Making small overpayments on a loan??

chescadanielle

Hi All,

Just a quick question ...

I have today worked out that on my 'big' loan my last payment will be in January 2014 which I pay £263 a month on.

I am on a very tight budget and basically have £150 a month left to 'live on' once all my bills etc are paid.

Is it worth paying an extra £5/10 a month off my loan? My aim is to try and increase it gradually.

Any advice would be great

[Deleted User]

I would say yes - if you have the spare cash then any extra payments no matter how small all mean that your debt will be gone quicker.

I do that at the end of the month with whatever is left in my account(mostly its zero!)cos it all helps.

Dxxx

Tixy

Is this loan your only debt?
If you have other debts then check the APRs on all - it may be better to pay the extra £5/£10 elsewhere instead.

If this is your only, or most expensive debt then you'll need to check your agreement or call your provider to see if they will allow overpayments. If they won't and as you are on a tight budget then it might be better trying to put the £5/£10 and whatever else you can afford into a separate savings account - that means you can access it in an emergency but that if you don't need it it will grow so that you might eventually build up enough to pay off the loan early.

*zippy*

I found with my loan I have to ring them before I make each overpayment to tell them to take it off the balance, so decided to put it into savings and do every few months rather than have to ring them every month. Best to check with who you are with on how they like it done.

If you use the snowball calculator it will tell you how much interest you will save making overpayments

http://www.whatsthecost.com/snowball.aspx

chescadanielle

hmm,
actually as I have thought about it I would prob be better making small payments to a HFC credit card I have instead - the APR for that is 39% while the APR for the loan is 16%

I have previously checked about making an overpayment on my loan and they said to set up a seperate standing order.

Ive just got the loan and credit card but am trying desperately to save money in every way I can just to make a bit of a difference on them

Thanks for the replies xx

anh1904

At 39%, the card simply HAS to be the priority with any spare cash.