Need a debt consolidation loan

Savedotmoney

Hi all,

I have £5000 remaining on a finance I took out and the interest rate is very high. I think it's charged at 11% per annum. The lady said if I continue paying it off monthly I would pay £7500 in total with interest.

Would you recommend taking out £5k with someone with a lower interest rate and saving money that way? I have no issues continuing to pay but I want to save money.

Thanks

immoral_angeluk

The bigger question is, would you GET a further 5k loan with a lower interest rate?
How much do you earn?
How much credit do you have already?
What's your repayment history like?
Are you a homeowner or tenant?
What's your star sign?

All of these things and more will have an impact on whether you could even get a loan at all. Well ok... maybe your star sign won't. But lenders can be very picky!

maginot

11% is not too bad!

You could always try to apply for a cheaper loan, but remember you now have a £5000 extra debt compared to when you got the last loan. So may find that you are offered even worse rates (lenders don't know you are consolidating)!

As said by other posters, it depends on a variety of issues! But saving money is always a good thing

Do you know if there are any early repayment penalties?

Duke203

Savedotmoney wrote: »

Would you recommend taking out £5k with someone with a lower interest rate and saving money that way?

If saving money is your bag then yes it is a great idea on paper. The new loan would cost, let's say with a finger in the air, £6,500 so you would have saved a grand

However, you have to be certain you'll use it to clear the original finance otherwise you could end up paying back £14,000 in the above example if 'something pops up'. Of course you might not get the loan anyway but good luck whatever happens!

Savvy_Money

They often prefer proof of salary. Do not be surprised if they will send you an agreement in principle on condition of proof of salary and/or three months worth of bank statements.

Hope you get the rate you are seeking.

iolanthe07

I think it's charged at 11% per annum.

If this is APR you may find it difficult to get a better rate in today's credit climate. Don't fall into the trap of seeing a 'representative' rate advertised of, say, 6.5% APR and assume you will get it. Lenders only have to offer the representative rate to 51% of successful applicants. I would tend to stick with it, personally, but it depends on your circumstances and the rate you can get.

Savedotmoney

immoral_angeluk wrote: »

The bigger question is, would you GET a further 5k loan with a lower interest rate?
How much do you earn?
How much credit do you have already?
What's your repayment history like?
Are you a homeowner or tenant?
What's your star sign?

All of these things and more will have an impact on whether you could even get a loan at all. Well ok... maybe your star sign won't. But lenders can be very picky!

I earn £32k per year, I have around £8k of credit so far (mostly car HP agreement)

Repayments always made on time, no problems with credit history, always paid back everything (had quite a few different finances all paid off)

I live with parents

I applied with Sainsburys today as I worked it out that if I get their loan and pay off my current one, I can make the same monthly repayments but cut the term down by 8 months. If I went for the same period of time as my current loan, I would have saved £50 per month on each payment.

Obviously they didn't like something though as they refused it. It's annoying that I have to keep paying Creation such a high amount of money.

They gave me exact figures today...

£4576 to pay it off,
28 months remain at £238 with a final payment of £280
total payment of like £7700.

Thieves! I know I signed up for it but I'm trying to save paying money to them.

paddyrg

Honestly, 11% is pretty decent for a loan of £5k, many people would be thrilled to pay so little, especially if young/without your own home etc. No harm in asking, but don't be too shocked if you get offered something closer to 9-10% - at which point it becomes a question of is it really worth the hassle for the sake of a few quid difference!

Could you overpay instead? Pay £300/month or more (living at home, your bills aren't too huge for a £32k income) means you will save far more than reducing your APR by a percent or two. In fact, if you pay all your spare cash into it, you'll save a mint and have it paid off so much sooner

poppasmurf_bewdley

Savedotmoney wrote: »

Thieves! I know I signed up for it but I'm trying to save paying money to them.

No they're not. They offered you what you wanted at a time you wanted it.

Doubtless at the time it was offered, you were very grateful.

Just because you've thought about it afterwards doesn't put the loan company in the wrong.

How would you feel if the loan company called you a thief for trying to do them out of some of the interest you are now trying to save?

DCFC79

How dare the loan co offer the OP a loan at 11%.

Savedotmoney

Once again this forums replies rear their ugly head with their sarcastic opportunity to condemn others.

What I'm saying is that like everyone, I'm trying to save money by cutting my monthly repayments.

I think I'll just increase the repayments and reduce the interest that way.