New loan, opportunity to halve it

Shade-

Hi all,

About 2 months ago I took out a loan for £9.5k/18 months to consolidate a few other debts. I'm about to go into the second month now so the outstanding balance is £8.5k. I took it because the rates on my old one and CC were naff, this loan works out at only paying about £400 or £500 in interest over the term which seemed a no brainer. Figured I'd go for a fairly aggressive strategy and get it paid off relatively quickly. It works out at £554 p/m.

Anyway, as a brief background - no other debts aside from a PCP car and I don't struggle at all to make the monthly payments on either. Never missed a payment, had a CCJ, or anything like that.

Anyway, my question is this - I'm about to receive a not inconsiderable tax rebate (to the tune of £5k or so) and I want to know what to do with it. Do I overpay £5k on the loan and reduce my monthly payment, do I keep the monthly payment and reduce the duration or do I do something else with it?

Thanks for any advice.

[Deleted User]

Will they actually allow you to reduce payments? That's fairly rare.

But to minimise interest, you should clear as quickly as possible.

Only do something different if you can get a better return.

Shade-

Yeah they've said I have either option available.

Clive_Woody

Shade- wrote: »

Hi all,

About 2 months ago I took out a loan for £9.5k/18 months to consolidate a few other debts. I'm about to go into the second month now so the outstanding balance is £8.5k. I took it because the rates on my old one and CC were naff, this loan works out at only paying about £400 or £500 in interest over the term which seemed a no brainer. Figured I'd go for a fairly aggressive strategy and get it paid off relatively quickly. It works out at £554 p/m.

Anyway, as a brief background - no other debts aside from a PCP car and I don't struggle at all to make the monthly payments on either. Never missed a payment, had a CCJ, or anything like that.

Anyway, my question is this - I'm about to receive a not inconsiderable tax rebate (to the tune of £5k or so) and I want to know what to do with it. Do I overpay £5k on the loan and reduce my monthly payment, do I keep the monthly payment and reduce the duration or do I do something else with it?

Thanks for any advice.

Personally I would shorten the duration and be rid of the loan sooner :money:

[Deleted User]

Clive_Woody wrote: »

Personally I would shorten the duration and be rid of the loan sooner :money:

Second that - loan gone by end of January. Nice start to the new year/decade.

redux

Deleted_User wrote: »

Only do something different if you can get a better return.

Given that an online loan calculator says the rate on this is about 6.2%, that's unlikely without investment risk, so paying back a big chunk definitely looks best.