Reduce interest rate on EGG loan. This is a long one, but stick with it !

Dave_in_Andover

Took out an EGG loan in January at 7.9%.
Advert on the EGG site for a new loan at 6.9%, a few days after I'd signed up...Asked if I could transfer and was told it would be complicated. Spoke to another EGG chap yesterday, who said that not all EGG staff were able to make such decisions, as they were not trained financial advisors, and their advice was therefore not insurable.
Instead, he said, keep my original loan, apply for a top-up when a loan offer appeared ( pretty regular offers on EGG web site ), take out £500 top up at 6.9%(or whatever the offer would be). Pay off the £500 asap, and the remainder of THE ENTIRE LOAN would then revert to the lower interest rate.
No idea how that works, but I'm going to try it at the earliest opportunity.

Dave

Munki_2

Hmm... interesting idea... hoever, I don't know if anyone else might back be up with this theory, but if you topped up the loan, and paid the topup amount directly back into the loan, yes you'd get the lower rate... but (and I may be wrong here), but doesn't an overpayment on an Egg loan just reduce the number of monthly payments.... So you'd end up paying less overall, but you may have to be careful that the topup amount doesn't push your monthly payments up to an unaffordable amount each month...

Anyone else think that?

Other than that, it sounds like a good idea... in fact, I may try it with my egg loan...;-)

Munki.

Munki_2

oh, and welcome to the MSE boards, Dave!

Munki.

Rafter

Don't know how that one works Dave, given that there are normally repayment penalties.

If it is a long loan you may be better off switching supplier all together. You should be able to beat 6.9% with Barclays offer of 5.7% if your credit rating is good enough.

R.

Munki_2

Rafter, I'm not sure EGGsactly how the egg loans work as far as 'top-ups'. When they 'top up' a loan, do they effectively have to pay off the existing loan and get a bigger one, or can egg simply top up the existing loan?.... i just don't know... If they can really top it up, then I'm guessing there should be no penalties, as the loan wouldn't be paid off early at that point. If not, then there may well be a penalty of 1 or more months worth of interest.

Time to dig out my Egg loan T&C's! ;-)

Munki.

Margaret_Millne

Rafter wrote:

Don't know how that one works Dave, given that there are normally repayment penalties.

If it is a long loan you may be better off switching supplier all together. You should be able to beat 6.9% with Barclays offer of 5.7% if your credit rating is good enough.

R.

I didn't think Egg had any repayment penalties.

Munki_2

Margaret_Millne wrote:

I didn't think Egg had any repayment penalties.

I didn't either... I'm pretty certain that was one of the things I made sure of before I took my Egg loan out...

Munki.

Munki_2

Looks like I was wrong with my first reply...

'In addition to your rights to make settlement by paying off all amounts payable under the agreement you may make an early repayment of part of the total amount payable at any time.

If you make an early repayment of part of the total amount payable you can choose to change the amount you will pay each month to an amount you choose and/or change the remaining number of repayments to a number you choose provided that each remaining instalment will be for an equal amount and the total amount payable will still be paid within the period of time originally provided for in the agreement.'

So you can change your monthly repayments, as long as it's to an amount that will allow you to pay off the loan within the original loan length. I'm also assuming they will automatically reduce the monthly repayments continuing over the same length of the loan when you pay the top-up amount back into the loan account.

So all's good by the sounds of it! ;-) Just as long as my credit is good enough for me to borrow the extra money to tip my loan over the £5k bracket for the better rate ;-)

Munki.

funkymonkey

as an egg customer - i have done this before without realising.

i asked to top up my loan ( which basically means that you apply for a second loan with them to pay off the first) the orriginal loan was for 6K and my seccond was for 7K it just so happened that they were doing a cheaper rate month the second time round so am now paying 6.7% instead of orriginal 7.9%

pinkfluffybabe

Has anyone any experience of taking repayment breaks from the EGG loan? I am considering doing it to pay off my egg card at 13.9%

Is this a good idea?

Thanks