Why Can't I Refinance My HSBC Loan at a Lower Rate?

Emmia

It's also worth bearing in mind that the "advertised" interest rate on loans only needs to be offered to 50% of applicants.

You're seeing a cheaper rate being available, but if you were successful in applying for that loan you may in fact be offered it at a much higher rate of interest. The banks / loan companies want to get their outlay back - they achieve this by charging a higher rate to those they consider more likely to default... 

Nasqueron

Emmia said:

It's also worth bearing in mind that the "advertised" interest rate on loans only needs to be offered to 50% of applicants.

You're seeing a cheaper rate being available, but if you were successful in applying for that loan you may in fact be offered it at a much higher rate of interest. The banks / loan companies want to get their outlay back - they achieve this by charging a higher rate to those they consider more likely to default... 

Just to note it's a minimum of 51% of successful applicants, not just applicants and it has to be a minimum of 51% as they need to offer the headline rate to a majority of customers

Nomunnofun1

Sasek said:

Isthisforreal99 said:

Sasek said:

Isthisforreal99 said:

Sasek said:

Isthisforreal99 said:

Sasek said:

Emmia said:

Sasek said:

Is there no way for me to take a 'consolidation' loan where the new loan/bank would automatically pay off the old loan and credit card balance and even close down my credit card? This is 100% possible in Europe and I would be really suprised if this would not be available here. I honestly do not want to take on additional loan, just refinance the existing loan at a better interest rate. The reason I don't want to pay it off currently is - I will have some money come to me in about a year and I need to 'survive' until then. 

To answer the question about my NET monthly income - the minimum is £2048/month but often it is more as I may do some overtime etc. 

My idea was to apply for a loan at whichever bank and have that bank just repay and close down my existing loan and potentially credit card directly with HSBC (someone says it may be better to combine the loan and credit card balance via the consolidation loan). 

But the banks don't normally let you "refinance" in the way you're seeking.

If you don't get a "consolidation loan", what is your plan to pay off the loan and credit card?

If I don't manage to refinance it with a lower interest rate, I will just continue to make the monthly payments of £372.19/month for another year and half at which point I should have enough funds to pay off the rest of the loan. I am really really suprised there is no way for another bank to give me a loan to pay off the other loan. Europe has this available for decades now and even in the UK you have this same for credit card offers (you see this a lot on MSE - move your credit card with this special offer to this other bank). Why couldn't there be a way for me to 'move' my loan to a different bank under better conditions (interest rate)? 

But your income doesn't allow you to do that. As I said earlier I'm amazed anyone would lend £25k to someone on £32k. 

Also, there is no guarantee you would get a better rate than the 9.9%, which can be beaten but is certainly not the worst rate out there.

What was the purpose of the original £25 loan?

The current pay-off balance is £18,215. Why can't you shop around and change the provider of a personal loan in the UK the same way you can do for credit cards, utility bills, phone carriers etc.? It's not that difficult in Europe - by applying for a refinance loan (or whatever you want to call it in English), you simply agree the new financial institution will pay off the current balance at the existing bank on your behalf and make a loan for you with them under the new terms. It's technically possible (I've seen it done in other countries). I thought London was the financial capital of the world? I really strugle to understand why it's not possible here. 

The purpose of my original loan was for an investment that is going well but tied up for another year or so. 

You can shop around but if a lender doesn't want to take the risk on that is their perogative. What you think may happen in Europe is frankly irrelevant. As is the settlement figure, you still owe more than £22k, that is what your credit report will show.

Hopefully the investment is worth more than the total amount you will pay back. Borrowing money at 9.9% to invest is not wise and hopefully isn't the S&S ISA valued at £28500

Thank you for your answers - it is much appreciated! One more question for you - why would the credit report show that I owe more than £22K? I am ready to pay off my credit card today and then my pay-off balance will just be what it would cost to pay off my existing personal loan = £18,215. Is this a glitch in the system? 

So sorry to ask this again but for me to be absolutely clear - there is no way for the new bank to pay off my existing loan directly on my behalf in the UK, is this correct? So when people apply for consolidation/refinance loans here, nobody checks whether they actually pay off the old loans/credit card balances? If they just keep the money as an additional loan, nothing happens? Thank you. 

You said in you OP that you currently owe £22,358? That is what will be reflected in your credit report. When you took out the loan you agreed to pay back the £25k + interest so £30+k? That is what your credit agreement was for so that will be the amount reflected in your credit report - feel free to check your own report.

Not saying that there is no way but only way would be with the existing lender and they have already said no.

I see you were quiet on the 'investment' point!

