Loan fixed payment help?

skintinseattle

Hi all,

Never posted before but had a quick question. Had my 'lightbulb' moment a few days ago and have devised a sensible plan to pay off o/draft (1250) and credit card (£400) so that I should be free of those by July whilst still saving for my holiday and a new car.

However - I have £11441 on a loan, not sure what the APR is but I'm paying £202 a month on it at the moment - which at that rate is going to take me another 4.5 years to pay it off. After I've cleared the overdraft I want to start saving for a house deposit, so my question is this:

Is it worth putting my £200 a month into my savings account for my house deposit and leave the 11k loan as it is?
Or
Do I ask my bank to up my payment to £300 (wouldn't want to up it to 4 in case I had an emergency and couldn't switch back down) and pay it off in 3 instead? Do you think its worth it?

Any advice would be greatly appreciated.

IWantToBeFree_2

Most loans are fixed repayments, so they won't let you just increase your payment, they would probably ask you to refinance the loan (i.e. take a new loan to pay the old off) but this would be more expensive in the long run.

With most loans you cannot overpay, but you can repay in full early, so you would have to save up enough til you can afford to pay it off in one go.

andys15

IWantToBeFree wrote: »

Most loans are fixed repayments, so they won't let you just increase your payment, they would probably ask you to refinance the loan (i.e. take a new loan to pay the old off) but this would be more expensive in the long run.

With most loans you cannot overpay, but you can repay in full early, so you would have to save up enough til you can afford to pay it off in one go.

It might not be more expensive in the long run. If they owe 11500, then depending on APR and penalties, they may get a settlement figure of 10k. If they then take ou a 10k loan over a shorter period, then srely they will pay less in the long run. In the short run you will probably pay 2 months interest charge. I would put the full 200 in towards the loan, and worry about an emergency sitation as and when.

A tesco loan over 2years is 452 pounds and you pay 866 pounds in interest over the 2 years

skintinseattle

Thank you, have an appointment with my bank manager next week to look at options, fingers crossed I can be debt free in 2011!