Money transfer offer to clear loan?

kezzygirl

I have an offer on my barclaycard to transfer up to 6.5k at a rate of 3.5% until May 2026. We have a loan with novuna which is 6.9% and is due to be repayed u til April 2027. I would be about 2k short by doing a money transfer to pay it, along with it being 11 months shorter term but we could pay it off in that time. My question is, should I go for it and get the money transfer? I have read money transfers are dimly viewed by lenders as it signifies financial difficulty?

CliveOfIndia

It would probably make sense.  Overall you will save money in interest charges.

Bear in mind there will usually be a fee for doing the transfer, so you'll need to factor that into your calculations.  Also remember that you'll need to make the minimum payment each month to the MT card, along with saving up the money to repay it in full when the promotional rate expires.  Plus paying off the £2K shortfall on the loan.

So you'll need to do the sums, but on the face of it, it would probably make sense.

Lenders are allowed to charge an early settlement penalty of up to 2 month's-worth of interest, so again that's one more thing to factor in.  Not all lenders will charge this, but most will - check your T&Cs.

Doing a MT won't have a big impact your credit report as such, as long as you do repay the loan.  A lender is more interested in your overall level of debt, rather than where that debt is sitting.

You'll almost certainly see your credit score drop if you take out the new MT card, as it's a change in your credit circumstances.  But you can safely ignore your score as it plays no part in any lending decisions, and is not used - nor even seen - by any lender.  It's purely a marketing gimmick invented by the CRAs.

kezzygirl

Thanks. I've managed to transfer the balance from barclaycard which leaves me with an 11k limit and an offer of 3.5% fee 0%interest until May 2026 on money transfer. I'm.planning to Mt and pay it straight off novuna (£8400), which will save about £700 interest than what we would be paying for the loan. Going to keep the repayment at £275, which is what we are paying for the loan. Bit scary reducing thr amount of time we have left to pay it by 11 months but at least we won't have the interest