Yes: 

• Outstanding balance: £22,358.40

• Today's Final Settlement amount: £18,215.41
  
  

I figure the outstanding balance is the current pay-off balance (if I paid the loan off in full today) + future forecasted interest. It doesn't seem fair to calculate it like that as I actually owe £18,215.41 as of today but if that is how it works, then OK. 

And apologies for not answering the investment point. It was NOT for the stocks and shares ISA. Instead, I bought a piece of a privately held company which turned out to be a solid investment well worth the money. 

The ‘outstanding balance’ would appear to me to be the total of the repayments still to be made under the agreement if you were to continue paying - 60 x £372.19 is £22331 which is close. 

ManyWays

At the moment you are borrowing at 9.9% to invest in a privately held company and to keep money in your stocks and shares ISA. This isnt sensible if you have cash flow problems because of your rent rises.

Other people have explained that no one wants to lend you an extra 20k.Wishing they would isnt going to change that fact.

Why not take the 18k out of the S&S ISA and set up a monthly savings into the ISA of something affordable, say £250. And obviously clear the credit card.

Sasek

ManyWays said:

At the moment you are borrowing at 9.9% to invest in a privately held company and to keep money in your stocks and shares ISA. This isnt sensible if you have cash flow problems because of your rent rises.

Other people have explained that no one wants to lend you an extra 20k.Wishing they would isnt going to change that fact.

Why not take the 18k out of the S&S ISA and set up a monthly savings into the ISA of something affordable, say £250. And obviously clear the credit card.

I really don't want an extra 20K. I want to lower my interest rate. I already cleared my credit card (the balance on there is now 0) but I don't want to use the ISA money to pay off the loan. The reason being is there is a chance I might loose my job in the near future and if that happens, I will use that ISA money to 1. Make my monthly loan payments and 2. For living expenses while I sort things out. 

I really struggle to accept the 'that's how it is' attitutude. If I can shop around for so many things these days, why shouldn't I be able to shop around and get a better interest rate? After all, that's what the MSE Newsletter is all about. That's what the TV show is all about = be a smart consumer and get the best deal!

Emmia

Sasek said:

ManyWays said:

At the moment you are borrowing at 9.9% to invest in a privately held company and to keep money in your stocks and shares ISA. This isnt sensible if you have cash flow problems because of your rent rises.

Other people have explained that no one wants to lend you an extra 20k.Wishing they would isnt going to change that fact.

Why not take the 18k out of the S&S ISA and set up a monthly savings into the ISA of something affordable, say £250. And obviously clear the credit card.

I really don't want an extra 20K. I want to lower my interest rate. I already cleared my credit card (the balance on there is now 0) but I don't want to use the ISA money to pay off the loan. The reason being is there is a chance I might loose my job in the near future and if that happens, I will use that ISA money to 1. Make my monthly loan payments and 2. For living expenses while I sort things out. 

I really struggle to accept the 'that's how it is' attitutude. If I can shop around for so many things these days, why shouldn't I be able to shop around and get a better interest rate? After all, that's what the MSE Newsletter is all about. That's what the TV show is all about = be a smart consumer and get the best deal!

If you're at risk of losing your job that is a good reason to pay down the debt if you have the money.

kimwp

Sasek said:

ManyWays said:

At the moment you are borrowing at 9.9% to invest in a privately held company and to keep money in your stocks and shares ISA. This isnt sensible if you have cash flow problems because of your rent rises.

Other people have explained that no one wants to lend you an extra 20k.Wishing they would isnt going to change that fact.

Why not take the 18k out of the S&S ISA and set up a monthly savings into the ISA of something affordable, say £250. And obviously clear the credit card.

I really don't want an extra 20K. I want to lower my interest rate. I already cleared my credit card (the balance on there is now 0) but I don't want to use the ISA money to pay off the loan. The reason being is there is a chance I might loose my job in the near future and if that happens, I will use that ISA money to 1. Make my monthly loan payments and 2. For living expenses while I sort things out. 

I really struggle to accept the 'that's how it is' attitutude. If I can shop around for so many things these days, why shouldn't I be able to shop around and get a better interest rate? After all, that's what the MSE Newsletter is all about. That's what the TV show is all about = be a smart consumer and get the best deal!

You can shop around and maybe get a better interest rate - if you increase your earnings by at least 30k.

Deals have to be available for you to take advantage of them.

kimwp

Emmia said:

Sasek said:

ManyWays said:

At the moment you are borrowing at 9.9% to invest in a privately held company and to keep money in your stocks and shares ISA. This isnt sensible if you have cash flow problems because of your rent rises.

Other people have explained that no one wants to lend you an extra 20k.Wishing they would isnt going to change that fact.

Why not take the 18k out of the S&S ISA and set up a monthly savings into the ISA of something affordable, say £250. And obviously clear the credit card.

