Archive: MoneySavingExpert's Money Tips Email

Urgent! Cheapest loan deals likely to be pulled ANY MINUTE... if you need to borrow, apply ASAP

The cheapest personal loan rates have doubled in the last 18 months. While we can't confirm this, we've heard it's very likely that more than one of the market's cheapest loans are about to be pulled - or at least repriced at higher rates - any minute. There's even a chance this could happen as we send this week's email out, so do double-check any rates.

If correct, it means if you currently need to apply for a loan, speed is of the essence. After that, we may well be close to rates plateauing and stabilising, so this isn't a call about the longer term. Full info in Cheap loans, but in brief...

• Please only get a loan if it's planned for, NEEDED and you've budgeted for the repayments. It should be for a necessary, one-off purchase (new freezer, kitchen, car etc) you can't pay for from savings. NEVER borrow willy-nilly to fill gaps in your income, as it can spiral out of control. Before borrowing, budget to ensure you can afford the repayments, borrow as little as you can, and repay as quickly as you can. Overall, if in doubt, don't.
  
  - If your aim is to switch credit cards to loans, a balance transfer is likely cheaper.
  - If you're struggling with debt already, you can't borrow your way out of it. Please read Debt help instead.
  
  
• The UK's cheapest FIXED loan rates - where you can check first if you're likely to be accepted. Loan rates are meaningless if you can't get them. Worse still, applying means a mark on your credit file even if you're rejected. Instead, it's best to go via our Loans Eligibility Calc, which shows which loans you'll likely get without impacting your ability to access credit. All rates are fixed for the length of the loan.
  
  Update 9.45am Wed 11 Oct: Santander has upped some of its loan rates this morning, meaning they are no longer top picks. For the latest options, see Cheap loans.
  - £1,000 to £2,999: Santander* 14.5% 13.5% rep APR interest, but 0% credit card loans are likely cheaper for many
  - £3,000 to £4,999: Novuna Personal Loans* 9.9% on £3k to £4k, 9.7% on £4k to £5k, M&S Bank* 9.9% rep APR
  - £5,000 to £7,499: Santander* 7.2% rep APR, AA* 7.2% rep APR for members (7.3% non-members)
  - £7,500 to £15,000: Santander* 5.8% rep APR, Tesco Bank* 5.9% rep APR (must have a Clubcard)
  - £15,001 to £20,000: Santander* 5.9% rep APR, Tesco Bank* 5.9% rep APR (must have a Clubcard)

• Sadly, lenders needn't give you the rate they advertised at. All loans listed, and virtually all personal loans on the market, are 'representative APR'. That means they only need to give 51% of accepted customers that rate - the rest can be charged more without limit. This is very frustrating, and worse still, the only way to find the rate you'll get is by applying, which marks your credit file. A few lenders do now give guaranteed rates via an eligibility check, but they tend not to be the cheapest. We continue to push for change, but don't have a solution right now.
  
  
• Always obey the personal loan golden rules. If you do get a loan, ensure you pay on time (preferably by direct debit) or you may be charged and get a missed payment on your credit report, which can cause real problems. And while loan rates are fixed, do monitor the market, especially if your credit score improves. You then might be able to cut existing loan costs with a new loan (it's complex though, so the article takes you through it).

Martin's warning to graduates (even grey-haired ones)...
Exclusive. A million people with student loans OVERPAID last year, often unaware. Can you reclaim £100s or £1,000s?

Student loan repayments work more like a tax than a loan - you only repay once you earn enough and in proportion to earnings. And just as millions unwittingly overpay tax (are you owed tax back?), many university leavers unwittingly pay too much off student loans. Our new Freedom of Information request reveals that in the 2022/23 tax year, over a million former UK students OVERPAID, adding to millions more who had in past years.

Some get £100s back just with a quick call, others may have to push harder, as Fiona emailed: "Thank you so much. I knew something wasn't right when I lodged my tax returns, and reading Martin's article was the catalyst for a sustained attempt to work out what had happened. Finally, I received £3,773 back." Our Reclaim student loan overpayments guide has step-by-step instructions on how to get your money back, but here's a heads-up...

The most common reasons why people overpaid. It's often due to incorrect details or processing by you, your employer or the Student Loans Company. Here are the figures for 2022/23...

• 833,000 repaid loans despite not earning enough in the tax year. Student loans are repaid at 9% of everything earned over the ANNUAL threshold (£27,295 for most, but it varies by the 'plan' - see what's my repayment threshold). However in practice, repayments are taken from the payroll monthly, if you earn over the MONTHLY equivalent threshold (£2,274 for most).
  
  So those with variable incomes or commissions, or who had some time out of work in the tax year, are likely to have paid in some months when their annual earnings aren't high enough, so can reclaim. PS: if you earnt over the annual threshold, but paid too much for the year due to some high earning months, sadly you can't reclaim then.
  
  
• 165,000 were on the wrong student loan payment plan. If you've not told your firm which plan you're on, the Govt tells it to assume you've a Plan 1 loan where you repay on income above £22,015/yr, yet millions are on plans where you only repay over £27,000/yr - so if the default setting is then used, you'll have overpaid.
  
  
• 57,000 had money deducted after the loan was fully repaid. After a set time the loan is wiped, often after 30 years, but again it depends (see When will my loan be wiped?). However, you could still repay even after your loan is cleared due to PAYE timings - it will pay this back automatically, but that can take time. To prevent this, you can set up a direct debit for the last two years of your repayments.
  
  
• 39,000 started repaying their loans too early. You are only eligible to start repaying in the April after you left your course. If you misstated when your studies finished or your employer got it wrong, you could've repaid too early.

Should you claim the money back if you've overpaid? Overpaying on normal loans is a good thing, it means you clear the debt quicker and repay less interest. Yet student loans don't work like normal loans. It's complex...

Many are on Plan 2 loans (eg, 2012 to 2022 uni starters from England) with its current 7.3% interest rate. So on the surface, overpaying may look a good idea. However, the Govt's own stats show over three-quarters of people won't clear these loans in full before they wipe after 30 years. If so, overpaying these smaller amounts won't usually actually reduce what you will pay in future, so you don't gain by overpaying (the very highest earners who will clear the loans in time will gain). This works differently for other plans - see should I reclaim overpayments? for plan-by-plan details.

How to reclaim? It's usually pretty simple and you can go back as far as you like. If possible, gather old payslips, your payroll number and a PAYE reference number. But if you don't have those, don't let it put you off, this can often be done in a phone call. There's no time limit here either, so even if this was a decade ago you can still do it. Full details in how to reclaim student loan overpayments.