Can I get a loan that I can overpay on?

mrmajika

MORPH3US wrote: »

Thats incorrect (at least it is the way I read it)

"Yes you can make overpayments at any time. Your monthly payment will not reduce and the total amount of interest paid will remain the same unless you settle your loan in full. As overpayments reduce your outstanding balance, you may be able to pay the loan off earlier than expected, as your loan term will reduce in line with any overpayments made. If you do pay off the loan early you may be entitled to a rebate of interest, which is calculated using the formulae prescribed by the Consumer Credit Act 1974."

I.e. the overpayments won't save you any interest until the whole thing is paid off so as I said, you'd be better sticking it in an ISA and paying it off sooner and earning some money back...

M

You are quite right. It looks like Northern Rock front load the interest and then rebate it as and when it's time to pay it off, so the idea of putting it in a savings account until you have enough to pay it off early would make more sense.:beer:

peterg1965

You can overpay with Marks and Spencer loans too. I have recently taken one out and have been overpaying into the loan account straight from my Internet bank account. Very quick and easy. The monthly payment remains the same, it is the 'term' of the loans that gets shortened I believe.

Tr@cker

If you're going to overpay then i reckon Egg is one of the best, the APR might be a bit above the best-though not that much-but the majority use the horrible 'rule 78' for calculating rebates which if you pay up really early is an antiquated, monsterous rip-off.

DesG

Tr@cker wrote: »

If you're going to overpay then i reckon Egg is one of the best, the APR might be a bit above the best-though not that much-but the majority use the horrible 'rule 78' for calculating rebates which if you pay up really early is an antiquated, monsterous rip-off.

Rule of 7/8's has not been allowed for quite a while now in the UK.

Cheers, Des.