Extra payments

psychopathbabble

ollow wrote: »

Thank you I have joined an extra payment a week and made my first payment only £1.35 but hey it's gotta help.

Every little helps in the name of a supermarket! It all goes a long way

Charityworker

Does that all also apply to loans? Last year I sent them an overpayment once a month for however much I'd managed to save. Some months it was only £10 and others it was £400 odd.

This year I thought I would save it up for a whole year and send them a cheque at the end of the year for however much I've saved.

So on a loan of 7.2 apr which of the above methods is best?

anh1904

A lot of loans apply all of the interest up front, so apart from when yuo do a full and final, I am not sure what overpaying actually achieves. It's worth calling them up to find out.

psychopathbabble

It does save a bit, although the first payments are made up of more interest than the last payments. I repaid my loan about 4 months early and saved about £30.

I'd say keep sending them payments Charity Worker... if you keep paying and managed to make your last payment say 6 months early, then would that not be the same thing as a full and final?

anh1904

It still depends.

10,000 over 1 yr with a 10% interest rate, the initial balance is £11,000 and the payments decrease the overall balance (no interest is applied at all during the loan term)

Others do interest calculations daily, others monthly, some semi-annually (if they're still allowed to).

Unless you know which way your lender deals with it, the only way to find out is to call up and ask.

Charityworker

Well I know that they added the interest on when I first got it and I spent the first year just paying off the interest amount. The sooner I get it paid off though the better as having all that hanging over me is worrying me too much.