Cooperative loan

monkeyclown

Hi all

Have been using the forums for advice for a while but not posted before so hope I do it right.

Just need some advice as to what people consider my best options are.

I took out a £10,000 loan with the co op it was a professional career development loan - which was brill as did not have to make any payments in the first year nor pay interest. But now the loan has kicked in and I am paying it off but just not sure if I should move it somewhere else or like if there is a better option.

Loan is currently 9,100, and the APR is 9.9% I have spoken to them and the early repayment charge is 60 days interest. term length is about 43/44 months left i think. I pay approx £250 a month.

Now I do not know if I am just being a bit optimistic but I see these ads and on this website of like 5% loans and im like well why overpay. But then i have also read about these no interest credit cards for 30 months now and I am thinking can i use those, and pay just the one off fee and then no interest (sounds ideal lol). I could pay upto £300 a month within my budget so pay it off quicker.

Also i have no idea if i would get these loans i know that only 51% do etc. I am not a homeowner, and earn 21k.

All advice welcome just wondering whether I should just chuck a few loan applications in and see what the banks offer but thought i would see what people thought.

thanks in advance.

Eonel

I suspect your salary is going to prevent you being able to replace your 9.9% loan with a cheaper one.

As a general rule of thumb, the amount of unsecured debt an individual can have is around 50% of salary. Try to get further credit beyond that and you will be seen as a high risk customer. With your 10k loan against 21k salary, you are already close to this limit.

In order to move the loan to another bank or to a 0% credit card you effectively have to take out another 10k loan and pay the first one off. This temporarily increases your total amount of available of credit to 20k - which is a high risk amount compared to your salary.

You know that you are not really increasing your credit to 20k - you will simply use the second 10k to pay off the first 10k and your debt remains flat.

But this isn't how banks will look at it. To them, there is no guarantee that you will pay off the first loan with the second loan - so they will risk assess you against the total 20k.

Per the rule of thumb, you will need to earn around 40k before you are likely to succeed in passing a 20k total credit risk assessment.

datlex

Have you considered speaking to the Co-op and asking you can move the loan to one of their other loans? Their regular loans are 5.6% representative. (obviously no guarantee you would get this rate) You may find this easier and they know you have been paying and could make sure the loan is transferred correctly?

monkeyclown

Oh that makes sense Eonal. I was trying to explain that to the bank as I was just chatting to them and they were like thats a lot of debt for your salary and I was trying to explain it will not be more. As I just want to move the loan (refinance it really) silly banks oh well.

That is interesting datlex, makes a lot of sense. As i could say to them I do not even want to have the money. They can do it internally.

Is there anything in the doing it by credit card? As i know I cant do a balance transfer from a loan. But some of the credit cards seem to give you the money for a 4% fee. I cannot tell if that is good or not.

Thanks for your advice btw really appreciated

SAPPER65

Can some one tell me how to post?

monkeyclown

do you mean a whole new post. as if so you go to the section you want to post in ... loans etc. then click new thread and post away. if you want to post a reply you just click on the post reply button.

Hope that helps

Eonel

monkeyclown wrote: »

Is there anything in the doing it by credit card? As i know I cant do a balance transfer from a loan. But some of the credit cards seem to give you the money for a 4% fee. I cannot tell if that is good or not.

Credit cards can be an even cheaper way of doing it, however you will face the same problem. Loans and credit cards are both unsecured debt and both will use similar affordability checks.

longtermplanner

Most 0% balance transfer do not 'give you the money' so you could clear the loan - the money is transferred to another credit card. And with your salary there is no way you would get a 0% card with such a high credit limit anyway. If you got one at all, it would only be for a thousand or two which wouldn't let you repay the loan.

You are doing absolutely the right thing by trying to work out how to reduce your interest but in your situation it isn't going to work. You could look again in a years time, by which time the loan will have reduced and hopefully your salary might have gone up?

monkeyclown

I spoke to coop and they moved me to a lower APR 'in house' if you know what I mean - used the one loan to pay off the other but now on lower APR. So very pleased.

Thanks for all the advice and tips. All were much appreciated.

Nice_Weather_For_Ducks

SAPPER65 wrote: »

Can some one tell me how to post?

Write a letter, put it in an envelope, write the receivers address on the envelope, attach a 1st or 2nd class stamp to the top right corner and post it in a postbox.