Loan question

[Wish]

If a £5k loan is 7.9% APR and a £7500 loan is 6.2 %

Could you borrow the higher amount to get the lower rate then pay back £2500 in the first month and keep the lower amount, and pay the rest of the balance off quicker ?

[Sport_Turismo_GTS]

Wish said:

If a £5k loan is 7.9% APR and a £7500 loan is 6.2 %

Could you borrow the higher amount to get the lower rate then pay back £2500 in the first month and keep the lower amount, and pay the rest of the balance off quicker ?

Unlikely. But will depend on the T&C of the loan.

[dave123456]

Wish said:

If a £5k loan is 7.9% APR and a £7500 loan is 6.2 %

Could you borrow the higher amount to get the lower rate then pay back £2500 in the first month and keep the lower amount, and pay the rest of the balance off quicker ?

To be honest most loans and mortgages just amortise the pre calculated interest charge over the borrowing period and there will be an early redemption charge that kicks in if you repay early. Over the years I have done a fag packet calculation a few times and deduced that the institution gets what they set out to get irrespective of what you do, occasionally you can overpay say up to 10% of the balance annually.

Does the lower rate kick in at £7.5k?

[Wish]

I was just looking at M & S loans on line.
It’s really a hypothetical question as I’m not looking for a loan and was just ready the FAQ which I couldn’t see mention this.

[zsdom]

If it’s a personal unsecured loan then yes, my employers loans allow over payments, lump sum payments & full early repayments free of charge & any interest is pro rata’d
The only thing you cant do is reduce the monthly payments

[EdmondDantes]

100% you can do this.

[The Rotrex Kid]

Yes, you can do this.

[E63eeeeee...]

It depends on the details of the loan and how flexible it is.
Often you will pay an extra amount of interest on any overpayments, so in your scenario you'll be paying interest on the full amount for a couple of months for example, before you start only paying it on the lower amount.

[Sunday Drive]

Yes this is normally fine to do.