Stupid Loan Question

alibhoy

Afternoon All,
Being really stupid here but can't get my head around something. I'm looking at taking a loan from M and S. I've read the terms and it talks about no early repayment charge (you can repay all or part of the loan at any time). 

If that's the case then why wouldn't everyone borrow a larger sum to secure a lower interest rate and then immediately pay back the amount they don't need?

Obviously missing something but I can't find the answer!

Thanks for any clarification! 

Willing2Learn

I just assumed that people do exactly as you have described.

[Deleted User]

alibhoy said:

If that's the case then why wouldn't everyone borrow a larger sum to secure a lower interest rate and then immediately pay back the amount they don't need?

Not everyone can get the larger amount based on affordability, and others can't manage the larger monthly payments for the duration of the (albeit shorter) loan period.