Debt Repayment

paulie38

Hi all, I'm after a bit of advice. I have had a debt with Nat West for about 7 years. I have been repaying it monthly, with a yearly payment review, when my payments have increased year on year. Finally, I'm down to my last £5000 of debt to repay. I've just had my recent review where my payments were increased to £400 pm.
I may be in a position in the next month or 2 to repay what is left. The balance is not accruing any interest, so my question is, would there be any benefit to me in paying the balance of as a lump sum, or should I just carry on the monthly payments?
TIA

McKneff

Me personally, if I had a debt hanging around my neck for 7 years, I would be bluddy ecstatic if I could clear it all at once so I would be free and clear.


But everyone is differerent.

bennyhill_2

There's the psychological benefit I guess. Have you checked the CRA's to ensure the default marker has been dropped? If not, you could arguably benefit by paying the balance in full (so that the account is marked as settled in full).

Having said that, if there's no default marker showing and you've got an emergency fund in place, and there's no other debts attracting interest, and (sorry!) you don't have a 'better' use for this windfall, I'd say pay it off. If any of the above is not true, I'd say use the money elsewhere - or as an alternative you could ask (again if the default marker has dropped) for a F&F settlement figure which may get you a discount off the balance owed (IMHO if the default marker is in place, dependent on the age, ie: when it's due to drop off, there's little point in not keeping the money - or some of it - for yourself).

Sorry that's a bit long winded...

sourcrates

Make them an offer to clear the balance, you should be able to get 20-30% discount easy.

[Deleted User]

Do you have any other debts, even ones that haven't defaulted?

If yes, and they are accruing interest (even if at a low APR), then use any spare cash to pay them off first.