Loan APR

1919

Looking for some advice for a friend on their loan please.

My friend currently has a loan with RBS and is paying around £30 interest a month (the APR is 24%). He took out a loan a few years back and has twice renewed the loan. So taking out a new loan for slightly more than what is outstanding, leaving him with a little extra cash. The last time he renewed it was last year, borrowing £3000 and paying back £80 per month over 5 years.

He is not good when it comes to his finances at all, and although the paperwork is clear how much interest he will be paying back I don't think he paid much attention.

Any suggestions on what he should do? He is in a position where he can afford higher monthly repyaments in order to pay his debt quicker. Should he try apply for a new loan elsewhere and hopefully get a better APR rate to pay this one off.

Many thanks

Rafter

That is a nasty APR. Whether your friend can reduce it will depend on his credit rating, income etc. Getting a debt consolidation loan (which this would be) is tough at the moment.

His best bet might be to try and get a balance transfer credit card, but not sure I would recomment this if as you say he is not good with finances as it could be a recipe for paying even more interest longer term.

I suggest trying to apply through something like zopa to see what he might qualify for, particularly as it is a relatively small amount.

Good luck

R.

jamesd

A Virgin or other MBNA credit card might be one way. 4% balance transfer fee and around fifteen months without interest after that. He'd be left owing around £1900 at the end of the fifteen months if he paid at £80 a month. He could pay more, or get another balance transfer deal after that.

If the current loan allows overpayments he could try a 0% for purchases credit card and put all day to day spending on it, overpaying the loan by the amount spent so that there won't be any interest for a while. Once the 0% deal is up he could go for a 0% balance transfer offer. The advantage of this route is that there's no balance transfer part at the start of the 0% for purchases deal, so it's cheaper. The disadvantage is that it requires being organised, so the first method may be better because it's simple.