Consolidation Help

BenC_2

Hi I was hoping someone with more knowledge on this topic could help me please.

I am taking on my sisters loan soon which is at £6000 in total over around a 3 year period, the problem I have is that in my savings I have £3000 which I would like to put into that loan straight away to reduce the payments however I have been told by some companies this isnt possible and I need to save up the full settlement figure before I can give them a large sum of money. Are there any companies out there that would allow me to have a 6k loan then pay half off stright away or is there any other way I could go about it something like a 0% on purchase credit card for example would they allow a 6k purchase of a loan?

Thanks
Ben

CLAPTON

what do you mean 'you are taking on your sisters loan' ? do you mean you are giving your sister 6,000 and she will settle the loan?
or do you mean you will make the monthly repayments for her or what exactly?

BenC_2

The siuation is the settlement figure is £6000 for her loan so I am trying to figure out the best way to pay that off and take the payments in my name. So that means getting a £6000 loan myself and paying that off or I have just thought of getting the £3000 I have in my savings and addding it to a smaller £3000 loan to pay it off with leaving me with only £3000 pay back....if that makes sense?

Im just unsure as to what the best way is to do it.

CLAPTON

what is the APR on her loan?
is it a flexible loan allowing part payment ?


what sort of APR are you likely to get on a loan
certainly it makes sense to use the 3,000 as you will almost certainly be earning less interest on it that the loan is costing.

BenC_2

I think its around the 8.6% rate but im not sure and no it doesnt allow for part payments.

Ive just ran a quote through on a comparison site and ive got these figures back.

£3000 over 24 months with Money Back Bank comes to £138.85 per month @ 10.8%apr

Surely there must be somewhere that could offer a better apr?

mrposhman

BenC wrote: »

I think its around the 8.6% rate but im not sure and no it doesnt allow for part payments.

Ive just ran a quote through on a comparison site and ive got these figures back.

£3000 over 24 months with Money Back Bank comes to £138.85 per month @ 10.8%apr

Surely there must be somewhere that could offer a better apr?

8.6% isn't bad for the size of the loan in todays climate.

As you have shown the interest rate is higher than you old rate but this would allow you to save interest on the other £3k which you cannot pay off on the old loan. You will incur more interest on the remaining £3k but will not pay as much interest overall.

Theres 2 other options, a 0% balance transfer credit card (how quick do you expect to pay the remaining £3k off?

Or you could take out a higher value loan (around £7,500) and make sure they accept lump sum payments and then repay the £3k you have plus the additional £1.5k leaving you with a £3k balance. I wouldn't do this as soon as you have the cash, maybe leave it a month but my bank manager actually suggested I do this to get the better interest rates.

I would probably go with the original option that you have suggested but these are other options available to you.

Is your sister not paying this debt off too? Will she be repaying you?