RateSetter loan - Pay off early.

Markflatley

Hi, guys, just looking for some advice RE paying off a RateSetter loan of early to avoid the interest.

It is currently at 11.9%, which when I was applying to buy the car I thought nothing of (excitement took over!)
I'm paying £162.83 a month and £34.57 of that is interest! There's £5,821.56 remaining, and the car if i was to part ex it would probably return me £3k - £3500 if I was lucky.

The settlement figure is £5,821.56, I was under the impression loans could be paid off early as to not pay the interest?
Also, could I take out a bank loan of that amount (at a much lower interest rate) pay £1k off instantly, then say pay £200 a month for 5 months to then hopefully be in a much better position to part exchange?

Now, I've contacted RS, but with it being a bank holiday, I doubt I'll expect a reply today!

So, if anyone could shed any light on this situation I'd be very grateful! Sorry if its a little long winded!

Kind Regards,
Mark.

[Deleted User]

The interest isn't £34 a month. It declines each month as the capital drops.

By settling early, you'll save on the future interest. If the settlement is the same as your balance, it means they're not charging two months early settlement.

Settle it as soon as you are able.

Markflatley

How much would it be to settle it? The full figure?
Looking back, I wish I never took it out!

[Deleted User]

You said the settlement figure was £5.8k.

Pay that now and you'll save a fortune in interest.

Markflatley

If I got a loan of that amount, could I use that to pay it off?

Sorry for the questions, but I am not knowledgeable in this field at all

[Deleted User]

Yes, but whether you can borrow an additional £6k at a better rate, if at all, may not be possible.

It would be a total of 12k and you're already on a high rate.

Markflatley

Basically, I’m stuck with it then.
Just seems nigh on impossible to get anywhere with it!
The car has cost me £500 this week, I just want rid

[Deleted User]

If you've overstretched yourself, get to the DFW boards.

They'll show you how to start cutting costs so you can get the debt cleared sooner.

Markflatley

I have no trouble keeping up with the payments, I just feel it’s bloody extortionate!
Then again, my own fault for not checking 

[Deleted User]

If the payments are comfortable, then you should be over paying and settling early.  The rates aren't extortionate - it's based on your higher risk levels.

If you can't overpay, then things are stretched too tight. Get to the DFW boards and make yourself richer 

Markflatley

I’ll have a look mate, thanks for the advice