Loans (any advice please)?

Duncan_68

my wife has a 12k loan and pays £247 per month and has about 54 months to go. we have £1,500 pounds to pay into it but are not sure how to do this. there are 3 options available to us which are:

1. pay the £1,500 into the loan account and continue paying the loan?
2. pay the £1,500 in and reduce the payments by £47 pounds but increase the time period to 60 months.
3. pay the £1,500 in and keep the payments at 247 but reduce the period to 48 months.
there is a 4th option which is just keep things as they are and leave the money in the bank?

Any good advice please?

Tixy

Has the lender given you all those options (ie overpayments are definitely allowed?)

Assuming you can afford £247 a month I'd go for option 3.

Duncan_68

those were the options given to us, I was leaning that way but my wife seems to lean towards reducing the payments and extending the monthly term.

SnowTiger

Duncan_68 wrote: »

1. pay the £1,500 into the loan account and continue paying the loan?

3. pay the £1,500 in and keep the payments at 247 but reduce the period to 48 months.

Aren't options 1 and 3 effectively the same thing?

Anyway, I'd use the £1,500 to pay off part of the loan and continue making the usual payments.

Duncan_68

thanks for your reply. they are similar but not quite the same in as much as the term of the loan reduces by 6 months or so.

Tixy

Presumably option 1 is payments change to £220 or so and the repayment stays at 54months?

Essentially pay it off as quickly as you can afford to, it seems crazy to pay a lump sum off and then extend the debt, keeping you in debt longer. The quicker you pay it off the less interest you should end up paying (*probably).

ERICS_MUM

Before you commit to one of the options:


1. can you afford to use that £1500, do you still have other savings "for a rainy day" ? (sorry if its an obvious question)

2. double check that you wouldn't have to pay any fees, remaining interest or penalty charges for the option you ultimately choose.

Duncan_68

Tixy, the payments stay the same at 247.
Erics Mum, I can afford to pay the £1,500 and still have savings for a rainy day there are no extra charges