Making a Loan to pay off another loan...

I don't think it's a great idea. If you are paying off one loan with another...your interest for the second loan also keeps building up and then you might have two sets of interests...and when banks offer interest...they 'forget' to tell you the loop holes of how the interest builds up. Even with a credit card, one has to be very careful. If you use it like cash and payback promptly every month...without leaving any balance, it works out great....but if you pay the minimum and then let the balance buildup and keep paying only the minimum every month, it works to a very huge amount...because most banks start calculating interest from the first day of credit (the first time you had balance). I know this person who took a loan of Rs 70,000 for his wedding...and he kept paying only the minimum amount after that...and now he's in debt...and the amount is Rs 1,96,000!!! So, do you have a debt on your credit card?

I think its better to apply for that loan. I'm sure it could help. 2% difference is already big money especially when you have high balance yet. Try to grab the opportunity. If I have that chance myself I will also do it at least I could free myself from my credit cards...

If you are able to get out of the other loan completely and don't loan more money than you need for paying of the other loan then it might be a good idea getting a less high rent on it. I have never done something like this but I know people who have. Just make sure you read the fine print and don't end up loaning more then you are intended too.

I know many people who does just like that. It makes sense because like in your situation, it is right that you may save from the interest payments by 2%. So if a loan is made available to you which has a lower interest rate, you really have the option to avail it and pay off your higher interest rate loans. Much better if you pay loans from your income, in that way you really erased portions of your debts and try not to incur additional loans as much as possible. :-)

Hello aseretdd, I used many credit cards before but decided to withdraw all after getting married. My husband doesn't like me to have any as he knows pretty well how shopaholic I was *laughs* But, I have a friend who just did like what you are thinking to do. He has credit cards that due for payment and he couldn't came up with even the minimum payment for all the cards. He decided to apply loan to settle off his debt and just paying the only loan in future. It costs him less than all his minimum payments but it takes him years to settle it off. Here too, the credit card issuers come up with a flexi plan like transferring all the balance to one card and you just need to settle the balance of one of your cards with additional interest charge. For this one, I am not too sure whether it is good or not.

Well there is no harm in doing it ,you have been thinking about it i have been practicing it for some time now I use one of mine credit to pay the other and again I use the first one to pay the second ,i just rotate the funds and for 6 months i have been using the banks money and I have not paid i single percent interest, cool for me ,just rotating funds.

I know it's not a good idea but I have actually tried that. I needed the money very much and at the same time, I wanted to clear out the other loan. It was hard but I survived, after that, I promised not to have 2 loans at a time. For you, I guess the best is agree with your partner and decide what is best, in that way, you are there to support with each other since, it was open, I mean he knows your transactions!

make sure that interest rate isn't variable,or you could end up paying more than you started with. some banks only keep it low for 6 months.

It depends...if that other loan to pay off an old loan offers a better deal, then by all means, it is worth it. My daughter did that...she paid off her credit card through a loan from our local cooperative, which we found out does not slap horrendous penalties and hidden charges. So now, my daughter has since then closed her credit card line by paying it off; she's paying the cooperative instead, which computes interests on a diminishing balance, no hidden charges, and what you pay is returned through a patronage refund and the interest on savings is even higher. I have also done it, still through a loan from the coop and I had better peace of mind because the coop HELPS people, instead of sucking dry our pocket, the way credit card companies do.

hi! i dnt think its a good idea to take a loan to pay off another loan coz u get trapped in a vicious circle frm where u find it difficult to come out of-this results in enormous continuos stress.

if you calculate the total interest you will be paying is lesser than paying your credit card much better if you loan from the bank for paying your credit card. sometimes we must be practical so that we can save money although we consider it as part of our expenses because the amount you are going to save can be used in other needs.

i did it once and it helps a lot, but i cant help using my credit card, coz we need to buy groceries, milk, diapers, etc. now my i have to pay another and i kept on thinking if i will balance transfer it again, so that i will less the finance charge of 3.5%.

I have also a big problem with the bank regarding my credit card dues. The bank already passed the collection duty of my account to collection agents, mostly law firms. Just this afternoon, a personel from a financing firm came to our office and offering another loan, to settle my bank obligations. I didn't avail of their service, their offer. Simply because, I hate to pay the bank with another loan, still exist. Maybe, I pay the bank when I win the lotto.

Lots people do that!But i dont like that.I believe i should make sure my desire is under control.

i think it is not so much good idea. in this case you are gain taking another loan. may be this new one you will take more time to pay back, this is recursive process I guess.

I did that and it went fine for as long as you will not use your credit card again until the loan is fully paid. If you transfer your credit card debt to another and then continue to use your card then it defeats the purpose. It will get you more financial trouble.

There's nothing wrong with that. It's called consolidating your debt and it the interest is lower you're saving a LOT of money. People do that all the time, it's the same thing as refinancing your house. I don't know why anyone would advise you against it, unless they don't know what they're talking about. Plus, with the lower interest you'll get it paid off more quickly.

I think it can help you in a way. What i do to my credit card debt specially those who almost reached my limit is I balance tranfer it to another credit card and ask the other card company to make the payment in an installment basis in that way I can save money and it really worked quiet good to me since I can easily budget my finances well enough than to let debts just had interest.