Getting so close

markwilliams82

Well back in December 2004 I took out a £16k personal loan from Nationwide. I've now paid nearly 3 years worth of payments, with my loan due to end in December 2010.

Last month I also canceled my PPI, which resulted in them sending me a cheque for (off the top of my head) approx. £850. Which I have since paid into my savings account.

I have a current settlement figure of £10,706. And £5000 in my savings account. Now although I still have £5k left to save up for (at the moment anyway, I know this will decrease with the monthly payments I repay) I'm starting to think of the best ways to finish off my loan.

From what I can think of I've come up with 3 ways to do it, I'm after your advice about which are more appropriate and suitable.

1) Keep making the payments, and saving approx £250-£300 a month until I can settle. Which could take another 9-10 months.

2) Save and make repayments for another 4 months so I have a settlement of near £3000. Take out a flexiloan with my bank HSBC, so that I can clear my £16k and deal with a £3k loan, which I can make flexible payments with and repay a lot sooner than the term of the loan.

3) Pay the £5000 I have at the moment as a lump sum payment towards the settlement, and see how things go from there (ALTHOUGH I HAVE NO IDEA OF HOW MY LOAN WOULD WORK AFTER MAKING A LUMP SUM PAYMENT)

Any help would be appreciated as I'm very stuck and very keen to repay off this loan so I can move onto my next chapter in my life with my partner, and move out etc:D

markwilliams82

Meant to add, my opinion is that option "2" Take out a small loan to clear my big loan and make flexible repayments is my preferred option, as this will give me the boost of cutting a £16k loan down to a £4 loan. Going without any PPI, and having a smaller loan which should result in less interest being paid and money being lost by me

hopeless_case_2

Well i would have thought your best option would be to ring the bank and ask what your settlement figure would be. Also if you py the £5000 off now and continue your monthly payments as normal and then pay in the amount you save each month i would think this would pay everything off much quicker and save you mney in interest.

markwilliams82

Well I rang Nationwide, and my settlement figure to be exact is £10762.77 (which includes an interest refund) and thats valid until 19th December 2007. Obviously deducting any monthly payments I make in the mean time.

However if I was to pay a lump sum of £5000, that £5000 would be deducted from the higher figure of £11889.06. With my monthly payments staying the same, and the loan term being reduced (she couldn't tell me exactly what it would be reduced to)

jonesMUFCforever

I would overpay the loan you have now NOT take out a new smaller loan.
Look around at all lenders they ALL charge more for under £5k than they do for bigger loans.