Making overpayments

sparky25

Hi all,

I have a secured loan with Welcome Finance and having now got my other finances in order, I contacted them last week to find out about making overpayments.

The phone call was a real eye opener. I took out a £10k loan over 15 years and make a payment of £245 per month. Did build up £800 in arrears which I realise my overpayments will clear before I make any headway on clearing the original loan.

Basically I make a payment of £245 every month and on the 11th of each month, they apply their interest which totals £282. I am therefore getting deeper and deeper and owing more. The guy I spoke to told me he would reduce my monthly interest rate from 2.4 to 1.2 for three months so I am hoping to not only clear the arrears but also make a dent in what I now owe. A whopping £13,000 and I've been paying it for 3 years already.

So as long as my budget allows, I am hoping to make an overpayment of £400 a month. I'm using every means possible to pay this overpayment and using the calculator on here, I should clear it in about 2 years.

I cant believe I was never contacted by Welcome to advise me that the monthly payment which they gave me doesnt even cover the interest they're charging.

I've been on here moping around for 2 years surrounded by debt and not knowing what way to turn but phoning them last week was the best thing I have done for myself in that 2 years. I have never felt more determined. I will be saving myself £32,000 in interest alone. Cant believe the difference that would make to my mortgage.

If I can clear that in two years, my goal is to clear my other secured loan which is a bit more sensible. Given myself a 5 year goal for these two loans then I aim to apply the same principles to my mortgage and even if I cant clear it earlier, I will be well pleased to reduce it. It currently stands at £183,000.

The guy at Welcome said I would only be charged 2 months interest on the outstanding balance when I phone to say I want to close the account. Does anyone have experience of Welcome. Just want to make sure the information he has given me is correct.

Thanks in anticipation.
Sparky xx

clang_uk

I'm afraid I've no experience with welcome, but my loan doesn't allow me to make over payments without charges (similar to two months payment). So this may be standard for welcome, hopefully some one with better advice will be along soon!

Kepp

Don't know if this helps for the loan you have but when I cleared a loan with Lloyds a couple of years ago, they charged 58 days interest on the final balance when you paid that.

So I overpaid till my balance was down to about £2 and then made the final payment as the interest on this was so little!

Don't know if that will help for yours but may be worth looking into.

MichCoop

I'm sorry I can be of no help either. I just wanted to say that it's criminal what you have already paid/been charged! Good luck getting things sorted out and well done for coming this far!

happyandy63

Its very common to charge a penalty for overpayments even from the high street brands. Really what they want to do is bleed us dry? I overpay my morgage by £500 as it is the maximum I can. The 1st time I did this they said we have lowered your repayments in line with your overpayment. Sounds like they are being nice but they were really squeezing every penny out of me. The best thing financially for me is to put the £500 into the balance. What they were saying is we reduce your payments so we can charge you 20 years interest on the £500