more advice please.

shamu95

hi- have just rung about my loan. it is likely to cost me £42k to settle my 36k loan.(its at 9.9%) I can get another loan at 8.1% which is £345 a month for 20 years which is saving me 2 years of payments.
Is there anyone out there that is good with figures that can tell me whether this is a good idea or not.

Please please advise.

ps app if i keep the loan for full term i get £7125 cashback. its with a company called relax finance. loan we have a min is with endevour.

taxi73

Could you please post some details about the original loan....how much per month ...original amount borrowed and how long for...that may help us...though 8.1 doesn't seem that cheap..

shamu95

Hi here is as much info on the loan as i have.
Its £36 over 25 years with endeavour personal finance. Originally took out lpi so tatal loan was £42,840 At 8.8% apr.
Cancelled lpi last week and apr is now 9.9%-payments are £357
For early repayment it says i may cancel by paying the outstanding balance of total loan amount and any interest outstanding together with any unpaid insurance premiums,reasonable cost,charges and expenses debited to the account and an early repayment charge. erc calculated as follows. If repayment made less than 3 years after opened the erc will be 6 months interest on the balance of the total loan amount then repaid at the rate of interest then payable.
If repayment is made after 3 years the erc will be calculated as abovebut reducedby 1 months interest for each year or part of a year that the loan has continued in excess of 3 years.
If repayment made after 8 years no erc will be charged

lynzpower

Am I right then in thinking that with the new loan you would be paying interest on the interest & early settle ment fees of the old one?

shamu95

thats right. there is no additonal borrowing whatsoever.

lynzpower

but that means that there IS extra borrowing shamu, as you will be borrowing the costs of getting out of the 1st loan, and paying them off in the 2nd one.

I would be more inclined to stick with the loan you have then once you have paid off your unsecured debt, to then start banking up the money to settle the unsecured early.