Might be a stupid question-I'm rubbish with finances

gh123

I'm paying off a debt of £15,000. What's better?

Option A:
Pay £212 per month for 10 years at 7.6%. (This is what I'm currently doing).

Option B:
Same as option A but make overpayments of varying amounts whenever I can.

Option C:
Take out a different loan of £15,000 pay off my original lender and pay £308 per month for 5 years at 8.9%?

The difference in monthly payments is 308-212 = £96.
If I pay £96 per month in overpayments to my original lender is this better than changing lender and paying £308 per month at a higher interest rate?

My current loan has no early repayment charges but they said something about still paying interest? I don't really get what they mean. If I Pay an extra £100 per month for 5 months that's 500 off the total loan in overpayments,what is the issue with interest? Is this different to asking for a settlement figure?
Silly example but what if I put 14,000 in next month in a one-off overpayment thus owing only £1000 of the original loan amount. The interest makes the long term sum more like £25,000 than £15,000. Do I pay them something between the £1000 and the £11,000(25,000-14,000)? How do they calculate this?

Option A means I pay around £25,000 total, option C means I pay around £18,000 total. On paper C is better than A if I can afford the extra £96 per month and also with C, the £96 is consistently going into the debt whereas, if I was making one off payments(option , I might squander the money and not actually put it into the debt.

But now lets say I came into money with a bonus or overtime and I did option B. Sometimes putting in £200 if I have it, other times £96 and other times say £50. I'm still at the 7.6% rate and paying off my debt quicker. Is this then the best option?

Money and finances confuse me big time.:embarasse
I hope my sums are correct and my figures are not too far off.

Any help appreciated, thanks.

Numpty_Monkey

|There are No stupid questions on here
I'm not good at the money juggeling thing

Have you put the numbers into the snowball calculator?
http://www.whatsthecost.com/snowball.aspx?country=uk

Buzzbox

Tough choice to make at the moment. A lot of lenders are cutting down on borrowing, so watch out, they might even decline it. I personally have a loan running at the moment and I tend to put all extra money in a savings account to get the amount down asap... hopefully only a few more months and that should be sorted.

gh123

Thanks for the replies.

I thought of another option.

Option
Stay with my current lender but change to 5 years instead of 10 making payments £308 per month.

BUT. Does this not mean that I'd be taking out a completely different loan and they wouldn't offer me as good an interest rate and probably add some kind of early payment penalites that I don't currently have on my existing loan?

Thanks.

gh123

By putting it into a savings account, is that a better way to do it - build it up in a savings account then ask for a settlement figure and pay the whole lot off when you've saved enough? Or pay a little each month direct into the loan?

Buzzbox

Does your loan agreement allow that? I know mine is stuck in until the end, that is why I started a savings account and dump a lump sum in there whenever I have extra money.

gh123

I thought I could but I'd better check. I'll phone them on monday. Thanks.