Loan on to 0%??

iain2eyes

Hi all, I have a dilema and really need some advice as if I can do what I want, my total debt will be paid off 1 year early and I can then save the payments totalling £10k+ towards a deposit to a house, ok, sit back, here goes.
I have a loan with Lloyds - £10500
I have a credit card with Lloyds with a Credit limit of £12000 (no current balance)
I have 2 credit cards with 0% totalling £11000 (for 24months, Barclays and Halifax)
This is what I want to do - Transfer my loan on to the 0%.
This is how I want to do it (as the 0% is ONLY for Balance Transfers and NOT Bank Account Transfers)
I want to get a cash advance from my Lloyds CC thus creating a balance. Paying it in to my Lloyds account, then speak to Lloyds about paying off my loan. Transfer the balance to my 0% cards and thus moving my loan to a 0% over 24 months.
My questions:
Will this work, can you forsee any problems?
Will Lloyds allow me to BORROW on their card to effectively pay off THEIR loan?
Do I need to tell them that is what I am borrowing the money for as at the end of it I will be debt free with Lloyds?

I really appreciate any help guidance or advice.
Regards
Iain

oscar52

What you are effectively talking about - transferring money from your credit card to your bank account is a Super Balance Transfer - I am not sure if Lloyds do these.

However, if they do, you do not need to advise them of the LTSB loan - simply tell them you have a few bills to pay. (thats if they ask)

Stuart_W

The method you describe would work, but check carefully if you are limited on the amount of cash you can withdraw, and what the costs of such withdrawals are (often 2-3% fee plus a very high interest rate). You may be limited to £500 per day, or 50% of credit limit, etc. Different cards vary, some have no limits, but the added "fees" need to still keep the account within the credit limit.

Contact Lloyds for an early settlement figure on the loan first.

Make sure that the balance transfer clears the credit card cash advances and fees in full, and you'll need to make sure you have the money for the daily-rate interest added to the following month's bill after the balance transfer is received.

ejc81

iain2eyes wrote: »

I want to get a cash advance from my Lloyds CC thus creating a balance. Paying it in to my Lloyds account, then speak to Lloyds about paying off my loan. Transfer the balance to my 0% cards and thus moving my loan to a 0% over 24 months.
My questions:
Will this work, can you forsee any problems?
Will Lloyds allow me to BORROW on their card to effectively pay off THEIR loan?

You may struggle to get the cash advance for the amount that you want;

a) Your credit card will have a cash advance limit which will be less than the actual card limit

b) cash advances are usually limited to withdrawing a certain amount per day (probably around £500)

c) There is usually a charge on each cash advance (usually around 2-3% per withdrawal)

d) Interest is charged on cash advances from the date of the advance, so even if you pay the entire statement amount at the end of the month, you will still pay interest on each cash advance.

e) There will also be a fee for settling your loan early

To answer you other questions,

Yes you could do it, but see issues listed above and no you don't need to tell Lloyds anything.

If it were me, I would put all of my monthly spending on the Lloyds card, then transfer that balance to the 0% card and use the cash I would have spent during the month to make extra payments to the loan account, thus saving a pile of charges

iain2eyes

Thank you to everyone for your great advice. So far I got:
1.Cash advance (balance tfr to current account) for £10500 to pay off the loan
2. Loan paid off early
3. Credit card with £5k limit and transferred 90% balance to credit card, now on 24 months at 0%
4. Credit card with £6.5k limit and transferring the remaining balance over 22 months
5. Although I have had to pay fees this saves me over 3 years of interest and payments, gets my loan on 0% from 15.9% and I can now start to save towards a house once this is cleared.
6. Great result.
Thanks

Paul_the_Painter

Couple of things,

1. Pay off all but £200 of the loan, and you won't have any early payment charges from the Lloyds Loan. just 1 months interest, so under a fiver.

2. Lloyds are offering me 6 or 9 months at 0% with a 4% fee for Money Transfers as an existing customer. they are only doing this by post, not on my online account.

Taking the above into account, I would Money Transfer the loan money to your bank account, pay off loan (except a small amount), than pay off LLoyds card for 6 months, then balance transfer elsewhere.

iain2eyes

So, I am now 8 months down the line from when I started my plan to get my families total debt on to 0%. It was time for the second loan to go, following Paul's advice about leaving the last 2 payments to save on interest makes total sense, I have managed to secure an MBNA card with a credit limit of £8k which I can transfer 90% balance to my current account (fee 4%), good news is that this is 0% till MAY 2014, also first minimum payment is not till November, then I had to go cap in hand to my father in law to get the remainder of the balance of the loan (he knows I am working 2 jobs to get debt free and I broke down how the payments would work and the fees, as long as he had to pay nothing he was happy). So now my total debt which started around £38k 3 years ago will be paid off by April 2014 which is 9 months early, saving me approx £10k.

Thanks for everyone's help and suggestions, I always help people with sensible advice on money and share my solutions with everyone to hopefully help them to be debt free. I would urge anyone with debt to try out MBNA cards for their balance transfer/money transfer rates, even if you have an MBNA, like Virgin or AA.