We'd like to remind Forumites to please avoid political debate on the Forum. This is to keep it a safe and useful space for MoneySaving discussions. Threads that are - or become - political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.

HP loan switch

Good morning all,

 According to ClearScore I could switch my HP loan and save £20 a month saving me £1000 of interest.

 Has anyone done this before? Is it straightforward? Any complications?
 Any advice?

 Thanks

Comments

  • Emmia
    Emmia Posts: 4,620 Forumite
    1,000 Posts Fourth Anniversary Photogenic Name Dropper
    That sounds like a large / long term loan  - you'd have to find another provider willing to lend you that money,  on top of your existing commitments (there's no guarantee you'd use the new loan to clear the existing loan)
  • sourcrates
    sourcrates Posts: 30,615 Ambassador
    Part of the Furniture 10,000 Posts I've been Money Tipped! Name Dropper
    edited 30 December 2023 pm31 12:35PM
    I would tend to ignore silly comments from Clearscore that advise you that consolidation is a good thing, it isn`t.

    It may lower your monthly payment, but it increases your total debt, and increases the time you are in debt for.

    And contrary to what Clearscore say, you will pay more interest as the loan period is extended, and only 51% of borrowers get the lower advertised rate, the rest will be charged more according to risk.

    The only real benefit is to the lender, who makes more money from you, and keeps you in debt for longer.

    Not recommended.
    I’m a Forum Ambassador and I support the Forum Team on the Debt free wannabe, Credit file and ratings, and Bankruptcy and living with it 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.For free non-judgemental debt advice, contact either Stepchange, National Debtline, or CitizensAdviceBureaux.Link to SOA Calculator- https://www.stoozing.com/soa.php The "provit letter" is here-https://forums.moneysavingexpert.com/discussion/2607247/letter-when-you-know-nothing-about-about-the-debt-aka-prove-it-letter
  • fatbelly
    fatbelly Posts: 22,140 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Cashback Cashier
    I presume they are suggesting a personal loan to clear the HP. 

    If you do that then you lose your early termination rights under hp.

    Your car becomes your asset at the point you pay off the hp.
  • Hi all, thank you for the comments.
     Ok, just to let you know that I went for it! The details: I bought my car on HP at quite a high rate a year ago on a 5 year plan. I’ve now transferred that to Zopa for the remaining 48 months. It is still a HP loan. Due to the difference in what they were prepared to lend me and the settlement figure I had to pay just over £500. However, my monthly payments are now down almost £80 a month .

     Thank you for all advice given.
  • fatbelly
    fatbelly Posts: 22,140 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Cashback Cashier
    Well done. I didn't know this could be done. It makes you think there are probably a lot of people stuck on high interest HP who could probably refinance at a better rate. I note Lloyds offer this too.

    https://www.lloydsbank.com/car-finance/refinance.html
Meet your Ambassadors

🚀 Getting Started

Hi new member!

Our Getting Started Guide will help you get the most out of the Forum

Categories

  • All Categories
  • 348.3K Banking & Borrowing
  • 252.1K Reduce Debt & Boost Income
  • 452.4K Spending & Discounts
  • 240.9K Work, Benefits & Business
  • 617.1K Mortgages, Homes & Bills
  • 175.6K Life & Family
  • 254.1K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 16K Discuss & Feedback
  • 15.1K Coronavirus Support Boards

Is this how you want to be seen?

We see you are using a default avatar. It takes only a few seconds to pick a picture.