Taking a new loan or using the old one

MK55

Hello,

I currently have a loan with first direct, with a 3.6% interest rate. I now have enough money to pay this off, however we are looking at the kitchen re-done.

I can't work out whether it's cheaper to pay off the loan and take a new one or pay some off and continue payment.

Loan was £9000 over 60 months @ £164.06 per month.

Settlement figure for current loan

Current outstanding balance: £ 9,515.48
Interest refund: £ 709.05
Monthly repayment due on 16 June 2015: £ 164.06
Settlement figure: £ 8,642.37

Paying some of the loan off
When I spoke to FD and if I pay off some money to leave £5000 left to pay they explained I would pay £164.06 for 35 Months.

New Loan form First Direct website at 4.6%

Looking at their website this would be £149.48 for 36 months..

When I asked the lady on the phone she was unsure why it was cheaper online, and I am too as haven't lent money really before this apart from 1 loan which was cleared early again.

Can anyone help me understand what would be best thing to do money saving wise? I am planning on applying for the other loan before I cleared this one off just in case it was declined for any reason.

Thanks,

Nebulous2

Use the existing one. 3.6% interest is less than 4.6%

I'm not sure I understand what you have done though.

How long ago did you take out the first loan? It looks from the figures as though that is very recent.

How much do you need for the kitchen? Will £5000 cover it? If so I'd buy the kitchen and then pay whatever you have left into the loan account.

MK55

Hi,

Yeah the loan was taken out in Feb this year. I'm just working out whether to pay off some of the loan and carry on payments or pay it off and then take another new loan

ratrace

Op, I would stick to the original loan as you have a very good interest rate at 3.6%

the new 4.6% rate on the website in NOT guaranteed its, if you apply for the new loan (they will do a new search on your file) you may be offerd a higher rate, due to the fact the 4.6% rate has been taken by more than 51% of the customers

so in a nut shell - dont assume you you will defo get the advert rate

Hope this helps

MK55

Thanks for all the help !