Changing length of a Lloyds loan

SpendyMcSpenderton

Bit of a hypothetical question here.

I have two loans with Lloyds. One with £500 left and four months left to pay. One which is £7k left which is four months into 36 months. I've never missed a payment, always pay my credit card on time, been a customer for over 10 years.

Hypothetically, if circumstances were to change after the first one was paid off, would Lloyds allow an extension on the second to reduce monthly payments.

Obviously I'd be paying more in terms of interest but is this something that is feasible?

Thanks!

[Deleted User]

Unlikely, at least not without some significant impact to your credit file, as you would be defaulting.

You would need to look at getting a futher loan with a period that suits you better and then pay off the Lloyds one. But the success of that application would obviously be driven by your circumstances.

SpendyMcSpenderton

By extension I mean like changing it from a 3 year loan to say a 5 year loan etc. Not asking for any more money etc.

National_Debtline

Hello there. Lloyds may be able to re-write the loan over a longer period of time. It would be their decision at the end of the day. Although you will be able to pay a reduced instalment you may end up repaying a significantly higher amount of interest. If you have an outstanding credit card you may find consolidating a cheaper option. You should always complete a comprehensive financial statement prior to making any applications, this should help you gauge affordability.

Best wishes,

David @ NDL.

SpendyMcSpenderton

Thanks for that

The credit card has been cleared every month and if this situation arises then I wouldn't be using the card at this point.

My main concern is if I were to have a temporary drop in income for a period of time, for whatever reason, would the bank be open to adjusting the length of term. I guess it must be down to individual circumstances though as mentioned

Apples2

SpendyMcSpenderton wrote: »

My main concern is if I were to have a temporary drop in income for a period of time, for whatever reason, would the bank be open to adjusting the length of term. I guess it must be down to individual circumstances though as mentioned

They don't generally do this at a whim, there is normally something in it for them (which comes out of your pocket).

If you were to have a drop in Salary meaning you could no longer afford the repayments, don't expect a sympathetic ear, it would be normal for them to ignore your plight until you have defaulted. At that stage Collections would speak to you but your credit file will be trashed.

To satisfy your request, it is most likely they would ask you to apply for a different loan over a longer period but you would need to meet their lending criteria (which includes your current loan).

As has been mentioned, you end up paying a lot more if you repay over a longer period. Be very careful of the short term fix, it unfolds as a long term headache.

The best method would be to use the extra money once the first loan is clear to overpay the second.

There's no harm in asking though but remember they are not your financial advisors, they are salespeople trying to sell products to make most profit.

Paul_the_Painter

Personally I would use the £125 extra pcm, to build up a savings pot of about £1,000 before using the extra to pay down the larger loan. If you are concerned about a potential drop in income the £1,000 in the savings account would go a long way to funding the shortfall, or could meet all the loan payment for about 4 months.
Paying chuncks off the loan will leave you financially better off, but won't leave you a cushion in case of the unexpected! Lloyd's will expect their £250pcm right up until the last payment, no matter how much you have over paid.
In my experience, admittedly a couple of years old, if you go into branch they will do you a new loan over a longer period, then pay off the old loan basing their criteria on just the one loan, but you will get stuck with an early repayment charge of 60ish days interest, although they will add that to the new loan rather than expecting you to have cash.