Banks and loans

[sobrique]

Just been to the bank, to say 'gimmee money'.
Not with a shotgun, the police get upset.

They seemed positvely happy to hand me _vast_ amounts of cash. Not that I took any, but it does 'clarify' a bit where I am in terms of options for car replacements.

One thing I couldn't quite figure out though. Loans tend to have 'tiered' interest rates.
E.g. <1k 10% 5k - 10k 9%, 10k-20k 8% etc.

So... surely what you should really be looking to do is take out a loan at the highest interest tier, and then immediately repay everything you don't need, thus leaving you with the right amount of cash and a lower puddle of interest.

Or have I missed something? I don't recall any 'early repayment' penalty on my most recent loan that I repayed a year early. I suppose the repayments would be defined assuming you had the full rate to repay over the full term, but then you could just go for a 7 year loan, and repay 4-5 years worth all at once. (Obviously, this is subject to you being able to cope with whatever baseline repayments would be due on the sum borrowed over the maximum term available)

Comments

[hedya.livejournal.com]

maybe this can help with the floating ideas on borrowing?

[jorune.livejournal.com]

The branch has sales targets of lending money, they would prefer it if you borrowed more as it helps them achieve their expected figures thus triggering bonuses. They are working under the assumption that you will pay it off over a period of time and therefore over a $generic period where they can expect a regular income stream.

I don't think you have missed something ,the UK banking market is particularly competitive for loans and your lender will probably bend over backwards to provide you with a deal or advice.

It could be that more money at less interest repaid quickly saves you money than less money at more interest repaid slowly. Either way they will make money off the deal and deepen their relationship/data on you so they are happy.

[nicolyrezk.livejournal.com]

Basically, the longer the term and the higher the loan, the lower the interest rate, as it 'appears' to give you a saving, but not if you pay back over the full term. However, you CAN just pay back a chunk of it early, but most people don't ever think of doing that.

They just go "WHEEEEE MONEY *buys trips to majorca*"