Cancel loan agreement

Raffers · 20 June 2018 at 11:13AM

New CC @ 0% for 32 months = £827 (recently balance transferred this month - so still on file I suspect). Not used for spending at all.

Current unsecured loan £2,920 remaining @ 5.6% APR (£156p/m). Ends Feb 2020.

Additional £2,400 funds required.

Request to borrow £5K from a new loan (hoping for advertised rate of 3.6%) to settle the old loan and have the additional funds.
Accepted, but new APR offered 11.7% over 3yr (£163 p/m)

Despite having a good credit rating, I suspect I've been given the higher APR due to bad timing with applications.

My general question is - would it be a bad idea to cancel the new loan and wait a month or two until my recent credit changes settle down? (i.e. Having balance-transferred CC and it looks like loan on top of loan? Old CC had £3K limit, new one has £2K. Probably looks like £5K exposure at the moment + 2 loans?).

Would it be worthwhile reaching out to other lenders at the moment or would that just add additional unwanted credit checks when I least need them?

I had also considered paying back around £3K of the new loan straight away and only retaining the additional funds. Logic here being that it doesn't make sense to settle a 5.6% loan with funds from an 11.7% one. But this would mean having double payments in the short term.

Thanks.

[Deleted User] · 20 June 2018 at 11:17AM

If you're within the cooling off period and don't want it, I would cancel.

But remember that your 'good credit rating' is useless when it comes to applying for credit. Consider whether affordability or credit histoty is a problem - you may not be able to do better.

foxy-stoat · 20 June 2018 at 11:19AM

You may of been offered the higher rate based on current debt or reason for loan debt consolidation or the amount of the loan being too small for their head line rate.

If you need another £2.4K then maybe borrow it on the credit card and get another CC for the 0% shuffle.

Raffers · 20 June 2018 at 11:26AM

Thanks for the reply. Affordability is pretty much why I think it's as it is. Despite moving cc's and cancelling the old one, I probably looked more of a risk at application than I seem.

Old cancelled CC limit was £3K. New CC limit £2K. Total appears to be = £5K (but really only £2K).
Old loan £2,9K o/s. New loan requested £5K. Total appears to be £7.9K (but really only £5K).

Total overall probably means I have short term debt of £5K CC + £2.9K Loan and I'm attempting to borrow £5K more via loan = £12.9K.
Reality is new CC + new loan would only be £2K + £5K = £7K.

I therefore appear to be £5.9K less 'affordable' than I actually am. This is mostly timing I think.

foxy-stoat · 20 June 2018 at 11:38AM

Arrrr, you trying to use logic to work out why you haven't been offered the head line rate.....rookie mistake.

Cancel loan agreement

Comments

Categories

Get our FREE Weekly email full of deals & guides - and it’s spam-free