Loan Repayment

Matt9300

Took a loan out for £11,000 with at a rate of 2.9% making the total repayable £11,842.10

Monthly repayments are - £197.37 - payment due 1st

I've got the money to pay off the final settlement figure of around £9,500 

You have three early repayment options:

• Pay everything.

• Make one (or more) extra payments to reduce the overall amount you owe.

• Make one (or more) extra payments to reduce your monthly payments.

All three options mean we count up some of the interest we'll be losing (up to a maximum of 58 days' worth, starting from the day you tell us you want to pay more). 

Just looking for some advice on what is the best course of action?

MrFrugalFever

Ultimately if you pay off the loan in full you will save most of the interest left on the loan, therefore making it cheaper.

However, further information is required to give a more detailed/helpful response such as why you needed loan in first place, where the £9,500 has come from, whether you have an EF left after paying the loan off, any future plans for credit, future plans to spend on large purchases etc…

Bob~24601

If the loan is at 2.9% then I think I would find an account that pays more and stick it in there.

That way not only are you making more money than you are payong, you are also not losing out on the 58 days of interest.

Is the 2.9% flexible and likely to go up? If so, then I'd be tempted to pay it all off, but as the other poster mentioned more info would be needed. 

Matt9300

MrFrugalFever said:

Ultimately if you pay off the loan in full you will save most of the interest left on the loan, therefore making it cheaper.

However, further information is required to give a more detailed/helpful response such as why you needed loan in first place, where the £9,500 has come from, whether you have an EF left after paying the loan off, any future plans for credit, future plans to spend on large purchases etc…

I got the loan initially for a car for a job - but a change of circumstances have meant I've got a new job that is within reasonable commuting distance so was no longer needed so I sold it - that's where the £9,500 has come from. 

Sorry - i'm not sure what an EF is 

I did plan on getting the garden done - looking at around £6k for that but when I've looked online it would be cheaper to take out a new loan for the lower amount rather than just sitting on the funds.

Other than that I don't have much in the way of debt other than the mortgage and around £800 on a credit card which i'm paying off this month.

Bob~24601 said:

If the loan is at 2.9% then I think I would find an account that pays more and stick it in there.

That way not only are you making more money than you are payong, you are also not losing out on the 58 days of interest.

Is the 2.9% flexible and likely to go up? If so, then I'd be tempted to pay it all off, but as the other poster mentioned more info would be needed. 

The 2.9% is fixed its in a rainy day saver at 5% (for the first £5k at least) that's earning around £20 in interest at the moment. 

I didn't want to lock it all away as i'm currently funding the loan with the sale of the car to free up the cash each month