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Can I save money by moving my loan?

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I am 19 years old, I used to earn approx £1,100 per month but due to going back to college and reducing my hours I now only earn about £700 per month.
I have the following debts.

Credit Card: £800 (consolidated two cards to a 0% card.)
Overdraft: £1,015 (over agreed limit of £1,000)
Loan: £3,333.60

The loan is with my bank HSBC, which was to buy my car with. The loan was for £3,700 iirc. The intrest is 11.9%. There is currently £3,333.60 remaining this includes all of the intrest for the whole term. I repay £138.90 per month the day after I get paid.

There is a penalty for early repayment of two months intrest. I obtained a settlement figure of £2,969.16 for today.

I should get approx £3,000 for the car. I will spend about £1,200 on a bike to commute on, the rest I want to put towards paying off the loan, so would need something that doesn't penalise me for early repayments.

Any recommendations? :money:

I don't have any defaults or anything like that, but a little worried I might get turned down due to relatively low income now.

LBM
September 2006

Yorkshire loan: £4164 >>> £0
Amazon CC: £320 >>> £1700 (oops)
HSBC OD: £1300 >>> £200

Total £5784 >>> £1900 21/05/2006


Comments

  • beeniemac wrote:
    I am 19 years old, I used to earn approx £1,100 per month but due to going back to college and reducing my hours I now only earn about £700 per month.
    I have the following debts.

    Credit Card: £800 (consolidated two cards to a 0% card.)
    Overdraft: £1,015 (over agreed limit of £1,000)
    Loan: £3,333.60

    The loan is with my bank HSBC, which was to buy my car with. The loan was for £3,700 iirc. The intrest is 11.9%. There is currently £3,333.60 remaining this includes all of the intrest for the whole term. I repay £138.90 per month the day after I get paid.

    There is a penalty for early repayment of two months intrest. I obtained a settlement figure of £2,969.16 for today.

    I should get approx £3,000 for the car. I will spend about £1,200 on a bike to commute on, the rest I want to put towards paying off the loan, so would need something that doesn't penalise me for early repayments.

    Any recommendations? :money:

    I don't have any defaults or anything like that, but a little worried I might get turned down due to relatively low income now.

    I imagine that your overdraft interest is costing you more than the 11.9% your loan does!

    This then should be your priority debt! Have you asked HSBC if they can do your loan at a cheaper rate!

    What do you want to achieve by moving your loan? Is it to reduce monthly payments or too pay less interest! Obviously if you opt for less monthly payments you will be taking the loan over a longer term which in the long run will mean more interest! :confused:
  • Xbigman
    Xbigman Posts: 3,915 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    Is the car loan secured on the car? If it is your options are much more restricted. If it isn't you can sell the car, pay off the loan and borrow the 1200 for a bike. If you had a few hundred towards that and only borrowed 1000 that would help. Disadvantages of this are that between selling the car and getting the new loan you have no transport, plus you get hit with the early payment penalties which is money thrown away. Otherwise, could you sell the car and use the proceeds to buy the bike then pay 1800 off the loan as a lump sum? Some loans allow overpayment, others don't.
    The car loan in general is not bad given your age and keeping it going is probably the best option.
    Regards



    X
    Xbigman's guide to a happy life.

    Eat properly
    Sleep properly
    Save some money
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