Wanting to clear this annoying little weight off my shoulders.

fluffy123

Hi all, hope you are well.

I'll let you know where I stand at the minute. I'm currently around 8 months into a 4-year loan of £11,000 which I pay back via £270 per month. This was to consolidate existing debts. Along with this, at the end of my working month, my overdraft is usually around £1300 overdrawn.

5 Years ago I sought a Career development loan which I never completed due to illness and this is where most of the 'weight' has come from through this loan.

I want to try and clear this 'weight' in a shorter amount of time. I can afford to pay it off with my job, thankfully. However, it is just that it leaves me little left at the end of the month to do that much and I have to scrimp and save with what I do for 'entertainment'. Plus it means that whilst the overdraft is being reduced, it is being reduced slowly.

My current thinking is my car. It cost me around £6,500 two years ago and I'm wondering whether it would be worth selling the car and then purchasing an older, smaller, more economical one for say, £1,000. I don't use the car that much in all honesty, journeys to see family etc etc once or twice a week, so something like that might suffice. I could then throw the remainder off to pay the loan off.

This could seemingly reduce my loan repayment time by a couple of years? Perhaps whatever is left could even be possibly be dealt with with a super balance transfer and this could reduce further?

I just feel that until this loan is handled, I'll never be able to tackle this overdraft properly. For example, I could have it paid within 4-5 months if I didn't have the loan payment too.

What do people think of my initial ideas? Thanks in advance for your opinions and thoughts.

Fiddlestick

fluffy123 wrote: »

My current thinking is my car. It cost me around £6,500 two years ago and I'm wondering whether it would be worth selling the car and then purchasing an older, smaller, more economical one for say, £1,000. I don't use the car that much in all honesty, journeys to see family etc etc once or twice a week, so something like that might suffice. I could then throw the remainder off to pay the loan off.

Do your CBT and purchase a small motorcycle or a scooter instead - it's cheaper to tax and run than a car

twistedmoosie

Hi fluffy 123,

I had a similar situation last year and chose to sell my car as my only real asset. Be warned, in this market it is not easy to sell cars privately, and it's very unlikely you'll get what you think it's worth. Just a sign of the times! However getting a reasonable amount for it is definitely a good thing. Older cars often require more money initially throwing at them to keep them going e.g. expensive new tyres. Consider not replacing it at all if you can, it's a definite luxury if you're not using it much - you would remove your future liability towards all the extras (MOT, insurance, tax) and putting a spring in your step from taking an extra leap towards getting rid of the debt earlier - there's nothing to beat that feeling!!

I miss driving my car for the fun of it, but I reach my family with only a bit of extra inconvenience by train, and get my shopping delivered by ordering online. Not everyone can get rid of their car, but if you can there are ways of doing the same things and still spending less

I'd use the money to get rid of the overdraft first, and make sure you don't get back into it, then use the rest as an extra loan payment (or credit cards, if you have any). One thing though - make sure you're not going to get penalised via a hefty fee for an extra payment, I know on mine you do.

fluffy123

Nice to know people don't think I'm mad anyway! good ideas, I kind of feel stuck into needing some sort of 'run around' hence thinking a cheap little car to get me from A to B might work. I'd guess that'd depend on what the value of my actual car is I guess.

Or....I win a competition and pay the lot off! I can dream! ha!

Percy1983

Selling the car and getting a cheap runabout sounds an excellent idea.

One word of advice, don't overpay your loan. In basic terms if you make higher payments if only shortens the term and not the interest, where is you want to settle it in full they can only charge to months interest.

So basically sell the car, but a cheaper one and get out of your overdraft. Then start saving as much as you can and get a reasonable savings account, keep putting what you can afford in thereand keep paying your loan, eventually you savings will equal whats left on the loan and then pay it in full.