New Loan

Benno1983

Hi all,

I currently have a loan with the Halifax. I have just under 7k left to repay. I pay £175 a month at a rate of 22%. I can take out a Tesco loan for 7.5k with repayments of £145 per month at 7% apr.

Is this worth doing to get my monthly payment down?

Thanks

Con_fuss_ed

You've got to look at whether borrowing 7k plus interest with Tesco is worth it versus just paying off 7k including your interest on the existing loan is worth the reduction of just 30 per month in repayments. Plus I'm guessing your probably extending the term too?? It's down to your personal priorities and whether reducing your monthly outgoings now is more important than extending and maybe increasing the amount you pay back in the long term. No actual objective advice I'm sorry but something for you to ponder.

Benno1983

I would only be repaying 8,500 after interest. I'm currently paying back nearly 13,000. I think it makes sense to go for the Tesco one as its only 5 years and I've still got six years left on the Halifax one.

CLAPTON

yes a loan at 7% apr is much better than a loan at 22apr all other things being equal.

Benno1983

My remaining balance on the Halifax loan is £6830. Is this the amount I will repay if I take out the Tesco loan?

Thanks.

CLAPTON

Benno1983 wrote: »

My remaining balance on the Halifax loan is £6830. Is this the amount I will repay if I take out the Tesco loan?

Thanks.

you may have to pay a couple of months interest depending upon the T&Cs of the loan

however that still a much better deal

maginot

It makes sense to reduce your repayment by a year and pay back less interest. So definitely go for it.

However you do need to check any early repayment fee, also are you sure you can get the tesco rate of 7%?
It just seems strange that you were only able to get 22% when you took out the loan, haven't paid off this loan, but now able to get a rate that is reserved for those that have excellent credit rating and a good earning to borrowing ratio.

Con_fuss_ed

Again it depends on how long you've already had the Halifax loan too and I dont know how much you borrowed originally. If you've already been paying the Halifax loan for a number of years and are starting again with Tesco then it could cost you more long term. Again it's down to what's more important to you. Paying less monthly now or paying less over the long term. However if overall with what you've paid back to Halifax to date plus what you will pay to Tesco is less than what you would pay to Halifax if you stayed with them, then do the Tesco one.

Benno1983

If I was to call Tesco would they be able to tell me what apr rate they would give me?

CHR15

Benno1983 wrote: »

If I was to call Tesco would they be able to tell me what apr rate they would give me?

Not until they conduct a Search on your file.

As has been mentioned, you seem to be focussed on Headline rates without any indication you will receive the best rate.

If you only managed 22% APR before, why do you think you will now get the best rate? You are £7k worse off already compared to your risk when applying for the last loan.

redpete

Benno1983 wrote: »

I can take out a Tesco loan for 7.5k with repayments of £145 per month at 7% apr.

Are you sure you don't mean "I have seen an advert for Tesco loans with a representative rate of 7% apr."? If this is closer to reality then when they assess your personal circumstances Tesco a) might not offer you a loan at all or b) they might offer you a loan at a considerably higher apr.