New loan to repay existing loan

SoundsGood · 26 Nov 2015 at 20:12

I currently have £5k outstanding on a loan at 6.7%APR.
Santander have offered me 3.9% APR on a new loan from £7.5k upwards.

Would it be a bad idea to borrow £7.5k from Santander to pay off the old loan then use the remaining £2.5k to make a partial early repayment on the new loan? This ideally leaves me with the same debt but lower APR.

The old loan has no early repayment fees. The Santander doesn't either as far as I can see.

Zethor · 26 Nov 2015 at 20:20

Sounds good to me!

tom_e · 26 Nov 2015 at 20:21

yes do it.

Sirrel Squirrel · 26 Nov 2015 at 20:48

Quite a few places are offering 3.5% APR at the moment. Sainsburys, M&S, Clydesdale.

dowie · 26 Nov 2015 at 20:53

a decent credit card would be cheaper - you can get less than 2% for 30 something months...

Nitefly · 26 Nov 2015 at 20:56

Nationwide Select Credit Card + balance transfer?

sanaxe1 · 26 Nov 2015 at 21:00

Or you could invest the £2500 into my new indoor gardening venture and double your money in 3 months! Now that's some high interest!

Snookums · 26 Nov 2015 at 21:13

I know a Nigerian Prince that can help you out.

BennyC · 26 Nov 2015 at 21:14

Yep, borrow the minimum to get the new loan with the lower APR and then just pay back whatever you haven't used to clear your existing debt. :cool:

MadMouse101 · 26 Nov 2015 at 21:15

tom_e said:
yes do it.

+1

SoundsGood · 26 Nov 2015 at 21:15

Those 3.5% loans look good thanks.

Not keen on the credit card idea as I might use the extra loan cash to make swapping cars easier

yer_averagejoe · 26 Nov 2015 at 21:17

SoundsGood said:
I might use the extra loan cash to make swapping cars easier

The idea was pretty solid up until this point

Janesy B · 26 Nov 2015 at 21:19

Sounds good

Destination · 26 Nov 2015 at 21:29

Check there are no conditions to oaying off the old loan in full early, check you can make a large early payment on a new santander loan without penalty.
Do this bfore you consider further.

[TW]Fox · 26 Nov 2015 at 21:38

Hikari Kisugi said:
Check there are no conditions to oaying off the old loan in full early, check you can make a large early payment on a new santander loan without penalty.

The Consumer Credit Act does not permit penalties for overpayments if the overpayment amount is under £8000 (either in one payment or consecutive payments).

phonemonkey · 26 Nov 2015 at 23:27

yer_averagejoe said:
The idea was pretty solid up until this point

In theory I agree, although I suppose you have to balance that out with how much is current car is likely to cost him in repairs over the lifetime of the loan.

The_Abyss · 26 Nov 2015 at 23:28

phonemonkey said:
Read what he's written - he says he wants to avoid the credit card idea to prevent himself from changing car.

The idea sounds solid to me.

I read it as the opposite.

SoundsGood · 27 Nov 2015 at 08:29

Having the loan allows me to buy and sell privately to avoid dealer markup and low trade in values. Once the old car is sold I can pay off the loan.

tom_e · 27 Nov 2015 at 08:40

dowie said:
a decent credit card would be cheaper - you can get less than 2% for 30 something months...

Nitefly said:
Nationwide Select Credit Card + balance transfer?

Paying off a loan with a CC would come under a cash advance wouldn't it? You can't balance transfer from a loan to a CC and therefore it would be lolexpensive.

dowie · 27 Nov 2015 at 08:51

nah you just get a credit card that allows you to transfer to your bank account for a low fee - for a short term loan they tend to be cheaper than the typical loan - for example Virgin Money will let you transfer for a 1.69% fee and will charge you 0% APR for 32 months...