Re-finance a loan

Beattie1984

I used to have a 'poor' credit rating due to the amount of debt I had, as I was using about 90% of my available credit. I had never missed a payment but was stuck in a rut as the interest was high and I was unable to get a loan or interest free credit cards.
Eventually I paid enough off that I was able to get a loan for £19k to cover my debts and also my wife's. But we could only get a loan of the interest rate of 17% over 5 years, so there is a lot of interest on there.
Now I have paid all credit cards and have it down to the single payment to the loan. But since I was cleared those debts using the loan, my credit rating has gone up to 'good' at 891 on experian. And on equifax it is also high.
I have only been paying the loan for a month, but I am considering applying for a loan for £19k to pay off the loan I just got, as surely I will get a lot better interest rate since my rating is 'good' now?
In theory it will save me a few thousand over the 5 years.
I just wanted advice on if this is a good idea or should I wait a few months. Is it possible to simply pay off a loan with a loan with a better rate?
In advance, thank you for your replies.

dotdash79

Leave it at least 6 months before thinking of re-financing the loan, it does make sense if you can do it but it might not be that easy.

Are the credit accounts shut?

jellie

Applying for a £19k loan after only just getting a £19k loan is going to look like you are pretty desperate.


How is the 2nd lender going to know you are planning to pay off the 1st lender? For all they know, you might just be going to spend the second lot of £19k, leaving you with a debt of £38k.

DevCoder

Also the scores you see are worthless, lenders don't get to see these scores and have their own internal scoring mechanisms.

Thrugelmir

The high rate reflects the risk to lenders of lending on unsecured basis. You need to stick with the existing loan for an extended period of time and allow your credit history to age.

Cash_Flow

HappyChapp wrote: »

I think you will always pay high interest on an unsecured loan, even if you have good credit.. the market hasn't been the same since the recession - all the price comparison sites lie about the actual rate.

I just got 5.7% secured through nemo and loan.co.uk - I think thats the best i could get from looking around myself.

Spam alert.

dotdash79

Load of people get the advertised rate at least 51% of the successful applicants get it.

On this one you need to show that you are paying off the debt had no issues and aren't running up additional debts.

Apples2

HappyChapp wrote: »

I just got 5.7% secured through nemo and loan.co.uk - I think thats the best i could get from looking around myself.

At least try to make it seem realistic spamboy.


Equally cringeworthy
http://forums.moneysavingexpert.com/showpost.php?p=64116542&postcount=300