Disclaimer: I am neither a lawyer nor an expert; the following is my opinion and experience (not financial advice) and you use it at your own risk.

>1st - if I have a current account and personal loan with HBOS, can I close my current account and open one with Abbey (for example), even though I still have a loan with HBOS? Would I have to pay off my loan?

You can have more than one current account at a time, and you should be able to switch your current account freely whether or not you close the old one - nothing is forcing you to continue to use the account, whether you keep it open or not. Obviously, you will still be liable for any payments on the loan with HBOS and you will need to make sure that your repayments continue from your new account. HBOS should be able to accept a new Direct Debit instruction from you and your new current account provider may even be able to set this up for you.

> 2nd - I got my loan a year ago when the interest rates were higher, is it possible for me to get a loan just now on a smaller rate, then I could pay off my current loan (thus reducing interest payments) and thus will end up owing far less?

This completely depends upon your circumstances; you might be able to, but it is not guaranteed. First, find out how much it will cost you to pay off the loan early - there is usually a penalty for early repayment.

The BoS website says:

"The amount you have agreed to pay us includes interest charged to the end of the loan term. When you make a payment, you'll only have to pay a proportion of the interest still owing. This is because the settlement figure is calculated with the benefit of a statutory rebate of interest that you are entitled to when repaying your loan early. There is no charge for repaying your loan early, but as described above you'll pay a proportion of the interest that would have been paid."

Call them and ask for a current settlement figure - details are on their website. Establish how much less you will pay to settle the loan now as compared with making all the scheduled monthly repayments. Unless this is a LARGE sum of money, stop here and resolve to continue making the monthly payments. If you can save a worthwhile amount (i.e. more than enough to cover the interest on the loan you propose to take on), find out how much it will cost you to borrow enough to settle the debt over the remaining time period on similar terms (i.e. you probably don't want to convert an unsecured loan into a secured one). Your ability to obtain further credit may be affected by the loan that you already have, as may the interest rates you get offered.

Now assess the situation. If you can borrow enough to pay the settlement figure AND get a rate low enough that the total cost of the loan you propose to take on is still lower than what you would repay by just sticking with the original loan, great. If you can afford to increase your monthly repayments and repay the new loan over a shorter period, for example, it could save you money. If you are hoping to get a similar arrangement with another provider and profit from the drop in interest rates alone, then the total cost of the interest on your proposed new loan has got to be less than the amount you stand to save by repaying the old one.

In short, unless you have access to a MUCH better loan rate than your existing one, or the ability to repay over a shorter term, then it is probably not going to save you a fortune. There are exceptions; no-one can predict with certainty the loan rate that is available to you in your current situation. Save 10% on the APR and the early repayment penalty will fade into insignificance... save 2-3% and you're probably wasting your time.