What to use the money for?!?!

missexcel

Hi,

Just after a litttle advice as I just can't make the decision!!

I have a payout due (for a crash 2 years ago!!) it will be between £1500-£2000 still tbc but will get it around the end of March.

I have a loan of £338pcm with 32 months left on it and a CC with £2400 on it which is 0% to Sept 11 (total on the card s 4k but My OH is paying half off)

Do I:
a) use the cash to pay a lump sum off my loan to reduce the overall number of payments and focus my available monthly cash on paying off the CC but ultimately not pay off in time for the 0% period end.
or
b) pay off the majority of the CC and then pay off the remaining over the coming months before the 0% period ends, then use all available cash to start chipping away at my loan.


My concern is that if I use the cash towards my loan i'm still left with a large amonut of CC debt to clear by September, after which time I could try a transfer to another card with 0% and I'll have 2 debts to tackle as opposed to one. And If I pay it off the CC I am effectively not making the most of the 0% period as my loan is charging insterest.

Any advice would be greatly appreciated!

[Deleted User]

What's the interest rate on your loan? Are overpayments allowed penalty free? And what's the APR of the CC going to be when the 0% ends?

Also, are you currently making any monthly payments towards the CC? And if so how much?

costaerer

maybe besides the point and obviously i dont know your symptoms or circumstances but i had a crash two yrs ago ago and suffer from whiplash till now and im looking at between 5k-7k....a few people i know who settled between a month - a year after a crash with whiplash got between 1k and 2k...

missexcel

Domino9 - Loan APR is 13.4%, I can make as many overpayments as I like with no penalties (minimum £100 per payment) I made sure I could do this when I took out the loan.
All I can find on my CC website is monthly interest 2.0084% which will take effect after bu 0%. I'm currently paying minimum (£40) plus £100 and anything else I can pay but not much really! My loan cripples me!!

costaerer - that's a really good point, I didnlt claim when the crash happened because I could't be bothered but my neck is always stiff and I get headaches all the time, so I responded to a marketing text and they said i'd get about 2k - how do I go about asking for more?

Superbiatch

costaerer wrote: »

maybe besides the point and obviously i dont know your symptoms or circumstances but i had a crash two yrs ago ago and suffer from whiplash till now and im looking at between 5k-7k....a few people i know who settled between a month - a year after a crash with whiplash got between 1k and 2k...

Thats a really good point, I got over 4k but I still have problems to date and every now and again pay out of my own pocket to see a private physio who maniuplates me - sounds awful, but its lovely when she releases all the pain.

Don't accept, unless you are 100% better or told you will never be 100% again, thats how I got 4k in the end.

CH27

I would pay the credit card off first so one debt is cleared ASAP then throw everything at repaying the loan.

[Deleted User]

Loan APR is 13.4%, I can make as many overpayments as I like with no penalties (minimum £100 per payment) I made sure I could do this when I took out the loan.

All I can find on my CC website is monthly interest 2.0084% which will take effect after bu 0%. I'm currently paying minimum (£40) plus £100 and anything else I can pay but not much really! My loan cripples me!!

Well if you continue paying £140/month towards your CC between now and Sept (either £1120 (140x8) or £970 (140x7) dependng on whether you've already paid Feb or not), you will then have either £1280 or £1430 remaining) - it might be worth contacting the CC company and asking what the APR will be in Sept when 0% ends.

With your current payments + lump sum you are getting you should be able to clear the CC at/before the end of the 0%. And then from Sept overpay the equivalant towards the loan (only worth doing if interest will be above loan APR.)

Another alternative would be to leave the CC as is with your current payments, or reduce to minimum payments (worth doing if either interest rate will revert to rate below loan rate, or you are likely to get a balance transfer to another 0%, or low% CC - If this is the case, overpay your lump sum, and current CC overpayment towards the loan)

HTH

missexcel

Thanks Domino! You've given me a whole new option that I hadn't even considered!! Pay lump sum off loan, only pay minimum on CC, throw my cash at my Loan.
My loan to me is my biggest expense (aside from mortgage!) and it's the one I can't reduce so I think i'd feel better chopping a bit off in a lump sum and putting my spare cash towards it each month and clear it sooner.

In the meantime i'm comfortable with my credit card, I have another with nothing on it and a 0% for 6 months offer and although this offer probably won't be there in Sept I can phone them when my 0% ends on my CC and say I have a balance to transfer and ask what they can offer!

Interest on my loan is approx £50pm so by payng off c£1.5k I'll save myself 5 payments and that's £250 in interest saved.

So I have 32 monthly payments left as of now and say I get £1500 payout, that takes it down to 27, then paying an additional £100pm makes it £438.71 per month payment so of those 27 regular payments I will only need to make 20. So by paying off a lump sum and funnelying my money toward my loan i'll save myself 12 months worth of interest!!
Of course that's all rough calculations using round figures but the saving is clear.

Thanks everyone for your advice - Think I'll also push to get more comp too!! Though I'm not good at asking for money! lol

xx