Help me choose between 2 loans?

cw635

Hello, I've been approved for 2 debt consolidation loans;

£6500 over 72 months at 8.9% repaying £115.89 a month (Northern Rock)

£7000 over 60 months at 7.9% repaying £142 a month (Mint)

I realise that I should take the Mint one as it's shorter and therefore cheaper but the appeal of the Northern Rock one is that it allows overpayments and no penalty for early repayment. I like the idea of increasing payments when I can but then having the flexibility of the lower payment when I need the money for other things.

I don't really understand how overpayments work; the Northern Rock terms say that the interest paid will remain the same but the length of the loan will be shorter so does this mean that overpaying doesn't actually save me money? That was the reason I had for considering overpayments. I'd be grateful for your opinions. Thanks!

CLAPTON

Northern Rock is a bad deal if you want to overpay.. so it makes no sense to overpay.... you should simply save the money in a savings account until you can pay the whole lot off... in other words just like the Mint loan.

So there is really little difference between the two loans as far as early repayment is concerned.

However even better avoid getting a loan in the first place then you wont have to pay any interest at all.

SlyOne_2

CLAPTON wrote: »

However even better avoid getting a loan in the first place then you wont have to pay any interest at all.

If this is for debt consolidation, then surely there are other loans at higher interest, so getting a loan is a good idea. Do cut up the credit cards though - temptation is a sin

thebroker1980

cw635 wrote: »

I realise that I should take the Mint one as it's shorter and therefore cheaper
I don't really understand how overpayments work; the Northern Rock terms say that the interest paid will remain the same but the length of the loan will be shorter so does this mean that overpaying doesn't actually save me money? That was the reason I had for considering overpayments. I'd be grateful for your opinions. Thanks!

I would go for the mint one at a lower APR, but be careful of the Payment protection as it is sometimes so over priced you will be paying more for PP the interest. Find cheaper insurance online.