Loans

[Louise07]

I have had a loan with Lloyds TSB bank for years. It started off when I bought my first car, then I topped it up for a newer car and so on. I have two years left to pay off at �180 per month and the interest rate is around 14%. Basically I was wondering if anyone would know if it would be worth taking out a new loan elsewhere, if possible still over 2 years, with a lower interest rate, in order to pay off the current loan with Lloyds, and then pay off the new loan at lower instalments. In theory this sounds ok, but I dont know if it would be as good an idea as I think it sounds. Also can anyone recommend any good lenders?

[themas]

If you want to pursue this you need to ask Lloyds for a settlement figure, so that you know how much you would have to pay them now to clear the debt to them.

Someone else may be able to suggest possible lenders, but whatever you do don't get involved with any companies that offer to find you a lender in return for a fee.

[Loosehead]

14% ??? where they wearing a mask? Yes you can get a loan for half that and pay it off. Never borrow money for a car, it's extremely rare to have the car worth more than you owe, madness, madness! As above ask for a settlement figure and pay off the sharks!

[katyratbag]

Sorry but i have to disagree, even with a settlement figure you will still have interest in that amount. Another loan would only add more interest to it, total amount repayable goes up, this is how banks make money. go see your bank and see if you can re negotiate your rate. if not bite the bullet and wait out the two years. If you can afford to, offer overpayments (this will depend if the interest is calculated on term or amount.) shorter term less interest to pay. try moneysavingexper.com for the cheapest loans regards

[Loosehead]

Katy may have been correct in the old days but the rule of 78 is abolished, most loans now calc interest daily and add it monthly , LLoyds is definately one of them. Every day you owe them you will be paying 14%. change quick! If you don't beleive me look at your statements, each month you will see your payment subtracted and the interest added and the total amount outstanding will be steadily reducing.

[oldwoman]

One of the cheapest at the moment Northern Rock.

[Postdog]

If you do consider another loan tho, get in quick, because interest rate rise(s) will probably mean some current deals will probably be revised.

I actually have a loan with Northern Rock BTW and at the time I looked around, they were the cheapest.

Just one final thing, you probably will be able to get a better deal, but don't be tempted into perhaps borrowing more than you need just because you can probably afford to.

[hectic]

I work in a financial advisors and I agree with Katy, go into Lloyds and try and renegotiate the interest rate as they will want to keep your business so if you say that you are going to take your business elsewhere then you might get a reduced rate.

[Louise07]

Hi hectic, I went into Lloyds the other day and they weren't very helpful to be honest, basically they said they couldnt do anything better. I have been looking on the internet and have got a quote from Northern Rock and it seems to be much better than Lloyds, hectic as you work in a financial advisors what do you think?

[hectic]

Hi Louise, if you could let me know the settlement figure on the Lloyds loan and the total repayment with Northern Rock then I would be in a better position to offer you advice.

Thanks

[Louise07]

Hiya,

Right the current loan with LLoyds was over 5 years at �186.83 14.9% interest. I have 27 months left. This includes full payment protection.

The settlement figure they quoted was �4230.17. ( I was hoping for a bit less!)

Northern Rock �4,230.00 over 36 months with full payment protection �141.61 per month or over 24 months �205.51.

As I need a new car and have a small amount put aside, I got a quote to borrow �6,000 so then I could use �4230 to pay of Lloyds and the balance towards a car.

Payments for this are �198.99 over 36 months.

Thanks for your help.

[hectic]

Hi Louise, after looking at the figures, if you were to go with the Northern Rock loan over 36mths, you will end up paying �50 more than if you kept your existing Lloyds loan and would also be paying the loan for an extra 9 months so I really wouldn't advise you to go down that route for a saving of �40 per month.

If you are wanting to borrow an extra amount for a car then moving to a different lender would probably be the best way to go. I have done some quotes online for you in respect of both of your options or just paying off the exising loan and also the �6,000 loan.

Repay existing loan only: http://www.moneyexpert.com/Search/Results.aspx ?productTypeID=2

�6000 loan: http://www.moneyexpert.com/Search/Results.aspx ?productTypeID=2

Hopefully this helps you but if you have any questions or not sure about something that I have said, just post back again and I will check the post again shortly.

[Loosehead]

whatever you end up doing, drop the payment protection, that's incredibly expensive and they never pay out anyway.

[horselady]

Loosehead I have to disagree that they never pay out if you have payment protection. I have just returned to work after 6 months illness and Lloyds bank and Marks and Spencer Money both paid up.

[Loosehead]

Ok Horselady, fair enough, I've just heard a lot of horror stories about the tricks they use to avoid paying, I guess they occasionally have to pay up then!