I really don't want an extra 20K. I want to lower my interest rate. I already cleared my credit card (the balance on there is now 0) but I don't want to use the ISA money to pay off the loan. The reason being is there is a chance I might loose my job in the near future and if that happens, I will use that ISA money to 1. Make my monthly loan payments and 2. For living expenses while I sort things out. 

I really struggle to accept the 'that's how it is' attitutude. If I can shop around for so many things these days, why shouldn't I be able to shop around and get a better interest rate? After all, that's what the MSE Newsletter is all about. That's what the TV show is all about = be a smart consumer and get the best deal!

If you're at risk of losing your job that is a good reason to pay down the debt if you have the money.

I wouldn't have thought so - better to have a fund and default on the debt than no debt and no emergency funds or income?

Emmia

kimwp said:

Emmia said:

Sasek said:

ManyWays said:

At the moment you are borrowing at 9.9% to invest in a privately held company and to keep money in your stocks and shares ISA. This isnt sensible if you have cash flow problems because of your rent rises.

Other people have explained that no one wants to lend you an extra 20k.Wishing they would isnt going to change that fact.

Why not take the 18k out of the S&S ISA and set up a monthly savings into the ISA of something affordable, say £250. And obviously clear the credit card.

I really don't want an extra 20K. I want to lower my interest rate. I already cleared my credit card (the balance on there is now 0) but I don't want to use the ISA money to pay off the loan. The reason being is there is a chance I might loose my job in the near future and if that happens, I will use that ISA money to 1. Make my monthly loan payments and 2. For living expenses while I sort things out. 

I really struggle to accept the 'that's how it is' attitutude. If I can shop around for so many things these days, why shouldn't I be able to shop around and get a better interest rate? After all, that's what the MSE Newsletter is all about. That's what the TV show is all about = be a smart consumer and get the best deal!

If you're at risk of losing your job that is a good reason to pay down the debt if you have the money.

I wouldn't have thought so - better to have a fund and default on the debt than no debt and no emergency funds or income?

This might be a revolutionary idea, but if people take out cards and loans... Shouldn't they also expect to pay them off?

I know credit is too easy and people can get sucked in to ever increasing debts... then life changes and suddenly what seemed affordable isn't. The advice is also not to consolidate, as this risks a rapid increase of money owed.

Defaults / DMPs / IVAs / bankruptcy are not without downsides, the OP (unlike many) has the money to pay their debts. Plus even if they are made redundant, that doesn't mean they won't find new employment fairly easily, they may get a redundancy payment too.

I understand the rationale for holding onto an emergency fund, but that shouldn't be ~£20k in my opinion. £20k is one hell of an emergency

kimwp

Emmia said:

kimwp said:

Emmia said:

Sasek said:

ManyWays said:

At the moment you are borrowing at 9.9% to invest in a privately held company and to keep money in your stocks and shares ISA. This isnt sensible if you have cash flow problems because of your rent rises.

Other people have explained that no one wants to lend you an extra 20k.Wishing they would isnt going to change that fact.

Why not take the 18k out of the S&S ISA and set up a monthly savings into the ISA of something affordable, say £250. And obviously clear the credit card.

I really don't want an extra 20K. I want to lower my interest rate. I already cleared my credit card (the balance on there is now 0) but I don't want to use the ISA money to pay off the loan. The reason being is there is a chance I might loose my job in the near future and if that happens, I will use that ISA money to 1. Make my monthly loan payments and 2. For living expenses while I sort things out. 

I really struggle to accept the 'that's how it is' attitutude. If I can shop around for so many things these days, why shouldn't I be able to shop around and get a better interest rate? After all, that's what the MSE Newsletter is all about. That's what the TV show is all about = be a smart consumer and get the best deal!

If you're at risk of losing your job that is a good reason to pay down the debt if you have the money.

I wouldn't have thought so - better to have a fund and default on the debt than no debt and no emergency funds or income?

This might be a revolutionary idea, but if people take out cards and loans... Shouldn't they also expect to pay them off?

I know credit is too easy and people can get sucked in to ever increasing debts... then life changes and suddenly what seemed affordable isn't. The advice is also not to consolidate, as this risks a rapid increase of money owed.

Defaults / DMPs / IVAs / bankruptcy are not without downsides, the OP (unlike many) has the money to pay their debts. Plus even if they are made redundant, that doesn't mean they won't find new employment fairly easily, they may get a redundancy payment too.

I understand the rationale for holding onto an emergency fund, but that shouldn't be ~£20k in my opinion. £20k is one hell of an emergency

I'm not expressing any personal views about whether debt should be paid.

But if holding debt and savings and likely to lose their job, the better route is to hold on to the savings. Defaulting doesn't need to be an immediate go to - with £20k, the OP may be able to keep on top of their debts as well as general outgoings until they find a new source of income.