Loan payment holiday

Pooky

Ok, need some suggestions on this one.....

Have just changed our loan from HSBC to a flexible one with Egg. Because of the change in interest rate and taking the loan over a shorter period and having a few extra quid a month to chuck at it, we've managed to knock 14 months off this loan......which is a fantastic saving. We've got the option with Egg to have a 3 month payment holiday once we've paid 3 consecutive payments.....now I'm thinking that we would be better off taking that 3 month break and chucking the money at a credit card instead....it would clear one of my cards that will be finishing 0% around then. By my thinking, the interest on the Egg loan is set and it's saved us so much already by changing that adding another 3 months to it isn't actually going to cost us any more........

Does that sound right?????

loubie_lou

Hiya

I've done it a few times and my monthly payments have only gone up a few quid. If you are going to do it it is a good idea to chuck that extra money at other debts.

You have the option of having up to three months payment holiday in a 12 month period. But I wouldn't do this every year as it'll take forever to pay off your loan!

Good Luck

dinkylou

Guess it depends which has the highest rate of interest!

If your credit card is about 15% and your loan about 8% (these are guesses) then you should take the payment break and get rid of the CC as your monthly interest will be higher.

But dont forget to check the small print with taking the payment holiday.