Loan at cheaper rate to pay off another loan at higher rate?

MrKlank

Hi
Just got the latest email from MSE, and there are loans available now at 3.3%. I've currently got a loan for 5K (about 1K paid off so far) but the interest rate is 6.6%.

I'm wondering if it's worth applying for 5K at the 3.3 rate, to pay off the other loan that's at 6.6%. Would this be a good idea, or am i better off just carrying on with the existing one?

Any help much appreciated! Cheers!

molerat

a) Will you get the headline 3.3% ?

b) What are the penalties for paying off the loan early ?
You need to do the sums.

Sncjw

You might not get the rate advertised

DCFC79

Depends if you can get the advertised rate on the £5k, you might find the better rates start when you borrow £7.5k.

Use the MSE loans eligibility checker to see what your most likely to get. The link is in the email.

foxy-stoat

You wont get the lowest rate for debt consolidation - keep paying your current loan.

dano17439

If you apply for £7,500, there are lenders that are offering 2.9%...M&S, Sainsburys, Tesco.


Zopa and the AA and Nationwide are offering 3.0% also. Then you can just overpay the balance back to the lender


Until you apply you wont find out. I f you can refinance at a cheaper interest rate then go for it

Jami74

MrKlank wrote: »

Hi
Just got the latest email from MSE, and there are loans available now at 3.3%. I've currently got a loan for 5K (about 1K paid off so far) but the interest rate is 6.6%.

I'm wondering if it's worth applying for 5K at the 3.3 rate, to pay off the other loan that's at 6.6%. Would this be a good idea, or am i better off just carrying on with the existing one?

Any help much appreciated! Cheers!

I'm in a similar position having £3.5k left of a £5k loan over 3 years at 6.7%. I have to pay two months interest on any over payment and I've worked out that the interest saved would be about £200. Taking into account the over payment interest, the saving for me averages out at less than £10 a month for the remainder of the loan.