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Paying back money from loan early to reduce interest rates

kippaxman
kippaxman Posts: 24 Forumite
Part of the Furniture 10 Posts Combo Breaker
I am looking to borrow £3000 from Tesco home loans, apr 8.9%. If I borrow £7500 apr 3.0% and payback £4500 in the 1st week would I keep the 3.0% interest rate?

Comments

  • You should check the terms and conditions of the loan for early repayments rather than asking on here.
    I wouldn't assume you would get the offered rate either when factoring in your budget calculations.
  • DrEskimo
    DrEskimo Posts: 2,382 Forumite
    Seventh Anniversary 1,000 Posts Name Dropper
    Is it for goods that can be purchased with a credit card? Can you repay within 12-18months?

    If so, you could look at a 0% purchase card instead.
  • DrEskimo said:
    Is it for goods that can be purchased with a credit card? Can you repay within 12-18months?

    If so, you could look at a 0% purchase card instead.
    Thanks for the reply & suggestion. I was looking to repay over 5 years
  • Nebulous2
    Nebulous2 Posts: 5,501 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    There is no problem with that idea, especially if there is such a difference in the interest rate.

    Check any charges for repaying early, but the most they can charge is two months interest on the overpayment.

    You also need to be aware of how they treat the overpayment. Some companies will reduce the term, some will reduce the monthly payment, some will give you the choice.
  • kippaxman
    kippaxman Posts: 24 Forumite
    Part of the Furniture 10 Posts Combo Breaker
    You should check the terms and conditions of the loan for early repayments rather than asking on here.
    I wouldn't assume you would get the offered rate either when factoring in your budget calculations.
    You should check the terms and conditions of the loan for early repayments rather than asking on here.
    I wouldn't assume you would get the offered rate either when factoring in your budget calculations.
    You should check the terms and conditions of the loan for early repayments rather than asking on here.
    I wouldn't assume you would get the offered rate either when factoring in your budget calculations.
    T&Cs only say it would reduce the term. No mention if it would trigger a higher interest rate over the remaining term.
  • kippaxman
    kippaxman Posts: 24 Forumite
    Part of the Furniture 10 Posts Combo Breaker
    Just had a tweet from Tesco bank customer support. The interest rate is set for the term of the loan. Over repayments can be made whenever & by as much as you like, it would reduce the amount you pay monthly or the term but you would still be on 3.0% apr. 
    Thanks for taking the time to lend your support.
  • I have generally had good experience of tescos customer service
  • Just to confirm you definitely can do it and they will automatically do a new loan agreement (without a credit score) to either reduce the term or the payment amount. I was on the phone to them to do it today 😉
  • I would have thought it would be specific to the person/applicant/risk level and not generalised - definitely worth a conversation with them to confirm.
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