Switch 5.4% Car HP to 3.4% Loan

mark55man

I've been MSE for too long (well maybe) and I have a mental conflict about whether switching loans (as per title) is something I should do - just thought I would reach out and see if anyone can help me with suggestions or ways to finesse the situation

In March following a catastrophe in the 2nd hand car market after our old battle wagon gave up the ghost, I took advantage of a new Vauxhall offer at 40% off list price and took out a HP loan to do this at 5.4%. That decision is done now - I don't really regret it and it is affordable

However, I see now that Cah00t and Sainsbugs are offering finance at 3.4%. If I settle the HP early with the money from the loan I will pay £600 less in total (interest/fees) and be finished 6 months earlier. I thought it was a no brainer to fill in the application, but I cant bring myself to do it - it just feels wrong. I am sure my credit rating would support it - and I am not looking to do anything else financial in the next 6 months

So what would you do? Thanks

[Deleted User]

You may not get the headline rate - particularly with an existing loan of an unknown value.

But one search wouldn't be the end of the world if you were to get rejected.

Remember to calculate any early settlement fees into your numbers.

andyfromotley

Make sure you have done the figures correctly, lots of car deals seem to have add ons etc so make sure that you get the full settlement figure.

Other than that go for it providing that you get the headline rate or close to it which can be tricky with sainsbury. Lots if threads from people with perfect credit records not getting it.

mark55man

Thanks ZX81 - not much margin so if the rate isn't lowest then I wouldn't do it.


Have already checked - there were admin elements built into the HP so paying early doesn't trigger anything extra

mark55man

andyfromotley wrote: »

Make sure you have done the figures correctly, lots of car deals seem to have add ons etc so make sure that you get the full settlement figure.

Other than that go for it providing that you get the headline rate or close to it which can be tricky with sainsbury. Lots if threads from people with perfect credit records not getting it.

Thanks Andy - will try Sainsbury's first