Reducing loan amount

djwolf

I currently have a car loan running with a balance of £8k remaining. There are about 50 monthly payments left. I always had the intention of paying it off early. I usually have some cash spare each month and just wondering whether to make one-off extra payments or whether to put money away into a savings account until I eventually have one big lump's sum to pay off the remaining balance. Which would you suggest is better?

milliemonster

Definitely putting it away and saving until you have enough to pay it off. If you make overpayments it will not affect the interest charged on your loan and many loans will not accept overpayments anyway unless it is enough to clear the full balance.

At least if you put your spare cash away it may earn a little interest!

PNPSUKNET

I agree with the above, most do not allow overpayments