How to pay off one loan with a new one

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giveaway_girl
giveaway_girl Posts: 3 Newbie
in Loans
Hi, hoping for some help as can't find any online.

I have a loan at a 6.7% interest rate with HSBC. I've seen a new loan which is for 3.0% with Tesco which would save me money over the same term. The loan is for just short of 25k.

How do I go about getting a new loan to pay off the old loan? I'm not sure/don't think I could get the new loan without paying the old loan off first. Surely there must be a way to do get the money from the new loan to directly pay off the old one, so it's clear to the lender I'm not trying to double my debt.

Thanks so much for your help.

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  • [Deleted User]
    [Deleted User] Posts: 35,242 Forumite
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    giveaway_girl wrote: »
    Surely there must be a way to do get the money from the new loan to directly pay off the old one, so it's clear to the lender I'm not trying to double my debt.

    Surely not, unless it's the same lender.

    You'll need to get the second loan before you can pay off the first, which is where affordability will become a problem on that kind of loan.

    If accepted, it's fair to say it's unlikely you would get the 3% rate.

    I would work on paying down the first one, at least some of it.
  • DCFC79
    DCFC79 Posts: 40,598 Forumite
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    edited 15 March 2018 at 2:26PM
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    giveaway_girl wrote: »
    Hi, hoping for some help as can't find any online.

    I have a loan at a 6.7% interest rate with HSBC. I've seen a new loan which is for 3.0% with Tesco which would save me money over the same term. The loan is for just short of 25k.

    How do I go about getting a new loan to pay off the old loan? I'm not sure/don't think I could get the new loan without paying the old loan off first. Surely there must be a way to do get the money from the new loan to directly pay off the old one, so it's clear to the lender I'm not trying to double my debt.

    Thanks so much for your help.

    I see a belated welcome is needed.

    Have you spoken to HSBC, explain you want to pay off the 6.7% loan and is it possible they can offer a rate thats lower.

    As far as Tesco would be concerned you are doubling your debt.

    Woild you even be able to get a loan at the 3% ? Other than the loan what other debts do you have, what does your credit reports from the 3 agencies say, any negatives.

    If you
  • giveaway_girl
    giveaway_girl Posts: 3 Newbie
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    Deleted_User wrote: »
    Surely not, unless it's the same lender.

    You'll need to get the second loan before you can pay off the first, which is where affordability will become a problem on that kind of loan.

    If accepted, it's fair to say it's unlikely you would get the 3% rate.

    I would work on paying down the first one, at least some of it.

    Thank you. Yes that's what I was thinking re the second loan.
  • giveaway_girl
    giveaway_girl Posts: 3 Newbie
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    DCFC79 wrote: »
    I see a belated welcome is needed.

    Have you spoken to HSBC, explain you want to pay off the 6.7% loan and is it possible they can offer a rate thats lower.

    As far as Tesco would be concerned you are doubling your debt.

    Woild you even be able to get a loan at the 3% ? Other than the loan what other debts do you have, what does your credit reports from the 3 agencies say, any negatives.

    If you

    Haha thank you! I tried to set up an account today but apparently I did it and forgot four years ago!

    That's a good idea about speaking to HSBC. I will look into that and see if they can help as I've been a customer with them for 20 years and my mortgage is with them too
  • DCFC79
    DCFC79 Posts: 40,598 Forumite
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    Let us know how you get on with HSBC.
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