Loan advice (high interest rate...)

Gaz83

ryanm8655 wrote: »

Disagree with the post saying that consolidation previously didn't work, my debt has gone down since then so it did work...but because the interest rate is so ridiculous a year of paying circa £320/month has only reduced the amount of debt by about £1k, everything else has been interest.

You can disagree all you want, but that is how a lender is going to see you.

A year ago you borrowed money to pay off other debts. Now, a year later, you're looking to... borrow money to pay off other debts.

ryanm8655 wrote: »

Now I want to get rid of it more quickly and pay less interest overall, that is the reason for another loan, not because I need more cash. Not that I am saying you are wrong to say I won't get a better rate, perhaps I won't, but I don't think it's crazy to think I could

As you have found, no lender is willing to lend to you at a lower rate.

ryanm8655 wrote: »

...and if I am such a high risk why on earth do I keep getting money chucked at me (credit cards and overdraft limits get increased).

I didn't say you were high risk, I said you didn't have a good risk in terms of lending you money at a lower rate than you're already getting.

If you're paying back money on time, without missing payments, then it's not hard to see why they keep offering you products - they're making (not inconsiderable) money from you.

ryanm8655

Because it was £10k less about 3 months ago, and I didn't know I could overpay without penalty until reading on here on Sunday.


Absolutely, which is why I don't think it's crazy to think another bank might offer a slightly better rate so that they can make the money instead of HSBC.


On an affordability note, I took out an £8k loan about a year post graduation when I was earning £22k and had exactly the same credit cards and was maxed out on my £3.5k 0% interest student overdraft, I'd say my situation is considerably better now yet the rate I get offered is worse despite interest rates declining in that time...but I guess the fact I consolidated and my debt situation hadn't improved in 2 years wouldn't help...

Gaz83

ryanm8655 wrote: »

Absolutely, which is why I don't think it's crazy to think another bank might offer a slightly better rate so that they can make the money instead of HSBC.

You're stuck between a rock and a hard place, though.

Taking out a new loan with the same bank = no incentive for the bank to give you a loan at a lower rate as it will result in them making less money

Taking out a new loan with a different bank = no guarantee you will use the new loan to pay off the old one, possibility you will end up with twice as much debt

You may think this is crazy, lenders don't.

ryanm8655

Gaz83 wrote: »

You can disagree all you want, but that is how a lender is going to see you.

A year ago you borrowed money to pay off other debts. Now, a year later, you're looking to... borrow money to pay off other debts.


As you have found, no lender is willing to lend to you at a lower rate.


I didn't say you were high risk, I said you didn't have a good risk in terms of lending you money at a lower rate than you're already getting.

If you're paying back money on time, without missing payments, then it's not hard to see why they keep offering you products - they're making (not inconsiderable) money from you.

Not strictly true...I've tried two other lenders (one just a pre-check) and they were unable to offer me a loan at all which is likely down to the fact I have just updated my address and this hasn't been reflected on my credit file (pre-checks for comparison sites confirm this as they couldn't find my credit file so were unable to assess my suitability). I haven't tried anyone else...ever...only HSBC...


I disagreed that consolidation hadn't worked, my debts haven't increased, I'm not looking to borrow more, I am looking to borrow less than I borrowed a year ago in order to get a better rate. I have no idea what detail lenders will go into but that doesn't show that the consolidation didn't work...if they did review it surely they would note I have met all the payments and the debt has gone down. There must be plenty of people who consolidate their debts to get a better rate and are successful? I might not be but I find it hard to believe that no one has ever been able to get out a new loan to clear an old one and lower the interest rate they pay...


Likewise if other lenders can see that I am paying back on time without missing payments then surely they'd be interested in undercutting HSBC (particularly as the rate is higher than a credit card, I was recently accepted for a credit card with the post office that I applied for as it was 0% fees abroad btw) and making that money themselves?


I'm not being facetious...


My financial situation has improved, my income has increased and level of debt has decreased...once my credit file has been updated and I have used savings to clear down the debt I don't think it is unrealistic to think some lenders might be able to offer a better rate than HSBC did previously for a higher amount and with a considerably lower wage...I might not be able to but time will tell...


Thanks all for the advice.


Will update in a due course, lower rate or not.

EDIT: I agree re: rock and a hard place, I don't think that's crazy, seems perfectly logical that lenders might see things that way. In which case the answer is pay it down to get myself back under the affordability threshold I guess...

-taff

You've got a 13k loan, you're looking to borrow 10k, that takes you to 23k, half your income, [there is no guarantee you'll pay off your current debt with it].
You're a high risk.

ryanm8655

Reading another thread it seems HSBC are a notoriously fussy lender...


Definitely need to shop around in a few months...

ryanm8655

Bit of an update on this...found out I have £11730 to pay on the loan if I settle the debt now...I have £1750 in a regular saver and could also go into my overdraft to reduce this further if need be (the rate is a bit better than I have on the loan as I have a HSBC advance account so get a better rate).


Plan is to use the savings to reduce the loan.


I had booked an appointment with Santander to open up a 123 cashback account, and am also going to enquire about a loan and see if they can do a better rate (have heard they are less fussy than HSBC when it comes to lending and I used to bank with them/still have credit cards with them that I always pay off in full each month).


Question...£10k loan would be sufficient to pay my current loan, if I were to use my overdraft to reduce the loan to £9k could this improve the rate I get offered compared to borrowing £10k? I plan to pay it back over 24 months, if not sooner...


Worst case scenario I'll clear down the HSBC debt using savings/overdraft as much as possible and refinance the remainder over 2 years with HSBC at the same rubbish rate...


Thanks,
Ryan

[Deleted User]

Stay out of your overdraft - that's likely to make things worse if you end up living in it for any length of time.

enthusiasticsaver

Hmm. I am not sure a Santander 123 account is good for you at the moment. Try the Santander 123 lite. Lower fee.

redux

Pay the savings account off against the loan, don't use the overdraft, and increase your monthly repayments by £200 or £300 a month.

That will test whether you can pay it back in 2 years, and already halve the remaining interest if you do.

Maybe after several months of that might be a better time to see if a lower interest replacement would be available, but on the other hand it will be most of the way through the interest by then anyway.