Loans question

jonimitchell

Hi there

New here and I hope I am posting at the right place.

Once you get a loan to consolidate debts, do you then look for a better deal year on year?

I have a loan with Sainsburys since Feb 2004 and the APR is 6.5%. They charged me £2,000 arrangement fee for it which I now regret bitterly agreeing to but I was desperate at the time. The loan was/is for 42 months.

Is it worth trying to get a lower APR loan? I have seen some advertised for 5.70% recently.

Many thanks for any replies.

johannamse

6.5% is quite low really.

I would say the only better youi could do would be 0% credit cards, but this will depend on the amount of the loan and how quickly you think you can pay it back.

Xbigman

In general you can consolidate and if your credit rating improves then move to a better deal later. You already have a good deal and have paid out a big fee so its not worth moving.
For anyone considering doing this there are a few things to note. Watch out for hidden charges and early redemption charges. These can easily wipe out any savings. Also never take out a loan bigger than the one you are paying off. Loans and mortgages should go down not up. Lastly, be aware PPI is often paid up front. You mention a rate you have seen of 5.7. That could be Northern Rock and they push PPI very hard and its very expensive.
Regards



X

Jedi_Master

jonimitchell wrote:

I have a loan with Sainsburys since Feb 2004 and the APR is 6.5%. They charged me £2,000 arrangement fee for it which I now regret bitterly agreeing to but I was desperate at the time.

Goodness me; that is quite a hefty arrangement fee. How on earth do they justify that??

Having said that, 6.5% is quite a good rate but it doesn't seem appropriate to try and go elsewhere unless any new deal does not have such high arrangement fees.

northerngirl_2

We've been looking at taking out a loan for £25,000 with NorthernRock,there overall repayments seemed alot higher than some other lenders.Tesco's are doing a good rate on loans,6.3%(i think)just now.We found it better to top up a previous loan and take one with Tesco for £20,000 over 7yrs.We're at the studying the small print stage just now hope to get it sorted over next few days.

jonimitchell

Thank you very much for your responses. I suppose what I was really after was a possible reduction in the monthtly amount I pay to loans - ££586 at present.

I think I will wait until Feb 06 to see what the settlement figure is 2 years after I took it out and see what the rates are then.

When I applied for the loan no one mentioned the 'arrangement fee', it was just one of the things listed in the agreement, alont with PPI which I cancelled straight away. As I said, I was desperate so I took their offer but I still think it was all a bit unfair really.

Nevermind, I am on my way to being debt free and that's all that matters!