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  • FIRST POST
    • GaZMaN888
    • By GaZMaN888 8th Sep 17, 12:46 PM
    • 3Posts
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    GaZMaN888
    Cheapest way to pay off a loan
    • #1
    • 8th Sep 17, 12:46 PM
    Cheapest way to pay off a loan 8th Sep 17 at 12:46 PM
    Hi People!


    I am trying to get my finances in better order by reducing/moving my debt in order to pay it off quicker and was hoping for some advice as I am a bit lost. Affordability of the repayments is not a problem, I'd just like to clear the debts as soon as possible and as cheaply as possible.


    I have a credit card with £4,000 on it at the minute which I am hoping to transfer to a 0% card but I also have a loan that was originally for £16,000 over 5 years @12.9% and I am not sure of the best way to reduce the cost of that borrowing, can anyone point me in the right direction?


    Thanks in advance,


    Gary
Page 1
    • Wookey
    • By Wookey 8th Sep 17, 1:18 PM
    • 795 Posts
    • 398 Thanks
    Wookey
    • #2
    • 8th Sep 17, 1:18 PM
    • #2
    • 8th Sep 17, 1:18 PM
    Ideally you would throw everything at the loan and pay it of ahead of time, this will depend on whether there are penalties for overpayments involved or not. Best to check the T&C's on the loan and find out exactly what you can or cannot do with Re to it first.

    One other thing to consider is how long the 0% will last for and what the % rate will increase to once it finishes.
    Norn Iron Club member No 353
    • GaZMaN888
    • By GaZMaN888 8th Sep 17, 1:30 PM
    • 3 Posts
    • 0 Thanks
    GaZMaN888
    • #3
    • 8th Sep 17, 1:30 PM
    • #3
    • 8th Sep 17, 1:30 PM
    Thanks for your reply,


    There are no penalties for overpaying the loan, if needs be then I will try and make overpayments every month, I was just wondering if there was a similar way of moving a loan to something closer to 0% like you might do a credit card.


    Thanks,


    Gary
    • D_M_E
    • By D_M_E 8th Sep 17, 1:33 PM
    • 1,270 Posts
    • 62,729 Thanks
    D_M_E
    • #4
    • 8th Sep 17, 1:33 PM
    • #4
    • 8th Sep 17, 1:33 PM
    You may not get a 0% card to shift the £4000 to and there is no guarantee that you will not stop spending on the card again once it's been cleared.

    Probably best to cut up the card so you cannot use it anymore then put every spare penny you have into paying off the £4000 since it's probably at an interest rate of at least 18% - assuming it's not at an introductory rate - then save up as much as you can and pay off the loan early with your savings.

    Edit - just seen your reply above - clear the card first then overpay the loan with the savings from having done that.

    To shift the loan and card balance you need a money transfer card - one which will allow you to transfer to your bank account - you may have to pay a small fee of around 3% for this but this will be far cheaper than than either the card rate or the loan rate.
    Last edited by D_M_E; 08-09-2017 at 1:36 PM.
    • GaZMaN888
    • By GaZMaN888 8th Sep 17, 3:37 PM
    • 3 Posts
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    GaZMaN888
    • #5
    • 8th Sep 17, 3:37 PM
    • #5
    • 8th Sep 17, 3:37 PM
    Wookey/D_M_E,


    Thank you both for your replies, they're both really helpful.


    Gary
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