• Matty posted an update 1 month ago

    For various reasons I might need to take out a small personal loan – about £3000. Initially I considered my own bank but then discounted them after looking at a comparison web site.

    One that came out quite favorably in terms of interest rates was Hitachi Capital.

    Whilst I’ve heard of Hitach in terms of electronics etc. I didn’t know they were into banking.

    Has anyone used them? I can’t remember the actual rate but they were certainly about the mkst favorable on the face of it.

    • Luke replied 1 month ago

      What do you need it for ? Can you get a 0% credit card for purchases and pay it off that way (over 24 months or whatever)?

    • Lots of people will have a hitachi loan without realising; they are one of the big players in retail lending.

      With personal loans, just be aware that loans can be very ‘stepped’ so you may get a much much better interest rate by borrowing over £5000 or over £7500

      BUT the affordability check will be harder for larger loans.

    • Definitely fine as a lender/business.

      For your purposes however, as others suggested, for a relatively small amount like that the 0% card might be a winner. If you have the strength of character to ‘wean yourself off’ credit cards you should be fine to take a fresh one out with a ‘0% for x months on all purchases in first X months’ deal on it, set up a DD to pay the loan off within interest free period and cut up card straight away. Cancel it formally once all is paid off.

      The second step to ‘sorting finances’ is getting to a stage where you can safely use or have access to credit and use it when beneficial to do so. Paying interest on a loan if there is another route to the same outcome that doesn’t involve paying interest falls into that category so long as you do what you set out to do – repay within 0% period.

      This also has benefit that if you pay off say 100 per month on 0% card in 12 months you have paid off 1200 pounds. On a loan of same amount in 12 months you will have paid 1200 but will have paid less than 1200 of the capital amount – loans tend to front load interest so in earlier period you pay off interest at a higher rate and capital at lower rate. Means that if you need to re-finance for any reason you find that 1 year into a 2 year loan you have paid off less than half the total amount which can come as a shock. That’s one of the reasons loan companies aggressively try to sell you a new loan part way into repaying existing – the hook is ‘here’s more money, go enjoy yourself, you are a responsible re-payer’… but what they are doing is using the new loan to pay off the old plus give you more, and re-starting the clock on a fresh loan paying larger amounts of interest and lower amounts of capital again. So at stage when you should be making larger inroads into clearing your debt they puff you into paying fresh interest and not reducing capital.

      If you use the 0% card you can likely shift balance to a new 0% deal for a fee that will be much less than interest on the loan, if the interest free period on card 1 isn’t long enough for your purposes.

      • jack replied 1 month ago

        Second this.

        I used 0% cards when interest rates on mortgages were higher, use them to put all your shopping on (note: never ever use a card for a cash advance) and keep the money in a bank account offset against the mortgage. Pay off 1 week before its due. Repeat. Had maybe £6-7k on cards at one point between me and wifey. Its a bit scary, but you sound diligent enough to use cards this way, so why give anyone 8%? Also look at, and you really need to do your sums here, at the end of the term on the card, look at a balance transfer to extend the 0% time with someone else, but check what the cost is of doing it. Often a percentage~e.g 1.5%. But paying this may be lower than the interest on the card and extends your payback time.

        Always loved the idea of using one bank to pay another off and meant paying my mortgage off about 5yrs earlier!