What should I do?

Jaymz

I have a Nationwide Loan I took out last November for £8000 over 3 years @ 6.7% for which I used to buy a car. Since signing up on here I wanted to try and pay it off as soon as possible because I don't like the fact I am in *debt*.
Since May I have been making overpayments by using savings and the amount has been coming down, I currently owe £2665.88 (phoned up today for an ourstanding balance).
My regular payment is £245.20 which comes out on the 19-21st of each month and then a few days later I post a cheque for the overpayment. Last month I made an overpayment of £300 and for some reason it didn't bring it down as much as I had hoped (I expected it to go down just over £300 which would include interest but it didn't - it seemed like it brought the amount down by about £260ish).
Now obviously I want to get this loan paid off as soon as possible but I want to go about it the right way. Is making overpayments each month worthwhile or should I just save up the remaining amount left on my loan and make a final payment that way? I will obviously continue to make the regular monthly payments.
I know I can have this loan cleared in less than 3 months if I stay on target
Hope this makes some sort of sense! Thanks in advance

mrcow

If you're only talking 3 months left, then in reality, it's not going to make a massive amount of difference (you are probably paying slight more in APR on your loan that you would perhaps be getting if the money was instead in a savings account).

If the discipline of sending the cheque each month is working for you, then personally I'd say carry on (and well done!! :beer: BTW!).

About the loan figure not going down by the amount you expected, was this perhaps because they'd added the monthly interest in the interim period?

Jaymz

mrcow wrote:

If you're only talking 3 months left, then in reality, it's not going to make a massive amount of difference (you are probably paying slight more in APR on your loan that you would perhaps be getting if the money was instead in a savings account).

If the discipline of sending the cheque each month is working for you, then personally I'd say carry on (and well done!! :beer: BTW!).

About the loan figure not going down by the amount you expected, was this perhaps because they'd added the monthly interest in the interim period?

Wow, thanks for such a quick reply! Its been hard work getting the amount down to what it is but thankfully my rent is quite cheap and I have been cutting back in other areas

I think you're right about the interest actually, I should of asked about that but nevermind. Paying off a chunk each month has been working to a degree but I think I will just transfer the money I have been using to overpay the loan into another account and then use that in 3 months to clear the loan outright. The difference it will make in interest on the loan will probably be pence anyway!

Thanks again mrcow!

mrcow

After you've paid it all off, try and stick to the discipline of putting that regular payment (and the overpayment!) into a savings account.

If you carry on as you have been, by November 2007 you could have £8k in your pocket to do what you want with.