Take a loan to pay a loan?

SuzySu

Hi

I have a loan with Picture which was mostly paid up after the sale of our house, leaving just over £8000 balance which is now unsecured. The problem is that the term is still the same as the original term (ie was for 25 years - now has 22.5 years left to run) and the interest is crippling. I have being paying £60 a month for the past year and the loan has only reduced by £90 overall. It's gutting.

Is it worth trying to get an unsecured loan to settle the Picture loan (IF I can) or is that never wise. I just can't bear the thought of this hanging over my head for so long.

I could up my monthly installments to £100 which would cut the term down to just over 9 years, which is very tempting (if I can afford to do that).

There are two problems with taking another loan that I can see, however:

1. I am due a NCB payment (through the PPI) of £2700 in May 2010, another £1000 in May 2011 and £600 in May 2012, all of which can be taken off the loan. As this is guaranteed, is it really worth looking elsewhere;

2. I am not even sure I could get a loan as my wage is not that great, I get CTC and HB and don't know what my credit rating is like.

Do any of you wise peeps have some advice for me please.

Thanks.

SuzySu

Cheers guys

bbelt

SuzySu wrote: »

Cheers guys

cheers! :beer:

Silaqui

Hi Suzy,

I'm not really an expert but I'll tell you what I think anyway, normally the advice isn't to take out a loan to pay one off but being as yours is over such a long term it seems to me like it would be the best idea in this case. The only problem is it will probably mean that you have to pay more the 8k of the loan because you will have to add the interest on for the new loan.

The other option is to keep paying for the time being whilst trying to save up as much as you can and then ask for an early settlement figure, I'm not sure how this works though.

Hopefully you will get some replies from more knowledgable people now this have been bumped
x

CLAPTON

if you have a loan of 8,000 over 22.5 years and are paying 60 per month then the APR is only 7.5%.... an amazingly good APR

if they allow you to overpay without any penalties then that would be good to do if you can afford it
well can you afford it.


if you repay early, will you still get the NCB of 2,700, 1,000 and 500 ?

given your low income (how much is that?) you are unlikely to get a new loan on affordability grounds and even if someone gives you one you will probably pay an APR of 20% ish.