Loan Help Please

claire_206

Hi All

I am really after some advice, I took a loan out 4 years ago with Northern Rock at 7.9% for £8000 over 10 years. I pay £96 a month.
After 4 years I have worked out I have paid approx £4590, still got £6887 to go.
I have contacted them for a settlement figure which was roughly £5800.
Which means I'd only been approx £1000 better off settling now - approx £166 a year I would save.
I can't get my head around the figures - if anybody can help/offer any advice I don't know whether to get a loan over a shorter period to pay it off or maybe use a 0% credit card. I just don't want another 6 years of this loan around my neck if that's possible!

Any help greatly appreciated - what would you do!? Thank you!

iolanthe07

It is because you pay the interest up front. In the early years of a long loan most of the payments go towards the interest rather than the capital; it is only in the last few years that real inroads are made into the capital amount. That is why settlement figures half way through are disappointing. It woul all have been in the terms and conditions you signed. Actually 7.9% isn't bad these days and if I was in your position I think I would leave it alone. You would be lucky to get a new loan at 7.9%.