Help!! I want to pay off my loan early!

sunshine_shell

I have a loan of £7,500 with A&L and i pay £160 off every month but soon my boyfriend will be moving in with me freeing up some money and i want to use it to pay of this loan... what is the best way of doing it,

a) to save up the money earn interest on it and then try and pay it off

b) ring them up and tell them i want to increase the payments if they let me?

Please help i'm not sure how i go about doing this!

Thanks

Michelle

Burlesque_Babe

Why not ring them up and ask if you can make overpayments?

How much interest do you get on your savings? Is it more than the APR on the loan?

peb

Okay. First thing to find out is what the situation is with regard to interest. If it is frontloaded then there is no benefit to paying it off early, other than for your peace of mind. Check this out and, if so, then consider whether to put the money in a saving account and earn interest on it or make overpayments. If you save up all the money you can repay it all; if you ask for an full and final be careful that your credit rating is not damaged; other posters can help.

sunshine_shell

i'll give them a ring... thanks!

sunshine_shell

The loan is 6.7%

I gave them a ring... very unhelpful man told me i wasn't allowed to make over payments because that is what i took out for that amount of time. He said the only way to increase the payments was to take out more finance and reduce the term of the payment.

But he did suggest that a save in a lump some and that settle the account like that.

So miserable about it so i'm going to throw as much money as i can into my savings account so i can pay the !!!!!! off!!

Burlesque_Babe

Good for you - check out the savings board for the thread about the best account to put it in. The Yorkshire are paying 7% if you can put a regular amount in (£10 -£500 per month) as long as you don't withdraw more than one amount a year (I think)

B2B-2008

My partner had an A&L loan that I made overpayments to every month!

We didn't increase the payment we kept it as it was but they let us set up a standing order and we made overpayments via that.

In_Search_Of_Me

Depends on the loan you have...sme you cant overpay on and as OP said if its front loaded then there is no benefit to you in paying it early. I can totally understand the frustration as I have two loooong loans, both front loaded that I am stuck with for years. If you take out a new loan you'll just be paying interest twice so no point & much better to put money into savings and at least have a fall back fund! The lessons we learn the hard way eh!

sunshine_shell

Thanks, it is front loaded so i'm just save up so i can pay it off quicker

Thanks again:beer:

pandapaws

We wanted to pay off a loan but weren't allowed to make overpayments, so what we did (obviously depends on your circumstances) was get a 0% credit card and draw the whole lot out as cash (be careful as some treat cash differently for 0% purposes - we actually did ours as a payment to ourselves through Paypal to avoid that!), pay off the loan in full with that money, and now we just pay the credit card by standing order at an amount that suits us.

The 3 benefits from that are that the settlement figure on the loan was a lot less than we owed on it as they refunded all but 2 months of the interest not yet paid, we now have it as a 0% debt for a year rather than at the 8ish% it was as a loan, and because it is a credit card we can pay any amount to it as and when we like.

Not suitable for everyone, but maybe worth looking into? If you're interested, have a look at Virgin first, as they're generous with their 0% deals, and they'll transfer the money straight into your bank account at 0% as well.