Loan Advice

charnny95

Looking for advice on a loan please. I currently have a loan with the AA which has the following :

Time left on loan : 40 months
Monthly payment : £153 per month
Total left to pay : £6120
Early Settlement : £5389

forgive me because I am not to savvy with finance, but if I pay the loan early I will save roughly £730. I don't have the loan amount to pay off in full but have a decent credit rating now I think I have two options :

1. Get a 0% credit card and keep switching but then am I charged to switch?
2. Someone I know also suggested writing to the loan company and saying they wont see any of their money unless they accept 50% of the balance immediately .

Any advice anyone , thanks in advance for all replies.

Tixy

Option 1
You would be lucky to get a super transfer 0% card with a sufficent limit to move over £5389 in debt. And you'd be charged a fee (around 4% depending on which of the few SBT lenders you went for). So you might need to apply for more than 1 card, and that might not be successful as you might look desperate for credit and be turned down.

Then after the 0% period you would have to hope to get a new card (again a switching fee of probably around 3% of the balance), if you couldn't get further 0% deals you could be stuck paying the debt at an interest rate much higher than your loan (20% or more).

Even if you could do it you would be looking at first transfer fee of £216, if you were lucky and got a 14month deal and continued to pay £153 per month the balance would then be £3463, so the fee would then be maybe £104 and then after another 12months you might have another fee of £52 quid or so. So in total you would likely be paying a minimum of £370 in fees, so you wouldn't actually be saving £730 overall.

And I suspect in reality your plan would fall down long before you paid off the balance and you'd end up paying much more in interest.

In general AA loans are not bad in terms of APR and you may well be better off just keeping it as is.

Option 2 - won't happen. If you have kept up to date with repayments and can afford to continue to do so no reason AA would accept a 50% settlement. And for that balance might well take you to court which would result in a CCJ against you.

drbesty

Option 3, just pay the loan off as agreed