Early settlement/Overpayment

kingandy16_2 · 6 September 2017 at 4:07PM

Hello,

I have a dilemma... I have an early settlement figure of £13500 for an existing loan at 6.4% that I have.

I have £7500 to make a lump sum payment but they will only reduce the length of the loan, not the amount that I pay a month (which is what I want to do).

Do I...

1. Pay off £7500 of existing loan and get a new loan at 3.5% and pay the remaining £6,000 off with that.

2. Get a new loan of approx. 3% for the full £13500 and then make my overpayment.

3. Pay off £7500 and get a 0% credit card of 6k and pay off that way.

I have 4 years left of the £13500.

Please help, thanks in advance!...Or is there a better way...

Andrew

Nearlyold · 6 September 2017 at 4:34PM

For option 2 to work you would need to ensure the lender would reduce the payment and keep the term.

Why do you want to reduce the monthly payment rather than reduce the term which would clear the loan quicker and reduce the amount of interest paid - what is the APR on the loan you already have?

MallyGirl · 6 September 2017 at 4:44PM

kingandy16 wrote: »

3. Pay off £7500 and get a 0% credit card of 6k and pay off that way.

Andrew

Make sure it is 0% on money transfers - not balance transfers - if you try this route.

kingandy16_2 · 6 September 2017 at 4:46PM

Hi,

What if I used a different lender?

I struggle at the end of the month so save any cash, I don't mind paying it over the 4 years it is for improvements, I would then make overpayments as and when I can.

Thanks

Sncjw · 6 September 2017 at 8:53PM

Are you garunteed to get the 3% though.

kingandy16_2 · 7 September 2017 at 7:53AM

Well credit score up 983, obviously not guaranteed but surely that would help?

macman · 7 September 2017 at 9:22AM

No, because lenders don't even see it. It is meaningless. What they are interested in is your credit history.

Early settlement/Overpayment

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