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Loan advice please

chrisevs83
Posts: 7 Forumite

in Loans
Morning all,
Bit of advice is possible please.
I currently have two loans paying £638 a month. A lot but i can afford to pay it, i'm not struggling
One @ £326 a month that runs until October 2023 @ around 12% APR
One @ £312 a month that runs until 2026 @ around 9% APR
I was looking to reduce the cost and can get a new loan (approved @2.9%) for £385 a month with allows to me pay off both of the above.
It would say me around £250 a month.
It is better to do this or just wait until the first loan is paid next year and save the £326?
Thanks in advance
Bit of advice is possible please.
I currently have two loans paying £638 a month. A lot but i can afford to pay it, i'm not struggling
One @ £326 a month that runs until October 2023 @ around 12% APR
One @ £312 a month that runs until 2026 @ around 9% APR
I was looking to reduce the cost and can get a new loan (approved @2.9%) for £385 a month with allows to me pay off both of the above.
It would say me around £250 a month.
It is better to do this or just wait until the first loan is paid next year and save the £326?
Thanks in advance
0
Comments
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How long is the 'new' loan for?0
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If your income is sufficient to support the extra borrowing - they will assume it is additional rather than to pay off the others - and your credit history makes you attractive to someone offering 2.9% then it will save you money. Only if you actually do use the new loan to pay off the old ones though - do you trust yourself to do that?I’m a Senior Forum Ambassador and I support the Forum Team on the Pensions, Annuities & Retirement Planning, Loans
& Credit Cards boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com.
All views are my own and not the official line of MoneySavingExpert.1 -
The_Unready said:How long is the 'new' loan for?0
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If you do it now, you'll save more on interest.
But you should reduce the term of the new loan and bring the monthly payment back to what you're currently paying, as that is manageable, otherwise you're going to throw a lot of the savings away again.
1 -
Deleted_User said:If you do it now, you'll save more on interest.
But you should reduce the term of the new loan and bring the monthly payment back to what you're currently paying, as that is manageable, otherwise you're going to throw a lot of the savings away again.0 -
chrisevs83 said:
I was looking to reduce the cost and can get a new loan (approved @2.9%) for £385 a month with allows to me pay off both of the above.
1 -
Simply put, lenders consider your 2 debts and add on the third debt as a new debt, in addition, as they cannot force you to spend the new money on the old, you could just as easily put it on some nag at the 3:30 at Chepstow or spunk it on whatever bitcoin Elon Musk is raving about currently. Thus their affordability is based on whether you can maintain all 3 debts at once, if not, then they either won't lend or give you some higher rate. If you can afford the debt and maybe over pay (if there are no penalties) you might do better doing that0
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chrisevs83 said:One @ £326 a month that runs until October 2023 @ around 12% APR
One @ £312 a month that runs until 2026 @ around 9% APR
I was looking to reduce the cost and can get a new loan (approved @2.9%) for £385 a month with allows to me pay off both of the above.0
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