Loan Repayment plan; flaw??

jock23

Hello,


Bear with me on this one, any comments will be gratefully received.


Last August I took a loan out with HSBC (my bank at the time) to consolidate a lot of credit card debts that I had. Although many disapprove of doing this it really turned my finances around, despite the loan being at the rate of 15.9% over 42 months.


I am now looking at ways of getting this loan (30 months left) paid off early. Can anyone see a flaw in the below plan?


-Currently paying £352 a month off, debt outstanding is £10,560 including interest.
-Bonus at work this winter, after dealing with Christmas and having a decent amount set aside for a rainy day I reckon I can pay off minimum £1500 in a lump sum.
-Keep paying loan (with hopefully a few extra payments on good months) until my early settlement figure is £4000. I reckon this is going to be about August next year by my calculations (give or take a few months)
-Credit card with about £4000 spare on it (other balance is all very low interest rate) that I can transfer into my bank account at 0% for 10 months. Use this £4000 to pay off my load completely.
-Start paying off my credit card at £352 a month (plus what I am currently paying each month).


The only sticking points that I can see are any charges HSBC may through my way in terms of early repayment? Obviously this depends on Barclaycard still offering the 0% deal next year, but they have been ramming it down my throat for the last year so can't see why not.


Sorry its so long, thanks for sticking with it if you did!


Opinions?

Tixy

You'd need to check the T&Cs on your loan, however I think that HSBC don't levy any charge for the extra overpayments you make during the loan. They will, like pretty much all loan providers, charge you 58 days interest at the point you repay in full.

Sounds like a reasonable plan and likely to save you quite a bit in interest. Ideally you'd want to be paying off just over £400 a month to the credit card once transferred, so that the promo balance & bt fee are cleared before the end of the promo period (assuming that they are offering money transfers and it is still for 10months).

bargainbetty

You also need to allow for the % transfer fee that you will pay moving it over - probably 2 or 3% of balance. This can catch you out, so I'd make one extra payment on the loan so it is well below your card limit, so the charges don't push you over and mess up your nice 0% rate.

jodles16

Sounds like a really well thought out plan! I would check out the early repayment aspect, and check where you stand. Otherwise using a 0% bank card is a great idea to to get interest free, perhaps work out how much you would need to pay a month to pay it off before 0% ends, but you can always tart it if that happens!

Good luck!

Jodles :j

jock23

wow happy with those responses, appreciate it. I know there are a few little points to look out for in the finer detail but this way I reckon my "loan" could be paid off by August next year then it's all just on a credit card with can be paid off a lot easier.

Considering my initial option was looking to get another better rate loan, glad I had this flash of inspiration.

Fingers crossed that Barclaycard don't suddenly change their minds!

catriona79

Could you not get a 0% card now instead of later? Then you'd have at least some of the balance on 0% instead of 15.9%?
Is there a reasons you don't want to go back to 0% balance transfers?