Tesco Loan 2.8%

SeagullFTB

Not an advert or a question, just letting people know as it could be beneficial.

I have a personal loan with Nationwide with approximately £21,500 left to repay with 69 months remaining at 7.9% APR. Been paying it for just over a year so far. I have been getting targeted adverts recently from Tesco Bank for loans starting at 2.8%. I checked the calculator and the overall saving is quite significant, so I decided to apply. I was approved instantly for a loan at 2.8% for £21,500, although I'm awaiting the paperwork by post to be absolutely certain.

I opted to keep my monthly repayments the same (well, £1 less per month than my existing loan) but the repayment term is 60 months due to the lower interest rate. This means I can pay off the existing loan and save myself 9 months of repayments at the end, which saves over £3,000!

[Deleted User]

While it is good for you, 99.9% of people would not be earning anywhere near enough to qualify for a £21500 loan on top of existing £21500 loan (as lenders always calculate on the basis of affordability of both loans together as there is no guarantee you'd pay off the debt with the second loan). Moreover, your individual circumstances do not translate to others getting offers - I could apply for a loan and get say 4% and only £10,000

SeagullFTB

Of course @Deleted_User and everyone should only look into moving to an alternative loan if it is beneficial for them. I simply wanted to highlight that some lenders such as Tesco are currently offering loans at potential very low rates which could be beneficial to switch to. Of course it would depend on the actual rate offered, the current loans rate and eligibility. Most lenders offer an eligibility checker before applying, which isn't entirely accurate, but definitely encourage people to do this first to avoid an unnecessary hard search.

[Deleted User]

SeagullFTB said:

Of course @Deleted_User and everyone should only look into moving to an alternative loan if it is beneficial for them. I simply wanted to highlight that some lenders such as Tesco are currently offering loans at potential very low rates which could be beneficial to switch to. Of course it would depend on the actual rate offered, the current loans rate and eligibility. Most lenders offer an eligibility checker before applying, which isn't entirely accurate, but definitely encourage people to do this first to avoid an unnecessary hard search.

As a general rule, consolidation loans are rarely approved because of the associated problems. Remember you are not switching, you are taking out a second loan on top of the first which not everyone will be disciplined enough to use to pay off the first

Lots of lenders are offering very low rates as they have been for a couple of years, availability depends on the person and circumstances - Post Office and the AA both do 2.7%, Tesco is now 2.8% alongside MBNA in the £20-25k range

Clive_Woody

I did a similar thing a while back when Natiowide was offering to beat any loan offer by 0.3%. I got a TSB loan for £20k at 2.7% then applied for a £20k Nationwide loan which was approved immediately at 2.4% saving me a reasonable amount of cash. I then made some considerable over payments to pay it off 18months early.

Plenty of ways to benefit from these kind of deals if eligible and disciplined.

SeagullFTB

Definitely hoping to make some overpayments when I have the cash available.

And although this kind of offer won't be available to everyone, it may help just a few people to look into refinancing existing loans. Had my Tesco offer confirmed now and signed off. The difference between 2.8% and 7.9% interest is huge. It will has reduced the outstanding term by 9 months, saving £3465 in interest.

Of course, discipline is needed. I have the settlement figure from Nationwide and have 100% intention to pay that loan off as soon as the new funds arrive in my account. No ifs or buts.

[Deleted User]

Has the new loan happened now, would be great to hear back.

SeagullFTB

Catsacor said:

Has the new loan happened now, would be great to hear back.

Funds arrived in my account yesterday. A week after applying.

I requested the settlement figure for the old loan last Thursday, which is being sent out by post and I have 28 days to pay it.

Edit: To avoid any confusion with my post a few days ago... I have the settlement figure, which was given to me on the phone. But the letter is being sent by post with details of how to make the settlement payment, which I haven't got yet.

SeagullFTB

I made the settlement payment to Nationwide, but a few days later, they took the monthly direct debit. I understand this is probably an overlap issue, but does anyone know if Nationwide will automatically repay this amount or do I need to contact them?

[Deleted User]

The lender's system will make adjustments, it will eventually show as cleared.

SeagullFTB

Just putting an update in case someone is searching the web for a similar answer in the future.

Nationwide automatically refunded the direct debit that resulted in an overpayment. It took 8 working days to receive the refund.