Debt – good, bad or ugly?

New expenses seem to pop out of nowhere as your responsibilities change, and it can be hard to decide which of the many finance options available is right for you. We’re on hand to give you tips on borrowing that will help keep you out of the red in the long term.

‘I’m ferrying the family around more and need a bigger car – but how can I pay for it?’

It might seem like a good idea to buy the cheapest model, but if it conks out in a few months then it could cost you more. You’re much better investing in a reliable model that will last. Read more car-buying tips from What Car?’s Jim Holder.

Leasing is one way you can drive the car of your dreams without forking out a fortune. It involves you paying a deposit and then paying towards the price of the car in monthly instalments for a fixed term. At the end, you can either pay a ‘balloon payment’ to own the car or use any value left in the car as a deposit for a new one.

While leasing can be a good way of spreading the cost, you need to check the agreement for details of extra charges – such as fees for cancelling the agreement early or for exceeding pre-agreed mileage limits. Interest charges can also vary widely.

An unsecured car loan could be more cost effective than alternative finance options. You have only one simple, fixed monthly payment and, although you must repay the loan in full, you own your car outright from the start, giving you the flexibility to trade up and down whenever you want.

‘The boiler has packed in and I’ve not got enough money to get it fixed with this month’s bills due. What do I do?’

Even one missed or late payment on bills – particularly those in the last 12 months – can weaken your credit score.

A credit card could be a good back-up option to use to pay for unexpected emergencies, as long as you can afford to repay the amount borrowed and make at least the minimum repayments each month.

If you’ve used up your monthly budget on an unexpected bill, an overdraft can provide a useful buffer to tide you over to next month. If you already have one arranged, make sure you check if you will be charged any fees before using it.

‘My house needs some TLC – but I’m not sure how to fund it.’

If you’re looking to undertake a big renovation project – like a loft conversion or an extension – then remortgaging could be a good option to help you raise the money you need by either borrowing more on your mortgage or releasing equity in your property.

Just remember that borrowing more means your monthly repayments will go up, so make sure you can afford the extra amount. Learn more about remortgaging options. Subject to application and status, terms and conditions apply.

Want a new kitchen? A Further Advance could be a good option for you. You can repay your loan in monthly instalments over a period of time that suits you, without affecting the arrangements of your existing mortgage. Loans are subject to application status; early settlement fees and terms and conditions apply.

If you just want to spruce up your bedroom but you’d like the flexibility to pay off different amounts each month, a credit card could be right for you. Don’t forget you’ll still need to make at least the minimum repayment each month.

‘I’ve borrowed from lots of different lenders and I’d prefer to deal with one lender instead.  What should I do?’

A debt consolidation loan allows you to manage all your debts in one place – with one fixed monthly repayment so you can have better control of your finances. Be aware that consolidating your debts might mean you’re charged higher interest overall and could affect the length of time you have to repay it.

As a Barclays customer, you may be able to find out your provisional loan limit before you apply – without impacting your credit score. Loans are subject application and status. Early settlement fees, and terms and conditions apply.

If you’re currently being charged interest on storecards or credit cards, you could make a saving if you transfer the balance to a credit card with lower, or no interest. With promotional no interest offers you could take a breather from paying interest, which could help you to repay the debt sooner.