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  • FIRST POST
    • Mjkpio
    • By Mjkpio 15th Mar 17, 11:48 AM
    • 47Posts
    • 8Thanks
    Mjkpio
    Comparing loans - or at least trying!
    • #1
    • 15th Mar 17, 11:48 AM
    Comparing loans - or at least trying! 15th Mar 17 at 11:48 AM
    Hi, Can someone who is cleverer than I please help me understand which of the following loans is potentially best?

    I pay £399.45/month car finance @10.5%. The balloon payment is due in September so I am looking to pay this off now, save a bit on interest, but mainly aiming to reduce my monthly costs and own the car (which I'm not planning on changing any time soon).

    Loan Option 1: Sainsburys - £8,000/36months
    Advertised @ 2.9%APR... actual 7.3%
    + 2 month "holiday" (amounting to 2x£399.45 "saved" in first 2 months)
    Interest: £1,006.48
    Total: £9,006.48 over 38 months
    Monthly £250.18

    Loan Option 2: Halifax - £8,500/36months
    Advertised @ 3.3%APR... actual 5.9%
    Interest: £773.96
    Total: £9,273.96 over 36 months
    Monthly £257.61

    Because of the 2month holiday vs the extra £500 and different %APR rates etc I'm not sure whether Sainsburys or Halifax is better?!

    Thanks in advance.
    Debt free by ... = Dec 2019
    Savings Target by Dec 2018 = £20,000

    2016 Goal = Buy a house with 10% deposit : COMPLETED!
    2017/18 Goals = Pay off Student Loan & Car Loan, Save/Pay for Wedding
Page 1
    • bengalknights
    • By bengalknights 15th Mar 17, 12:18 PM
    • 3,864 Posts
    • 1,406 Thanks
    bengalknights
    • #2
    • 15th Mar 17, 12:18 PM
    • #2
    • 15th Mar 17, 12:18 PM
    My calculations show Halifax as the better deal if you did a like for like £8k
    • Money Rollercoaster
    • By Money Rollercoaster 15th Mar 17, 12:34 PM
    • 237 Posts
    • 548 Thanks
    Money Rollercoaster
    • #3
    • 15th Mar 17, 12:34 PM
    • #3
    • 15th Mar 17, 12:34 PM
    Do you need really need that extra £500 from Halifax? It's costing you about £45 in interest over the term ...


    The Halifax is definitely the better deal ...


    You're paying it off quicker
    You only pay 9.1% in total interest on the overall sum borrowed (Sainsbury is 12.6%)


    You might consider going back to Sainsbury and asking them to beat the Halifax APR ...


    http://blog.moneysavingexpert.com/2012/05/08/sainsburys-launches-mostly-meaningless-price-promise/


    https://www.sainsburysbank.co.uk/borrowing/bor_borrowing_zone (expand the bit about price promise guarantee)
    Last edited by Money Rollercoaster; 15-03-2017 at 12:39 PM.
    Living Life @ 174 BPM >> CC Balance (0%) -£1,950 - Target DFD Dec 2017 >> Loan (Car) (3.1%) -£20,264.29 - Target DFD Oct 2020
    • Mjkpio
    • By Mjkpio 15th Mar 17, 1:11 PM
    • 47 Posts
    • 8 Thanks
    Mjkpio
    • #4
    • 15th Mar 17, 1:11 PM
    • #4
    • 15th Mar 17, 1:11 PM
    Do you need really need that extra £500 from Halifax? It's costing you about £45 in interest over the term ...


    The Halifax is definitely the better deal ...


    You're paying it off quicker
    You only pay 9.1% in total interest on the overall sum borrowed (Sainsbury is 12.6%)


    You might consider going back to Sainsbury and asking them to beat the Halifax APR ...


    http://blog.moneysavingexpert.com/2012/05/08/sainsburys-launches-mostly-meaningless-price-promise/


    https://www.sainsburysbank.co.uk/borrowing/bor_borrowing_zone (expand the bit about price promise guarantee)
    Originally posted by Money Rollercoaster
    Thanks.
    Well the amount I need to pay off is about £8477... that £477 I can take from savings or from the loan.

    I think the idea of the 2 months "holiday" was quite attractive as I could build up £800 of saved car payments, which could be handy for savings/anything else... but in the long run I think I agree the Halifax would be a better deal.
    Debt free by ... = Dec 2019
    Savings Target by Dec 2018 = £20,000

    2016 Goal = Buy a house with 10% deposit : COMPLETED!
    2017/18 Goals = Pay off Student Loan & Car Loan, Save/Pay for Wedding
    • Arleen
    • By Arleen 15th Mar 17, 1:13 PM
    • 727 Posts
    • 509 Thanks
    Arleen
    • #5
    • 15th Mar 17, 1:13 PM
    • #5
    • 15th Mar 17, 1:13 PM
    Wait, stop, hammer time.

    How much savings do you have there? Is it above the 1k needed for emergencies? If so - why not use this instead of taking out a loan and paying interest on it?
    • Mjkpio
    • By Mjkpio 15th Mar 17, 1:34 PM
    • 47 Posts
    • 8 Thanks
    Mjkpio
    • #6
    • 15th Mar 17, 1:34 PM
    • #6
    • 15th Mar 17, 1:34 PM
    Wait, stop, hammer time.

