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Pay back or get new loan
We took out a loan of 25k back in may for some house repairs. Over 5 years paying back £525 a month. The APR is 9.9%. We are now in a position to pay back around 10k of this. Question is do we pay back 10k and continue with the loan, or once paid off the 10k, take out a new loan for the remainder, which will drop the APR to around 6% (depending if we stay with bank or go to santender which is 5.something). Considering its only been 6 months a new loan of 5 years will not make much difference, and we could probably clear it before then anyway. Can you even take out a new loan to pay off an existing? Thanks
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Some info here.0
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Taking out another loan to pay off an existing one is, in the eyes of the new lender, increasing your debt to the combined figure as there is no guarantee you will pay off the exiating loan. Also with an existing loan you would be unlikely to get the best advertised rates.witchwood said:We took out a loan of 25k back in may for some house repairs. Over 5 years paying back £525 a month. The APR is 9.9%. We are now in a position to pay back around 10k of this. Question is do we pay back 10k and continue with the loan, or once paid off the 10k, take out a new loan for the remainder, which will drop the APR to around 6% (depending if we stay with bank or go to santender which is 5.something). Considering its only been 6 months a new loan of 5 years will not make much difference, and we could probably clear it before then anyway. Can you even take out a new loan to pay off an existing? Thanks
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Pay off the £10K but keep the repayments at £525. That way you will reduce the period that it takes to repay and significantly reduce the amount of interest paid.1
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