a bit sharper. I'd expect nearer to 1% for the arrangement fee.
Does your bank hold security already? If not this will add time and cost.
As an alternative, I am aware of some flexible funding against debtors (this is not factoring)

 

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No 25K without security but with security a lot more

 

[Adauxi]

Unsecured rates will be higher than for secured, as may the up-front fees on a smaller loan (there is a certain "cost" to the bank of getting it done).
Check the term of the overdraft. You may incur a further facility-type fee to renew ...

 

[businessfunding]

As Cheaper Accountant has said, you need to concentrate on utilisation, costs and benefits rather than fixating on headline costs.

Nobody likes to over pay but you could spend a lot of time shopping or getting duff advice rather than getting on with running your business. The only people who can realistically advise here are banks in receipt of a full application, or businesses whose circumstances are very similar to yours

I recently had a strange customer situation where the prospective client kept coming back to me complaining that my rates were extortionate and his accountant said I was trying to rip him off. I offered to talk to the accountant - it turned out that he had talked to the accountant about car finance but approached us for funding of random small pieces of equipment. Context is everything!

 

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As Cheaper Accountant has said, you need to concentrate on utilisation, costs and benefits rather than fixating on headline costs.

Nobody likes to over pay but you could spend a lot of time shopping or getting duff advice rather than getting on with running your business. The only people who can realistically advise here are banks in receipt of a full application, or businesses whose circumstances are very similar to yours

I recently had a strange customer situation where the prospective client kept coming back to me complaining that my rates were extortionate and his accountant said I was trying to rip him off. I offered to talk to the accountant - it turned out that he had talked to the accountant about car finance but approached us for funding of random small pieces of equipment. Context is everything!

Thanks a good real world reply

It is exactly how I usually work - don't sweat the small stuff but push push push

But it is a bit of a new area to me and so I think it worth a bit of forum time and starter investigation in case someone say whoah mate they are having a laugh there you really need to think again

 

[cheaper accountant]

To be frank, I've seen rates offered to clients at 10% above base so what you've been offered isn't at the top end. I must stress that 10% above base is for an unsecured overdraft.

You're looking at a secured overdraft and I would expect a decent movement from the 10% over base (being very much worse case scenario). So you've been offered 5% above base which an improvement but remember you've thrown in security.

Why not go back to your bank and ask for 3% above base and try and negotiate. I do think that you're in a good position as overdrafts are usually unsecured and the rate you've been offered must reflect the security you've provided.

 

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I think I have got my head a bit around it now - it was a new area to me

I was looking at their web site and I will simply come under one of their set small business rates it seems