    How much savings do you have there? Is it above the 1k needed for emergencies? If so - why not use this instead of taking out a loan and paying interest on it?
    Originally posted by Arleen
    Yes, but not nearly enough. Plus it's allocated for decorating (in progress) new flooring (in progress) and whatever's left is going in the wedding fund... everything seemed to happen all at once over the last few months! Trust me, the loan IS needed
    Debt free by ... = Dec 2019
    Savings Target by Dec 2018 = £20,000

    2016 Goal = Buy a house with 10% deposit : COMPLETED!
    2017/18 Goals = Pay off Student Loan & Car Loan, Save/Pay for Wedding
    • Arleen
    • By Arleen 15th Mar 17, 1:41 PM
    • 727 Posts
    • 509 Thanks
    Arleen
    • #7
    • 15th Mar 17, 1:41 PM
    • #7
    • 15th Mar 17, 1:41 PM
    Yes, but not nearly enough. Plus it's allocated for decorating (in progress) new flooring (in progress) and whatever's left is going in the wedding fund... everything seemed to happen all at once over the last few months! Trust me, the loan IS needed
    Originally posted by Mjkpio
    I'm even more curious now as of whether it is really needed. In the end this is your debt and your life, but as I see your signature I wonder why do you want to get into more debt when you are so close to being debt free? Cannot the wedding fund turn into a dinner for close friends and family at local restaurant, which will set you back about 50 quid per head?
    • Mjkpio
    • By Mjkpio 15th Mar 17, 3:27 PM
    • 47 Posts
    • 8 Thanks
    Mjkpio
    • #8
    • 15th Mar 17, 3:27 PM
    • #8
    • 15th Mar 17, 3:27 PM
    I'm even more curious now as of whether it is really needed. In the end this is your debt and your life, but as I see your signature I wonder why do you want to get into more debt when you are so close to being debt free? Cannot the wedding fund turn into a dinner for close friends and family at local restaurant, which will set you back about 50 quid per head?
    Originally posted by Arleen
    PM'd
    And trust me, that's not gonna fly with the other half!
    Debt free by ... = Dec 2019
    Savings Target by Dec 2018 = £20,000

    2016 Goal = Buy a house with 10% deposit : COMPLETED!
    2017/18 Goals = Pay off Student Loan & Car Loan, Save/Pay for Wedding
    • Mjkpio
    • By Mjkpio 16th Mar 17, 9:36 AM
    • 47 Posts
    • 8 Thanks
    Mjkpio
    • #9
    • 16th Mar 17, 9:36 AM
    • #9
    • 16th Mar 17, 9:36 AM
    Actually, after a bit more manipulation and maths the Sainsbury's offer still works out better (by 0.5%!)

    The 2 month holiday will save me £798.90, but the loan amount is short £477 of what I need.
    So... 798.90-477=321.90
    That remaining £321.90 can be marked against the loan interest... 1006.48-321.90=684.58
    And to get the % of the loan that is interest... 684.58/8000*100=8.55%

    To compare...
    773.96/8500*100=9.11%
    Debt free by ... = Dec 2019
    Savings Target by Dec 2018 = £20,000

    2016 Goal = Buy a house with 10% deposit : COMPLETED!
    2017/18 Goals = Pay off Student Loan & Car Loan, Save/Pay for Wedding
    • StopIt
    • By StopIt 16th Mar 17, 11:56 AM
    • 206 Posts
    • 169 Thanks
    StopIt
    I'm confused, how can the 2 month holiday save £400pm if the monthly payments are £250


    Also, have you calculated that the interest may still be added onto the loan for the holiday despite you not paying for it at the time?
    • Bedsit Bob
    • By Bedsit Bob 16th Mar 17, 1:40 PM
    • 9,516 Posts
    • 49,774 Thanks
    Bedsit Bob
    And trust me, that's not gonna fly with the other half!
    Originally posted by Mjkpio
    Then I suggest you put off the wedding, until the debt has been cleared, and you have saved enough money, to pay for the wedding.
    My job is Top Secret. Even I don't know what I'm doing.

    Amount I have so far denied the BBC - £1161
    • Mjkpio
    • By Mjkpio 16th Mar 17, 2:05 PM
    • 47 Posts
    • 8 Thanks
    Mjkpio
    I'm confused, how can the 2 month holiday save £400pm if the monthly payments are £250
    Originally posted by StopIt
    I pay £400/m now (car finance) but the loan will reduce that to £250/m. So I pay nothing for 2 months (and save the £400 I would have been paying) then start paying £250 after that. The first £400 will go towards paying off the car finance, the second will be allocated against the cost of the interest.

    Also, have you calculated that the interest may still be added onto the loan for the holiday despite you not paying for it at the time?
    Originally posted by StopIt
    Yes, and it's negligible in comparison to the 2 months savings.
    Last edited by Mjkpio; 16-03-2017 at 2:09 PM.
    Debt free by ... = Dec 2019
    Savings Target by Dec 2018 = £20,000

    2016 Goal = Buy a house with 10% deposit : COMPLETED!
    2017/18 Goals = Pay off Student Loan & Car Loan, Save/Pay for Wedding
    • Mjkpio
    • By Mjkpio 16th Mar 17, 2:27 PM
    • 47 Posts
    • 8 Thanks
    Mjkpio
    Then I suggest you put off the wedding, until the debt has been cleared, and you have saved enough money, to pay for the wedding.
    Originally posted by Bedsit Bob
    Well the wedding's happening in 2 years, noughts gonna change that. We know we're able to save what we need in time. The car's either going to be an issue now or in 6 months, so I'd rather get it sorted now, I'll have to take out a personal loan either way. My car allowance covers the car payments currently so I'll be able to save the extra when the payments reduce. For now it'll go into savings, then as that hits the target it'll go to overpayments/pay off early.
    Debt free by ... = Dec 2019
    Savings Target by Dec 2018 = £20,000

    2016 Goal = Buy a house with 10% deposit : COMPLETED!
    2017/18 Goals = Pay off Student Loan & Car Loan, Save/Pay for Wedding
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