Bigger loan or Smaller loan?

Gemmzie

Most lenders seem to drop, even half, their rates above £7k. Therefore, is it worth getting a larger loan without repayment charges, sitting on the extra money in a high interest account and then giving it back to them?

Most loans seem to be quoting around 6.9% but I have a regular saver with 7% interest, so surely the tiny amount of extra interest I'd be paying would be worth the lower rate?

asandwhen

I know for instance Lloyds tsb do this - I think it is £7,500 goes down to 6.4% and loans of £5,000 are about 10.9% - with Lloyds you can make overpayments so why not get a £7,500 loan then after 1 month pay back the extra £2,500 therefore having a cheaper 5k loan.

Plutos_2

The big banks are the worst for this - a search on uswitch gives loads of providers giving under 6% for a 5k loan over 3 years. The internet banks seem the cheapest I assume because they have low costs.

Are these loans harder to get though - aren't they supposed to give the rate to 66% of applicants?

Daniel_Jones_2

Hi, Gemmzie,
I think you just need to visit some loan websites. And you will definitely get an idea.

kevin_M

Gemmzie check zopa for a loan if your after a smaler amount u can get a low APR from them. plus u can repay early with no fee


if your intrested let me know because if i refer you u when u sign up to get £30 for joining

EDIT
i personaly never get a loan bigger than what i need.. meens higher repayments every month and more intrest paid out

PoorDave

kevin_M wrote:

Gemmzie check zopa for a loan if your after a smaler amount u can get a low APR from them. plus u can repay early with no fee


if your intrested let me know because if i refer you u when u sign up to get £30 for joining

EDIT
i personaly never get a loan bigger than what i need.. meens higher repayments every month and more intrest paid out

But the question is whether getting a bigger loan at a lower rate, and stashing the remainder in as high an interest account as possible is better.

You might be better off putting the extra in an easy access high interest account, as regular savers usually have limits on how much you can pay in each month, so you'd still have a big slice sitting around doing nothing