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Any personal loans NOT using rule of 78 for interest?
Hallo moneysavers,
Am new to board so NOT an expert in these matters but def fed up of being ripped off. Would appreciate some informal advice.
I have an £8K personal unsecured loan with Northern Rock, at 5.7% over 4 years. I didn't take out PPI. I've paid off 1 year and have an outstanding balance of nearly £7K - Northern Rock calculate paying off the loan so that you repay the interest first of all (Rule of 78).
I am approaching a time in my life where I need to a) free up some cash of circa £2K, and b) reduce my monthly outgoings - rocky times ahead which I'm trying to plan for.
Considering whether to add the remaining amount on Northern Rock loan to my mortgage, together with £2K advance - total added £10K (this is possible - have checked with mortgage lender) but aware of fact that I will accrue valuation fees, administration/arrangement fees, not to mention a huge amount of interest (around £10K) on the £10K added by simply spreading the payments over the length of the time of the mortgage.
So considered extending original loan plus additional £2K borrowing over period of 10 years, then when rocky times have settled down (in circa 2 years time), repaying the loan early over a shorter time period.
Went back to Northern Rock to see if they could extend the loan over 10 years and add another £2K to outstanding balance. Found out that if I did this, and I wanted to repay early, I would be paying off the huge interest balance first of all as they would still apply the rule of 78 - around £2.5K in interest.
Although my monthly payments would be lower (and I would free up some cash), I don't want to do this.
Does anyone know of any personal loans at a low rate which calculate the interest on a simple basis, so that I won't be stung for repaying early? I thought that personal loans had to stop calculating interest on early repayments in this way? Any advice gratefully received.
Right at this moment in time I am highly tempted to put the whole damn amount on the mortgage!!!
Thanks for your time,
Catta75
Am new to board so NOT an expert in these matters but def fed up of being ripped off. Would appreciate some informal advice.
I have an £8K personal unsecured loan with Northern Rock, at 5.7% over 4 years. I didn't take out PPI. I've paid off 1 year and have an outstanding balance of nearly £7K - Northern Rock calculate paying off the loan so that you repay the interest first of all (Rule of 78).
I am approaching a time in my life where I need to a) free up some cash of circa £2K, and b) reduce my monthly outgoings - rocky times ahead which I'm trying to plan for.
Considering whether to add the remaining amount on Northern Rock loan to my mortgage, together with £2K advance - total added £10K (this is possible - have checked with mortgage lender) but aware of fact that I will accrue valuation fees, administration/arrangement fees, not to mention a huge amount of interest (around £10K) on the £10K added by simply spreading the payments over the length of the time of the mortgage.
So considered extending original loan plus additional £2K borrowing over period of 10 years, then when rocky times have settled down (in circa 2 years time), repaying the loan early over a shorter time period.
Went back to Northern Rock to see if they could extend the loan over 10 years and add another £2K to outstanding balance. Found out that if I did this, and I wanted to repay early, I would be paying off the huge interest balance first of all as they would still apply the rule of 78 - around £2.5K in interest.
Although my monthly payments would be lower (and I would free up some cash), I don't want to do this.
Does anyone know of any personal loans at a low rate which calculate the interest on a simple basis, so that I won't be stung for repaying early? I thought that personal loans had to stop calculating interest on early repayments in this way? Any advice gratefully received.
Right at this moment in time I am highly tempted to put the whole damn amount on the mortgage!!!
Thanks for your time,
Catta75
0
Comments
-
I thought the rule of 78 finished in May as well.2014 Target;
To overpay CC by £1,000.
Overpayment to date : £310
2nd Purse Challenge:
£15.88 saved to date0
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