repaying too many loans early

hopefulmoneysaved

So I have had a year of tight finances with events such as car problems and house issues. This has affected my ability to focus on the right way forward and I have made some mistakes.

On 4 occasions, I took out a £1000 loan over 12 months. However I worked hard and paid off the loan before the first payment was due. My logic was Get the loan because I don't know if I can repay early, then work hard to repay. I never had more than 1 loan at a time.

I was about to do it again when I noticed my repayment would be higher than normal. So I knew there was a problem. I accept that another hard marker would be against my record.

I asked the internet elsewhere and they suggested that I may look dodgy or repeatedly repaying that early means my finances are chaotic (the 2nd reason was pretty accurate).

I don't have debt. I have paid for the issues. How do I fix things? For all I know, I may genuinely need a loan at some point.

Isthisforreal99

What makes you think there is anything to 'fix'? What rates are you being offered and who from?

Who were you borrowing £1000 over 12 months from, 4 times? My advice woukd be stop applying for loans 'in case you might need it'. There seems some compulsive behaviour here?

hopefulmoneysaved

https://forums.moneysavingexpert.com/discussion/comment/82096978#Comment_82096978

Nationwide. If my actual rate is higher than the free "this is what we could offer" then my record must be a problem.

Isthisforreal99

https://forums.moneysavingexpert.com/discussion/comment/82096997#Comment_82096997

Not really, the 'representative rate' only needs to be offered to 51% of people. You are reducing your chances with all these applications.

born_again

https://forums.moneysavingexpert.com/discussion/comment/82096997#Comment_82096997

No, they are simply not interested in offering good rates at the moment. All lenders have cycles where they are more appetite driven to take on debt.

Brie

Time will resolve any issues with your credit record if you aren't in debt.

Maybe it's time to have a good look at your budget - maybe use the statement of accounts/SOA linked in my signature. Be accurate with it using a couple of months worth of statements. Check where you might be overspending and correct. If you post it on the debtfree wannabe board others will make suggestions on how it might be improved. Then once you know what your excess is each month you can make that your amount to deposit into your emergency fund. That way future loans are less likely to be needed.

MEM62

If you repaid the loans that quickly, why did you take them in the first place? Surely you could have delayed the purchases for a short period whilst you raised the cash. Also, if you are capable of working to raise the cash to pay them off that quickly surely you can raise the cash to build a contingency / emergency fund?

hopefulmoneysaved

Because I did not expect to pay them off. I could have kept them going a few months but in my mind getting a loan and paying it early (in fact very early) would mean I was good for the credit.

Isthisforreal99

https://forums.moneysavingexpert.com/discussion/comment/82097326#Comment_82097326

But did you actually need the money you borrowed?

What you have done is not 'normal' as far as a lender is concerned. Especially 4 times.

hopefulmoneysaved

https://forums.moneysavingexpert.com/discussion/comment/82097394#Comment_82097394

well I thought I did

redux

You might consider a credit card that will have balance and money transfer offers. Not so much a big headline or big initial amount one, but with modest offers than run nearly all the time

For instance, on Lloyds or Halifax offers at the moment, there is choice of one year with 5% initial fee no interest, 18 months with 5% initial fee, or 4.9% or 5.9% interest no fee for 30 months

I think the last offer might suit you. Not for the whole period, but just from time to time, and no need to take more than needed just in case, as you can do a bit more later on if things turn out that way.

And with that rate, it might be worth not necessarily rushing to put spare cash in as soon as possible, but instead also opening their monthly saver at 8%. The Lloyds one can have money moved in an out as you like, Halifax only on closure

If you also do any spending on the card alongside, make sure to pay this spend amount off in full by due date