Should i take a new loan?

bowditch1985

Hi, I have a loan at 7.9% APR, and with the same lender can take out a new loan to pay this off (pre approved loan) at 5.9%. I am only 1 month into a 60 month term.


Should I do this? conversely I could lend another £700 and have the same repayments that I do now, but 1 month longer (monthly repayments are only around £280).


After some advise. appreciate your time.

[Deleted User]

If you can do this, then it would probably make sense. Be aware that you may be charged two months interest for early settlement, so factor this into your number.

bowditch1985 wrote: »

conversely I could lend another £700

Who to? And why?

bowditch1985

Apologies, I should have been clear, I could have another £700 added onto my loan and not have any adverse monthly costs compared to the first month of the initial loan I had taken out.


This figure includes the early settlement charge as well...


im not missing anything am I?

Pixie5740

Why would you want to borrow an extra £700? Do you need it for something specific?

This pre-approved loan, how did you find out about it? There's no guarantee you'll actually receive 5.9%.

bowditch1985

I have my loan on my on-line banking (as I also bank with Barclays).


So when I logged on, I went to look at my loan, and there's a section on there showing how much more your pre-approved for.

bowditch1985

Sorry, I should also say, I don't want to lend another £700, just that would be the other option. the first is my preference, take the new loan to cover what I owe and simply reduce my monthly charges by £14 per month.

Pixie5740

I'm confused, are you talking about borrowing another £700 or lending the additional £700 to someone else?

Borrowing money usually comes at a price so you should only borrow what you need.

Lungboy

They're using lend when they mean borrow I think.

bowditch1985

Apologies, for not being clear, hopefully this will make more sense:


I currently have a repayment of £250 per month roughly.


I can reduce this by taking a new loan, even though I only took the original loan a month ago to buy a car.


Ignore the £700 (I think I was confusing things by mentioning that)

Foxy-Stoat_3

If you are 100% sure that you will be approved and know the early settlement charges then take the extra borrowing for the same monthly payment and length of term, take it and buy £700 worth of Premium Bonds.;

Assuming you will take another 60 month loan, your will pay another month's payment so its £450 you are getting extra, not £700.

MallyGirl

On a forum like this it is really important to be clear. When talking it may be that you use the word 'lend' when you mean borrow but you will get some very confused readers if you do that on here. You lend money to someone else, you borrow money from them.