Worth Switching?

teuma86

hi

I took out a loan for 20k in September 2010 for 60 months (5 years) @ £465.65 per month. (14.9%)

Since taking out the loan I have a better paid job and aiming at soon getting a mortgage. I have been told it would be better to pay of the loan first because A: More money each month and B: Lenders dont want to lend when someone has a large loan already.

I am thinking is it worth taking out a new loan to pay of my current loan quicker.

Using the Halifax online calculator I can borrow 12k over 24 months with £535.32 monthly payments (total £12,847.68)

So A: I pay the loan of 6 months earlier and B: I save just over £100 on the loan.

But is it worth it or am I best waiting (rather than putting my name through credit checks again)

Also, is it possible to do this with my current provider (HSBC) as I know I have great credit history with them.

Tixy

Saying you will save £100 - what is that based on? is it based on the representative APR? if so you might not get that rate even if you are accepted for the new loan.

Does your existing loan allow over payments (check your paperwork or call your existing lender).

teuma86

Thanks, the saving of 100 is based on the early settlement fee - the total repayable of the new loan.

Sorry what if over payments? the settlement amount I gave is based of the original agreement document.

Tixy

The total repayable on the new loan - it sounds like this was just an illustrative example, based on the representative APR. You may not get that loan at that cost.

If your existing loan will allow you to make overpayments each month (i.e pay off £535 a month rather than £465) that would mean you would pay the debt off sooner and pay less in interest overall.
All newer loans have to allow overpayments, but you would need to check your paperwork to see if yours does.