Loans - can you re-negotiate interest rate?

ericcartman

Hi - hope someone can help! Thanks in advance...

Basically, I'm in debt and struggling and have already had some great help on the debt forum. But I have a specific question about my loan, which I thought might be better here...

I have a personal loan of £18,600 which costs £352 a month. I took it out (from a major lender) about eight months ago, and the interest rate was 14.4%. (By the end of the 84 month term it will have cost over £29500).

It's really tough to keep up with: I've had a pay freeze, a rent rise and have other credit card debts which are getting on top of me... I don't want to go into arrears (and haven't done so far) but it's a nightmare.

So the question is - is there any prospect of them reducing the interest rate if I plead with them....? Do lenders ever do that for customers who are not in arrears or making late payments? Has anyone got any experience of trying this? 14.4% is a high rate (8.9% is their typical rate).

Any ideas would be very much appreciated. I just wanted to compare notes before I go grovelling to them... - thanks!

Rafter

That is a big loan and a big interest rate - presumably reflecting that you have a lot of loans and debts versus your income - if you have credit cards as well?

Unfortunately you are in a catch 22 - lenders won't reduce your rates, which means you can't get your debts down fast enough to get on top of your borrowing.

I suggest you try the debt free wannabe board - produce a statement of affairs, get hold of martin lewis' money diet book and see what you can do.

If your debts really are getting on top of you you may have to consider defaulting and getting a debt charity to advise you on your options.

Good luck

R.

http://www.makesenseofcards.com/soacalc.html

ericcartman

thanks Rafter - very kind of you to take the time to reply. I've done the SOA on the debt board, and everyone there has been hugely helpful. I'm making some progress, and am desperate to avoid arrears/defaulting etc.

Yes, the reason for the high rate was the amount of debt I have. So there's no way of convincing them to change it? Even after eight months of on-time payments?

jonesMUFCforever

ericcartman wrote: »

thanks Rafter - very kind of you to take the time to reply. I've done the SOA on the debt board, and everyone there has been hugely helpful. I'm making some progress, and am desperate to avoid arrears/defaulting etc.

Yes, the reason for the high rate was the amount of debt I have. So there's no way of convincing them to change it? Even after eight months of on-time payments?

You can ask -the worst thing that can happen is that they will say no.

Treadmill

i can't see any reason that they would lower the interest rate and make less money.

jonesMUFCforever

Treadmill wrote: »

i can't see any reason that they would lower the interest rate and make less money.

Risk and reward - some lenders will accept a lower return in the knowledge that they will get a slice of the cake rather than nothing if OP manages to re-finance with someone else.

ericcartman

thanks for the replies - I guess I'll just give it a go and see what happens!