Is this wise?

[birdybirdy21]

I currently have a £6750 loan (this is the settlement figure) with HSBC for my car. The APR is 5.9% over 42 months. I have 33 months remaining and it costs me about £211 per month.

I want/need a new kitchen. Santander have offered me a £15k loan at 4.5% this will cost me £279 over 60 months. I will pay the car loan I have currently off and use the remainder to do the kitchen. I have about another £1000 to put towards the kitchen from savings.

I looked into extending my mortgage but the bank wanted to charge nearly 7% on the additional borrowing and over the whole 33 year term left on my mortgage it would have cost me about £55 extra per month. Also it will bugger up my LTV when I come to remortgage in c. 4 years time.

Do you think the 4.5% loan route is the best option for me?

I would say so yes

I'd advise you to get the car loan paid off first and then get your new kitchen.

Sorry I misunderstood your post. I thought you would be ending up with two loans. But I see you are paying the car loan off with the money you borrow. I agree with LunchLady.

The term of the Santander loan is 60 months. Your car loan has 33 months left to run.

Although the rate on the Santander loan is a little lower, you're paying it off over a longer period. Almost twice as long, in fact. So you'll end up paying more in the long run, see? The longer you take to pay a debt back, the more it costs you. Don't just look at the monthly cost in isolation.

If I were you I'd take your £1k savings and knock off some of the car loan, and perhaps clear it early, if the loan agreement allows. Stick with the current car loan rather than incorporating it into the Santander loan, though.

Borrow the absolute minimum from Santander. In fact, ask yourself whether you can live without the kitchen whilst you save up for it.

I'm really glad you didn't extend your mortgage. Not only would you be paying more, over a longer period, you'd also have secured the debt against your home, which is a terrible idea. 'Secured' debt is good for the lender, but bad for the borrower!