For people suggesting better rates and alternative providers we don't have the full context here.
Loans do have a measure of affordability criteria applied. This has a big impact especially around salary thresholds.
@bainbridge without knowing the circumstances of your GFs income and expenditure it is very difficult to judge the right course of action. For all we know, she could be a very low earner who manages her money really well but just doesn't earn enough to make ends meet or a decent earner who spends £800 on clothes and makeup each month; plus anything in-between. However, either way the outcome shows lack of good money management. Does she not have any assets to sell Inc phones, clothes, jewellery etc? How much does she spend per month on coffees, nights out, luxuries etc? Does she have an active spreadsheet which budgets and itemises everything?
With the overdraft, there is no regular payment just servicing of interest and keeping in limit which even at 20% on 5k isn't disastrous. This means the OPs GF was spending more and more on other things rather than concentrating on repaying interest plus some extra capital. Now if this was due to affordability then lifestyle changes are needed rather than just refinancing. Simply extending it again and again and not clearing it off attests to this. My view is that this arose due to poor money management and is not just one of those things and subsequently will again. This is something
@bainbridge you do need to help her with. Also, did you look at loan Apr thresholds, sometimes 5k is too low for best inbank rates, i.e. borrow 7k & Apr drops loads and you are almost paying the same back but have some extra to put into savings.
Given the closeness in APRs between the loan and overdraft, I'm not clear why the loan helps nor why it will prevent further regular overdraft usage. I presume it does at least provide a focus for clearing debt with some goal posts.
