Loan for home improvment

bushmins

bushmins

bushmins

Soldato
Joined
30 Aug 2006
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Having never taken out a small loan before I thought id ask for opinions.

I was looking at getting £3000 but the interest I would pay back is much greater than if I took a loan for £5000 (over 3 years).

Tesco bank seems quite good, over three years I would pay about £150 a month and end up paying about £350 over the original amount.

I've also been told by a few people about early repayment of the loan. Some people have managed to repay back all but say £1 of the loan, then pay back that £1 the next month and only have to pay the extra early completion fee based on interest on the £1. Although id have to talk to Tesco about there over repayments, I don't know if this would work with them.

Any advice out there? £150 a month is the maximum I could afford to pay back. I have looked at moneysupermarket, is that the right way to go?

The £3000 if for work I cannot do, i.e. having a boiler fitted. The other Money would probably pay for the other job I cant do which is guttering/soffits and facers. I'm not good with heights.
 
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Are you not able to use one of the long interest free credit cards? For example, the Santander 123 credit card gives you 0% on purchases for 23 months.

You can then save up the £3k over the 23 months ready to pay off at the end and earn interest on the savings all the while.

Note: just make 100% sure you will have the cash to pay it off in its entirety at the end.
 
Yeah, I'd use interest-free credit card for that sort of money.

If you aren't going to be able to completely pay it all off before the interest-free period ends, then just get another interest-free card, load your ordinary spending on that for a month or two and use the extra cash in your current account to clear the old balance (avoiding balance transfer fees).

You need to be organised, because you really don't want to be clobbered by the built-up interest if you don't make the repayment on time, but it saves a bit of cash.
 
A larger loan may give you a far better interest rate.
I think one number that most banks have where ythe interest drops considerably is 7.5k
Check with the bank about large on off payments and things, overpayments and ERC.

You coudl potentially take a larger loan and pay a large chunk of it straight back

Alternatively for such a low figure a credit card may be just as good, do you have decent credit score and a current credit card?

Spend on the current credit card and then transfer it to a 0% transfer card, typically around 2% in fees. Some of the 0% deals are just about 3 years, your 150 a month would be the best part of 6k over that period.

OF course its always best to pay them off ASAP and dont do any spending on a balance xfer card remember :)
 
bushmins said:
I could look into credit cards, but that ill only work if the people ill be employing take credit card payments.
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If they don't you can usually pay for materials with suppliers on their behalf (where you can definitely use credit card) and then only have to find a way to pay their labour. You might find after material costs you can afford the labour out of savings.
 
Just had this issue while getting finance for solar panels. Needed £6100. Ended up borrowing £7500 for the lower rate, waiting for first payment to process then paying £1400 back as a partial settlement. Works out a hell of a lot cheaper and faster. I do intend to have this paid off in 12 - 18 months.

What you have been told about repayments is also correct. The guy that arranged my loan over the phone actually told me to do that.
 
darknite said:
Just had this issue while getting finance for solar panels. Needed £6100. Ended up borrowing £7500 for the lower rate, waiting for first payment to process then paying £1400 back as a partial settlement. Works out a hell of a lot cheaper and faster. I do intend to have this paid off in 12 - 18 months.

What you have been told about repayments is also correct. The guy that arranged my loan over the phone actually told me to do that.
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What APR did you get? Seems that you are in no way guarantied what the calculators throw up. Thing is that if you don't accept the first offer it will go against your credit rating :(
 
The loan was a from 3.7% job. Got it for 6.7%. But some of the loans I applied for were coming at 15%, had one at 22.5%!

Actually you get a bit of time before it affects your credit score. That rate of 6.7% was my 3rd loan offer on the 3rd day of looking.

Hitachi Finance came out best. Or Salisbury!

If you do start getting quotes just do a bunch together and make your choice within a few days.
 
Please don't just go applying left right and centre for loans.
3 applications within 3 days each doing a credit search will likely look crap if anyone has need to check your credit record.

Do you research first, see which are offering the best deals.

Then register on noddle and see what that suggests are the most likely for you to get, compare that to the research you've already done and make a sole application to one of them at this time.

You may also get a "preferential rate" from whichever bank you use as your regular account. Im with Barclays and got a loan on the day I asked, and the wife suggested that a credit search wasn't required as I'd banked with them for so long they could make their own minds up.
 
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