# Personal Loan advice.



## rich-hill (May 13, 2008)

Hi all,

Just wanting to know a little about personal loans.
I'm looking to borrow around £6-7,000 and wanted to know a little more about borrowing from the bank. (Changing car)

Are their loans out there where by I can take it out over say 3 years. But if i come across some more money i am able to pay a chunk off. (I beleive this is called over payments) and when doing this it will pay off some of the capital loan money, there for reducing loan period or interest paid.

Or can anyone let me have some idea of what to look out for while applying?

I Look forward to your replies and many thanks,
Rich


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## -tom- (Jan 27, 2009)

rich-hill said:


> Hi all,
> 
> Just wanting to know a little about personal loans.
> I'm looking to borrow around £6-7,000 and wanted to know a little more about borrowing from the bank. (Changing car)
> ...


Rich i work for the royal bank off scotland, how we do it is say u borrow 7 k over 3 years, u have your standard monthly repayment say £200 pm, u can make over payments or cancel the loan early. With the over payments we reduce interest/capital depending ware u r in the loan for example

at the start off any loan more interest is paid than capital say 150 interest and 50 for the capital the further down the loan u go the u will pay more capital.

Then say if u r two years in you will have repaid more or all the interest, if u make a over payment say 1 and half years in we will just reduce the capital your monthly amount stays the same but u just pay back sooner.

next year there is a new consumer credit directive coming in which is changing all off this, all uk banks have to comply by spring of 2011.

hope that helps any questions pm me


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## rich-hill (May 13, 2008)

What do the new rules state?


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## Aeroandy (Sep 2, 2009)

The borrower is slave to the lender. I don't borrow money anymore.


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## -tom- (Jan 27, 2009)

rich-hill said:


> What do the new rules state?


i dont know much yet got a lot off reading next to me which i will update over the weekend :thumb:


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## -tom- (Jan 27, 2009)

http://www.berr.gov.uk/assets/bisco...0-1053-consumer-credit-directive-guidance.pdf

that is some 111 pages mine is double or that lol


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## JoeNobody (Feb 21, 2010)

Egg have a good approach - if you pay of some of the balance early you can, at no charge, either reduce the term by making the same repayment on the smaller balance, or keep the term and make smaller repayments. The rate might be slightly higher than other lenders, but you're paying for the flexibility.


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## rich-hill (May 13, 2008)

JoeNobody said:


> Egg have a good approach - if you pay of some of the balance early you can, at no charge, either reduce the term by making the same repayment on the smaller balance, or keep the term and make smaller repayments. The rate might be slightly higher than other lenders, but you're paying for the flexibility.


That sounds like a better deal to me though? As you said rates are slightly higher but you can almost clear what you like when you like to a certain extent. So although you may take the loan out over 4 years, you could infact finish paying it off in 3, and be better off than if you took a lower rate non flexible loan.

Am i correct in thinking this?


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## empsburna (Apr 5, 2006)

Aeroandy said:


> The borrower is slave to the lender.


If you live like no one else, later, you can live like no one else?


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## Dipesh (Oct 12, 2007)

Sainsbury's are pretty cheap. 

Zopa are very flexible but weren't as cheap for me as Sains.

Best way to avoid (so i've been told) is that you pay your loan off but let the last payment pick up automatically and so avoiding charges of early repayment. 

I'll be testing this theory out soon and see how it goes.


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## Stevoraith (Mar 15, 2008)

Dipesh said:


> Sainsbury's are pretty cheap.
> 
> Zopa are very flexible but weren't as cheap for me as Sains.
> 
> ...


Eh?

Sorry I don't understand what you mean by the bit in bold, can you explain?


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## Dipesh (Oct 12, 2007)

Stevoraith said:


> Eh?
> 
> Sorry I don't understand what you mean by the bit in bold, can you explain?


Say you borrow £1000. You pay in monthly instalments of £100pm.

You already paid off £100 so £900 left.

You then win £900 on a scratch card (yay!)

What you do then is pay up £800 up front leaving a balance of £100 left which is ready to pick up on your last Direct Debit plus any interest that you may have occurred between you paying the £800 and owing the last £100.

I'm not sure if it works but Lloyds TSB actually told my mate this and he has done it to avoid any fee's of early repayment.


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## rich-hill (May 13, 2008)

Say you borrowed your £1000 in january and won the £900 in Feb, would you have to wait until close to the final payment or could you pay the £800 in Feb and the final payment then be March?


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## JoeNobody (Feb 21, 2010)

rich-hill said:


> Am i correct in thinking this?


I'd say so. I've done it a few times already, and would do so again if I needed a loan. Got the money pretty quickly too, although I am already an Egg customer.


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## JoeNobody (Feb 21, 2010)

Dipesh said:


> Zopa are very flexible


I had a Zopa loan recently and wished I'd gone with Egg - it was flexible, but only in that I could reduce my payments over a fixed term. The only way to shorten the term was to pay it off in full.


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## rich-hill (May 13, 2008)

JoeNobody said:


> I'd say so. I've done it a few times already, and would do so again if I needed a loan. Got the money pretty quickly too, although I am already an Egg customer.


Looking on the egg website i couldnt see any loan information, only about credit cards. Where can i find out about there personal loans?


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## Stevoraith (Mar 15, 2008)

Dipesh said:


> Say you borrow £1000. You pay in monthly instalments of £100pm.
> 
> You already paid off £100 so £900 left.
> 
> ...


Hhmmm, sounds suspect. Can't see how that would work in practice because your direct debits would be set up to take £100 each month. Can't see them not taking it for a few months because you've effectively already paid that months payment and then starting again in time for the final payment.
That would be complicated to administer and therefor would surely incur an admin fee, negating the point in not paying any early settlement charges!

If somone has done this I'd be surprised, but I'd also be very sure that it's not something which is standard practice and could be done with every loan.

To be honest, early settlement fees are generally equivalent to two months interest payments. Not really a huge amount on your average car loan.


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## Stevoraith (Mar 15, 2008)

rich-hill said:


> Looking on the egg website i couldnt see any loan information, only about credit cards. Where can i find out about there personal loans?


There's a link in the 'banking' section but it says they're not accepting applications just now as they're reviewing their loan products.


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## rich-hill (May 13, 2008)

Well that gives me a little more saving time then


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