Is this a good time to take out a personal loan?

[crazy about cars]

Just a quick thought really... I've been reading and also heard from some people how low the current interest rates are. I've also "shopped" online for personal cash loans at a very competitive rate.

At the moment I have 2 outstanding debts which are my mortgage and car finance. I am tied into a have roughly 4+ years remaining on the car finance at 13.5% APR. Is it wise to take out a personal loan to settle my car finance? Will I end up saving £££ on the long run?

I guess the other question is would I even qualify for a decent personal loan based on my existing debts....

[anonymous-user]

Regarding a new loan to replace the car loan. You can save quite a bit but check out the small print etc.of existing loan. Get the exact settlement figure as may be some early repayment penalties. Then seek a new loan for that amount & exact same term. Don't be tempted to borrow a bit extra or to extend the term!!!

[illmonkey]

13.5%! woah. You can get a loan for 6.5% at the minute. But it depends on how much is left. 7% (the difference) on £10k is £700 a year you could save. Or, shortern the term and it'll be cleared sooner.

Your repayments at 13.5% over 4 years must be fairly low, usually the APR is higher on small sums of money.

[cuprabob]

I would estimate his current payment is £420 per month including PPI, with 50 months left to run of a 60 month agreement

[crazy about cars]

cuprabob said:

I would estimate his current payment is £420 per month including PPI, with 50 months left to run of a 60 month agreement

wow...that is correct! It's slightly below 400 mark without PPI. I took out PPI just in case as the term is pretty long and it's best to be prepared.

The loan amount (HP) was around £18,000 and the total credit charge is £6700... so in total I am repaying £24,000 ish. I have £21,000+ left to pay.

I've been tempted with low personal loan rates but not sure if it is wise taking out another loan to settle an existing one? How would that work? I presume the credit check will not be good since on paper I am taking out massive loan? Will it account to the fact that I'm taking out a new one to settle an existing?

I need to contact my finance company regarding early repayment penalties but I am pretty sure there's a 1 year restriction. After one year its a small % charge.

[illmonkey]

Most loan companies will allow "refinance" as a reason for a loan. You'd explain you have a loan but want to move it as they offer a lower payment. I've done it a few times (paid off credit cards etc) and it works.

[crazy about cars]

illmonkey said:

Most loan companies will allow "refinance" as a reason for a loan. You'd explain you have a loan but want to move it as they offer a lower payment. I've done it a few times (paid off credit cards etc) and it works.

Thanks for the advice. I am using the online website moneysupermarket to shop and might make a few calls to see what they say.

Might be a silly question but the current outstanding balance on my HP takes into account interest charged. If I am paying it off early I guess the final figure will be the settlement figure the finance company gives me? This will definitely be lower than the current balance?

[illmonkey]

crazy about cars said:

illmonkey said:

Most loan companies will allow "refinance" as a reason for a loan. You'd explain you have a loan but want to move it as they offer a lower payment. I've done it a few times (paid off credit cards etc) and it works.

Thanks for the advice. I am using the online website moneysupermarket to shop and might make a few calls to see what they say.

Might be a silly question but the current outstanding balance on my HP takes into account interest charged. If I am paying it off early I guess the final figure will be the settlement figure the finance company gives me? This will definitely be lower than the current balance?

Lenders are no longer allow to dump all of the interest on the loan at the beginning. Your settlement figure will be less that the total borrow, but more than the initial loan, as you've paid interested already + any penalties. For a personal loan it tends to be 60 days interest.

[cuprabob]

crazy about cars said:

wow...that is correct! It's slightly below 400 mark without PPI. I took out PPI just in case as the term is pretty long and it's best to be prepared.

The loan amount (HP) was around £18,000 and the total credit charge is £6700... so in total I am repaying £24,000 ish. I have £21,000+ left to pay.

I've been tempted with low personal loan rates but not sure if it is wise taking out another loan to settle an existing one? How would that work? I presume the credit check will not be good since on paper I am taking out massive loan? Will it account to the fact that I'm taking out a new one to settle an existing?

I need to contact my finance company regarding early repayment penalties but I am pretty sure there's a 1 year restriction. After one year its a small % charge.

Sorry to break the illusion but I read it off you're other post :-)

[crazy about cars]

Thanks again for all the helpful posts. I've got the settlement letter from finance company today (which was quick!!!) as I expected MB contacted them. The figure is not as bad as I expected. It's now sitting at around a few hundred quid less than my actual borrowed amount.

[cuprabob]

crazy about cars said:

Thanks again for all the helpful posts. I've got the settlement letter from finance company today (which was quick!!!) as I expected MB contacted them. The figure is not as bad as I expected. It's now sitting at around a few hundred quid less than my actual borrowed amount.

Which effectively means the 10 payments of circa £420 you have already made have went up in smoke. So effectively 10months of finance has cost you circa. £4,000

[crazy about cars]

cuprabob said:

Which effectively means the 10 payments of circa £420 you have already made have went up in smoke. So effectively 10months of finance has cost you circa. £4,000

[cuprabob]

Rather you than me :-)

[crazy about cars]

cuprabob said:

Rather you than me :-)

Yes, I was hasty in taking out the HP @ around 13.5% (!) APR. However, working out the numbers long term it will still be better than the PCP/Agility offered by Merc.