What to pay first?

Auntyem

Hello, I am really hoping for some expert advice as I am getting v confused with my figures

I have been targeting my highest interest rate for overpayment, but am not sure if this is the best way forward. The reason being one of them is over a very long term costing loads in interest every month even though the APR is lower than the rest.

Here are the details:

• De-Linked Loan from old mortgage: £11500, 12.79% APR, 397 month term :eek:. My minimum payment minus the interest equals 40p per month knocked off the balance. Cost of interest monthly = £123.
• Flexi Loan: £1039, 21.9% APR, 27 months remaining if I pay ony the minimum. Interest cost per month = £18. *I have been overpaying this one*
• Overdraft: £715, 19% APR, interest cost £8 per month
• Credit Card: £464, 16.6% APR, interest cost £8 per month.

All advice welcome as I just want to clear it all as quickly as possible. Thanks, Em

easy

Auntyem wrote: »

Hello, I am really hoping for some expert advice as I am getting v confused with my figures

I have been targeting my highest interest rate for overpayment, but am not sure if this is the best way forward. The reason being one of them is over a very long term costing loads in interest every month even though the APR is lower than the rest.


Here are the details:

• De-Linked Loan from old mortgage: £11500, 12.79% APR, 397 month term :eek:. My minimum payment minus the interest equals 40p per month knocked off the balance. Cost of interest monthly = £123.
• Flexi Loan: £1039, 21.9% APR, 27 months remaining if I pay ony the minimum. Interest cost per month = £18. *I have been overpaying this one*
• Overdraft: £715, 19% APR, interest cost £8 per month
• Credit Card: £464, 16.6% APR, interest cost £8 per month.

All advice welcome as I just want to clear it all as quickly as possible. Thanks, Em

Are you in a good position to get hold of another card? If I was you, I'd try applying for a low-rate for life credit card balance transfer, and shift the outstanding credit card, flexi-loan and overdraft to that if at all possible. Then any money you do throw at it hits more of the capital balance.

Then you could hopefully chuck more than the minimum payment at the longer-term loan.

If your credit rating is OK, you might be able to shift the longer-term loan to a lower rate loan too (currently 7.5% seems to be available), but would you get caught by early resettlement fees?

Two9A

The standard way of going about things would be to clear the highest APR first, as you're pushing to do. The fact that you're only dropping £0.40 on the balance of the big loan is a problem, though.

If you're looking to clear it all in the shortest time, I'd move your overpayments to the big loan. It'll clear the capital on the big loan more quickly, but extend the life of the flexi loan somewhat.

Hope that helps a bit.

Auntyem

Easy, thanks. I will have a look at LOB rates.

easy wrote: »

If your credit rating is OK, you might be able to shift the longer-term loan to a lower rate loan too (currently 7.5% seems to be available), but would you get caught by early resettlement fees?

I think my rating is fine and I thought about doing this, but the thing that's putting me off is none of the available products allow overpayment, whereas the current one does.

eta: and there is no settlement fee either (northern rock are gagging to get rid of these products).

Auntyem

Two9A wrote: »

If you're looking to clear it all in the shortest time, I'd move your overpayments to the big loan. It'll clear the capital on the big loan more quickly, but extend the life of the flexi loan somewhat.

It definitely does thankyou, I just needed others to sanity check my instincts on this.