Advice on current personal loan please

Davenewcastle

Hi,
I took out a Personal Loan 2 years ago with Lloyds Bank and the repayments are quite high. At the time I wanted to use the loan to put the money I owed into 1 place to help my credit rating as I wanted to save for a mortgage. This past week i had an account review with an Account Manager at Lloyds Bank. They said the review was because they were in a better position to offer me a cheaper interest rate. From all the help and knowlegde I have picked up on this site And others I thought someone may of had a similar problem or be able to offer advice. The problem being to get the lower interest rate they would need to do a credit check. Which would obviously impact on a mortgage application I would want tk do in the next year. Some people say to use a balance transfer or 0% interest type of card. If I did this then that would affect my available credit % so would lower my credit score as far as I am aware. Personally I feel the bank should be able to automatically change the interest rate as I am not applying for extra money or a longer term loan. I think i will be stuck with the repayments that I am paying but just wanted to see if anyone could please offer any advice it would be very much appreciated. Thanks in advance. David:):

[Deleted User]

They need to do a credit check as they don't know what other borrowing you have. One credit search will have no impact on a mortgage application next year. Who has told you that it would?

Also remember that as your credit score is meaningless, it doesn't matter whether it goes up, down or to Bournemouth for the weekend. All that matters is credit history and account management. and your circumstances.

If the bank feels they can offer a lower rate, then you would somewhat mad to overlook the opportunity.

Gaz83

Davenewcastle wrote: »

Hi,
I took out a Personal Loan 2 years ago with Lloyds Bank and the repayments are quite high. At the time I wanted to use the loan to put the money I owed into 1 place to help my credit rating as I wanted to save for a mortgage. This past week i had an account review with an Account Manager at Lloyds Bank. They said the review was because they were in a better position to offer me a cheaper interest rate. From all the help and knowlegde I have picked up on this site And others I thought someone may of had a similar problem or be able to offer advice. The problem being to get the lower interest rate they would need to do a credit check. Which would obviously impact on a mortgage application I would want tk do in the next year. Some people say to use a balance transfer or 0% interest type of card. If I did this then that would affect my available credit % so would lower my credit score as far as I am aware. Personally I feel the bank should be able to automatically change the interest rate as I am not applying for extra money or a longer term loan. I think i will be stuck with the repayments that I am paying but just wanted to see if anyone could please offer any advice it would be very much appreciated. Thanks in advance. David:):

Have they said whether this 'new' interest rate would be repaid over a longer term?

Davenewcastle

Hi, thanks to you both for replying. The bank never said about the terms or duration of the loan changing. Just confirmed they would need to do a credit check. My concern last year when I got some mortgage advice was that I could get a mortgage because my credit report was excellent. But couldn't get a one if my deposit was less than 15% at the time. due to having the loan application a year prior. So just didn't want this to affect me again. I really just wanted to get opinions before perhaps going for the reduced rate as didn't want to be nieve like I had been with banks previously. David

Dobbibill

You need to consider the new terms vs how long you have left on your current loan. Also the lower APR normally comes with loans over 7.5k, so if it's significantly less than that then take time to weigh it all up.

Gaz83

Davenewcastle wrote: »

Hi, thanks to you both for replying. The bank never said about the terms or duration of the loan changing. Just confirmed they would need to do a credit check. My concern last year when I got some mortgage advice was that I could get a mortgage because my credit report was excellent. But couldn't get a one if my deposit was less than 15% at the time. due to having the loan application a year prior. So just didn't want this to affect me again. I really just wanted to get opinions before perhaps going for the reduced rate as didn't want to be nieve like I had been with banks previously. David

I'd be very surprised if the terms of the product with the 'new' interest loan wasn't spread out over a longer term and, ergo, would end up with you actually paying more in interest over the term.

Think about it - if you were a bank, and a customer was paying you £x amount every month, on time, with no payment difficulties, why would you give someone the chance to pay a lesser amount, when the purposes of a bank is to make money?

Davenewcastle

Hi, Thanks again for your replies. I certainly wouldn't want to extend the duration or anything. The different replies have certainly helped. Thank you

KJSmith

The interest rate of your loan can't just be changed. In reality what the bank are proposing is to take out a new loan which pays off and settles your existing loan. The new loan could be a different term, could be a different amount, could be a different rate. So it's worth exploring further even if they just provide a few quotes (which wouldn't involve any credit searches).

Regardless of what's been mentioned by Gaz83, Lloyds are happy to do this. They do often benefit from this service too as more often than not, people have other loans of borrowings elsewhere which they would consider bringing over to Lloyds.

The application for the new loan MAY involve a hard credit search, though often an external credit search is not performed. The branch staff are required to point out that a credit search will be made and they are instructed that credit searches take place for all loan application, so they would not be able to confirm this.