Which is best, advice please !

Herewegoagain

I took on a car loan after trying to get the best interest I could, but was missinformed I thought I was getting 5.8% but in fact got 10.85% which is vastly different!:eek:
My question is:

As my mortgage interrest rate is 6.25%, and I can draw down some cash from it, would I be better off doing that or to just carry on paying the stupid car at 10.85% and over pay as soon as poss?

Any ideas please guys

RAS

You passed by the most important article on the site, getting here, see http://www.moneysavingexpert.com/loans/cut-existing-loan-costs

Paying 6.35% over the rest of the life of your mortgage will almost certainly cost more than your current deal, but read the article to see why.

CLAPTON

what sums are we talking about here?

how does the cash withdrawal work?

can you subsequently over pay the mortgage?

Herewegoagain

Thanks raz will do,
clapton thanks too ye I can draw down upto a certain amount any time as long as there is some paid off, if that makes sence.
I always make overpayments and do intend to pay off mortgage asap anyway,
The car loan is £10.000 which I intended ot pay off by april 2009 by throwing everything at it then the mortgage:T Sorry guys I work 24/7 so it took me a while to read but I do need as much input as poss will check in soon
Thanks x

standupguy

Quote - The car loan is £10.000 which I intended ot pay off by april 2009 by throwing everything at it then the mortgage

You will not gain any rebate of interest by overpaying your car loan.

The extra payments will reduce your balance but put your account into credit.

It is only when you finally settle the last amount outstanding, which you say would be April 2009, that you would receive a rebate of charges at that date.

It may be better to put the overpayments into a high interest savings account until April 2009 and then draw out and settle the agreement - this way you will have benefited from the interest earned on the overpayments and not the Finance Company (as there will be no difference to the settlement figure quoted)?

CLAPTON

if there is no fees/cost to getting drawdown from the mortgage then it would make financial sense to pay the car loan off. Just use the money you would have used to pay the car loan to pay off the mortgage instead.

Herewegoagain

Thanks guys Thats given me food for thought:A :T

Herewegoagain

standupguy wrote: »

Quote - The car loan is £10.000 which I intended ot pay off by april 2009 by throwing everything at it then the mortgage

You will not gain any rebate of interest by overpaying your car loan.

The extra payments will reduce your balance but put your account into credit.

It is only when you finally settle the last amount outstanding, which you say would be April 2009, that you would receive a rebate of charges at that date.

It may be better to put the overpayments into a high interest savings account until April 2009 and then draw out and settle the agreement - this way you will have benefited from the interest earned on the overpayments and not the Finance Company (as there will be no difference to the settlement figure quoted)?

Thanks for that, it's something I didn't know, any suggestions on the best savings, most seem to want you to have lots to start with?

CLAPTON

Herewegoagain wrote: »

Thanks for that, it's something I didn't know, any suggestions on the best savings, most seem to want you to have lots to start with?

This isn't correct in general.
Some loans do allow overpayments that reduce the interest and some don't .. you need to check your specific loan. However, if the loan doesn't allow overpayments, then indeed putting the money into a savings a/c and settle thte loan early is good advice.