Additional Payments on Zopa Loan vs Trying for lower interest loan over shorter term

beeemm

Zopa Loan
18500 over 5 years
14779. Left to pay (Final repayment May 2024)
Current Settlement 12467
Repayment amount 434
APR 15.4%

OK, I'm wanting to clear this loan more quickly.  My first thought was that I'm likely able to get a better interest rate now my credit score is looking better (Pre-approved with several for 8%APR over 2 years) - This would increase my repayments by nearly £100 and shorten the term by 10 months.. doesn't seem a lot for the mess around.  I may possibly be able to get a loan with Santander at 3% as I have a 123 account but I figured I'd be much more comfortable just paying as much as I am able to, each month, off the Zopa loan.

I went through the additional payment options on the Zopa app, requested to pay an additional £400 and the message I got was, basically:

"Your next payment will be £378, after that your repayments will be £422, the term of your loan will stay the same"

This feels like it's set up to make very little difference if it's going to drop the repayment by a large amount each time before upping it again, seems counter productive.  So I guess I'd have to, at the very least, pay the difference on the month they drop the repayment else it will minimise the impact.  Especially as some months I may repay £100 extra but other months I might be in a position to pay 400 or 500 extra.

Also, is there a calculator around which will project the monthly repayments over time?  There are plenty which will show the reduced term if I make payments, but none seem to calculate reduced payments over time - I just want to get an overview of how much difference I'll see and how soon.

Or am I just being stupid and should just bite the bullet, commit to the additional monthly repayment and go for the lower interest rate loan?

[Deleted User]

Your credit "score" has no relation to what your loan chances are, no lender ever sees it and it's never used in a decision on giving you a loan or not.

Any loan will be judged on the basis of that loan PLUS your existing loan and whether you can afford both as you could use the second loan for anything you wanted, no guarantee you will be paying off the first loan

There are plenty of loan repayment calculators, just google it

If you can get the 3% loan at Santander then take it, use the money to pay off a lump from the Zopa one and pay as much as you can on both

Go to the Debt Free page on this forum for advice on cutting back and paying more

p3ncilsharpener

beeemm said:

Zopa Loan
18500 over 5 years
14779. Left to pay (Final repayment May 2024)
Current Settlement 12467
Repayment amount 434
APR 15.4%

OK, I'm wanting to clear this loan more quickly.  My first thought was that I'm likely able to get a better interest rate now my credit score is looking better (Pre-approved with several for 8%APR over 2 years) - This would increase my repayments by nearly £100 and shorten the term by 10 months.. doesn't seem a lot for the mess around.  I may possibly be able to get a loan with Santander at 3% as I have a 123 account but I figured I'd be much more comfortable just paying as much as I am able to, each month, off the Zopa loan.

I went through the additional payment options on the Zopa app, requested to pay an additional £400 and the message I got was, basically:

"Your next payment will be £378, after that your repayments will be £422, the term of your loan will stay the same"

This feels like it's set up to make very little difference if it's going to drop the repayment by a large amount each time before upping it again, seems counter productive.  So I guess I'd have to, at the very least, pay the difference on the month they drop the repayment else it will minimise the impact.  Especially as some months I may repay £100 extra but other months I might be in a position to pay 400 or 500 extra.

Also, is there a calculator around which will project the monthly repayments over time?  There are plenty which will show the reduced term if I make payments, but none seem to calculate reduced payments over time - I just want to get an overview of how much difference I'll see and how soon.

Or am I just being stupid and should just bite the bullet, commit to the additional monthly repayment and go for the lower interest rate loan?

If you repaid almost all the loan, then they'd have no choice but to take just what is left of the loan and then close your account.

It appears that Zopa are just taking overpayments to reduce your monthly repayments rather than reduce the term.  There's nothing wrong with that, but it doesn't stop you taking out a loan and paying it off.

[Deleted User]

Zopa will reduce your money payment when you overpay but there’s nothing stopping you keeping up with the original monthly repayment amount. For example, say your monthly repayment is £300 and you make an overpayment which means Zopa reduced your monthly repayment to £275. You can make a manual payment of £25 on the day your direct debit comes out to maintain £300 repayment. That’s how I paid off my Zopa loan earlier this year.