Nationwide Loan

markwilliams82

Hey everyone, I'm new to these forums. I have been looking for somewhere to discuss finances and loans for a while and found this to be the most helpful.

Basically in December 2004 I took out a £16,000 loan over a period of 6 years meaning I repay £310 a month (which is comfortably affordable) but now that I have a serious partner obviously I have part of my mind on moving out when the time is right etc etc. As your mind does think these things with a partner.

I currently have 4 years left on my loan, and although it doesnt really bother me I do have my moments when the loan depresses me and I want to pay it off as soon as possible. Very hard to do as my settlement figure at the moment is nearly £13000 and I have about £1000 in my savings.

I know I am not really asking much at the moment, but basically the main reason for registering and posting a message is to let things off my chest and put my situation out there to some people to see what kind of recommendations I could get.

I have thought of three options myself;

1. Get a smaller loan and over 3 years to repay the one I currently have

2. Save money so that in 2-3 years I might have enough in my savings to pay off my loan

3. Keep paying it off and save at the same time so that when my loan is paid off i have savings available to use for moving out etc

I know I've wrote alot and can be quite detailed but I would appreciate some opinions and advice.

Thanks

RHYSDAD

I personally think your second option is the best as that is what we done in the same situation.

We had an £8000 loan over 60 months which was £10080 repayable approx.
We paid loan off at monthly intervals for 18 months, got an early settlement figure just recently, paid it in full out of our savings and saved £1100 approx in interest overall.
We are now debt free apart from monthly house running etc and it don't half feel great!!
Your loan is twice what ours was but if you grit your teeth, cut down on your life a lot, in 2-3 years (assuming no more accumulated debt) you could be debt free!!
And £310 extra per month is a very nice figure to have to save.
Very nice feeling i can tell you!!

Very best of luck to you

Rafter

Hi there Mark,

Welcome to Moneysavingexpert!

OK.

That looks like rather an expensive loan, especially for nationwide. Did you take out payment protection insurance by any chance? The settlement value suggests you have.

If so, cancel it and if you really need insurance, get some income protection insurance somewhere else for a lower premium.

Nationwide are a good lender though, and will allow you to make additional repayments I think. There is no point having savings earning 4% in the bank if you are paying 10% on a loan.

Is this your only borrowing? If you have credit cards the rate may be even higher and you should prioritise paying these off first.

Regarding your 3 options.

1. If you can afford to make higher payments, you could reschedule your loan over a shorter period so you are 'debt free' in 2-3 years rather than 4.

2. No point in saving at a low interest rate while borrowing at a higher one.

3. See 2 above!

Other ideas for you.

Apply for a life of balance credit card and transfer some of your balance there. At 3.9% you will be paying much lower interest.

Apply for a zero % credit card and transfer the balance or use this for all your regular purchase while using the cash saved to repay your loan.

Have a look through the forums and set yourself a goal for how much money you could save a month by..... switching bank account, utilities, phone and mobile companies.

Some people on here have made drastic lifestyle changes in order to repay debts or mortgages rapidly. But even with modest changes you can save a fair bit.

Good luck and post back if you have any questions about my ideas.

R.

markwilliams82

Thank you both for such quick helpful replies.

As for the loan itself, yes it does include protection, I took it out as a precaution because the job that I was originally in wasnt very secure and was very close to closing down (Which the work place now has and made all the employees redundant) but luckily I am now in a new job which seems to be quite comfortable. So that was the main reason I took out the protection.

I rang up the Nationwide today to try to adjust my repayments but the very helpful and happy person on the phone told me they dont do that, two months after someone told me I could.
Do you think that I can change repayments and opt out of the protection now that I have already started paying it?

Anyway of reducing the settlement or period would be very helpful.

The loan itself is my only debt and I have no credit cards or anything, just the one bank account with debit card and this one loan...
I understand credit cards could help me out but its a situation I would rather steer clear off which I hope you can understand.

As for switching my bank account, I am currently with the HSBC and I am very tempted to switch to another bank, as I read that other "smaller" banks offer higher interest and no charges...Any recommendations on this front also would be appreciated, as I have been looking at the Nationwide bank.

My monthly outgoings aren't actually too bad, I pay out the £310 a month for my loan, £65 for car insurance (which is due for renewal very soon so hopefully can lower that), £30 phone contract (which again is due for renewal soon and i will be looking for a cheaper one) and petrol. Usually leaving me in the region of £200-£300 a month for savings and a life. But although I am only 24 drinking, getting drunk and smoking are things I dont do so the majority of my free money does go on savings.

RHYSDAD, congratulations on paying off your loan early. And an extra £300 a month would be amazing you're right.

kathyd_2

My son took out quite a large loan, including PPI, with Nationwide while living away from home. He returned home and decided to get to grips with his finances. First off, he telephoned Nationwide and asked them if it was possible to cancel the PPI. Not a problem. He'd had the loan for about 6/7 months at this point. We thought they would in effect, have to cancel or settle the loan with a new loan without the PPI. However, what they did was to reimburse the remaining PPI payments which amounted to almost £1000. With this money he paid a lump sum off the balance of the loan reducing the term of the loan by almost 12 months rather than reducing the payment amount. Not sure if there is a penalty clause for settling the loan early, which is what will happen.

Can't quite get my head around whether or not he's still paying interest on the original PPI amount which is added to the original loan.

Jaymz

I haven't read the posts other than the OP's but I took out an £8000 loan with Nationwide last November and cleared it earlier this week (took a lot of hard work and many sacrifices) but I managed to do it by making overpayments.

markwilliams82

Jaymz - how were you able to make extra payments? changing your direct debit?


kathyd - did your son have to say anything in particular to cancel the PPI? i dont want to ring them up and be turned down flat with no argument