Overpaying on a loan

carl310166

I have been considering transfering my car loan which is £14,000 at (7.9%) onto 2 credit cards at 0%.

I rang the loan company for a settlement figure.While i was on the phone,i was asked the reason for settleing the loan,i said it was to reduce the interest as much as possible.

The advisor told me that i could make overpayments either every month,or by lump sums as and when i wanted to,and they would only charge me interest on what was outstanding,to be honest,i can't remember her exact words,so i was wondering if anybody was familiar with what this would mean?

The only reason for not having done the transfer to the credit cards that i am a little bit worried about not being to get another two 0% CC's in six months time,even though i have cancelled approx £48,000 of unused credit card limits on several unused cards in the last month or so,i am in the process of cancelling another £15,000 at the moment.

So,could anybody advise on whether the overpaying on the loan is O.K as it is a bit more SAFE to know that i will be paying it every month,or give me a bit of confidence to go for the interest free option,but a bit of a gamble as i feel uneasy about putting £14k on the cards.

The maximum i can save or overpay is about £1000 per month,but would need to take a break from this when going on my summer holiday in Sept.

I know there are some really informed people on this forum,and i may show the wife your answers,as i might have to convince her about transfering to the 0% option.

One of the cards in an Egg (£4,500 limit)which runs out in Sept,but my anni is in Jan,and i feel if i could get the balance back there in Jan,i would be O.K

Sorry for the long post,but i need to be sure.

Thanks in advance.

Debt_Free_Chick

So,could anybody advise on whether the overpaying on the loan is O.K as it is a bit more SAFE to know that i will be paying it every month,or give me a bit of confidence to go for the interest free option,but a bit of a gamble as i feel uneasy about putting £14k on the cards.

Firstly check the terms & conditions of the loan to see if there's anything there.

Then, get the situation confirmed in writing by the loan company.

If you can overpay, as they say, and they do only charge interest on the amount outstanding, then I would go that route. It's not common for loan companies to allow this, so get it in writing

moggins

We can do this with our loan too, we borrowed £5K to buy a car and do some repairs around the house, we did check at the time if there was a penalty for early repayment and there wasn't.

We took the loan out over 10 years because the repayment of £77 per month was all we thought we could afford, however after joining here we've worked out that by paying £95 per month instead we will cut the life of the loan by 5 years and save approximately £4K in interest.

mountainofdebt

I have a loan where I can make overpayments without any penalty so its not uncommon but as others have said check again and get it in writing.

However one thought struck me is if you can get some of the debt onto 0% cards why not transfer upto the limit on those cards? Make sufficient payments on the cards so that you clear the balances within the 0% period and pay anything extra into the loan?

carl310166

Thanks,i will ring them again on Monday.