Paying off secured loan

Debtfree2024

Hi,

I currently have a secured loan with Barclays Finance where I am paying quite a chunk per month, the secured loan is due to finish in 2026 when it will be fully paid. I am currently trying to find ways to reduce my monthly outgoings as I have other debts which I need to clear and have taken action with these. My salary is due to go up significantly mid next year but I’m trying to find ways to manage currently. 

Is it possible that I could take out a credit card with 0% interest to pay off the Barclays at a minimum payment each month to reduce the outgoing? Would this be a balance transfer or purchase? I have a high chance of approval for one which is 0% on balance transfers for 17 months and 0% on purchases for 20 months. Baring in mind my large salary increase next year which will mean I will be able to start contributing more than the minimum payment.

fatbelly

Balance transfers only work between credit cards.

You would have to check whether Barclays would accept payment by credit card.

Otherwise you would need a money transfer card.

Is this going to reduce your monthly payment?

Debtfree2024

Yes it will thank you. I will check this out.

WYSPECIAL

Usually paying a chunk off a loan reduces the term not the monthly payments. Since 2026 is more than 17 months away presumably you won’t be raising enough to clear it.

There May also be penalties to consider.

CliveOfIndia

Debtfree2024 said:

Would this be a balance transfer or purchase?

As @fatbelly says, you'd need a purchase card, BT is only applicable if transferring a balance from one credit card to another.

But there are two things you'd need to check.  Firstly, will Barclays accept payment by credit card?  Secondly, would such a payment be treated as a cash advance (or "cash-like transaction") by the credit card?  If it is treated as cash then you'd be charged their standard cash advance fee, and would be charged their standard cash advance interest rate (it wouldn't qualify for the 0% promotional offer).

As noted by fatbelly, a Money Transfer card may be an option to consider - though there's usually a fee for this, which you'd need to factor into your calculations to see if it's worth it.

fatbelly

There are also few options now for 0% money transfer (where they dump cash into your bank account for you to spend as you wish)

https://www.moneysavingexpert.com/credit-cards/money-transfers/

The best you are going to get has a 4% fee and you are going to have to pay this off in 12 months or face very high interest -which is why I asked whether this is a sensible option if what you are aiming to do is to lower monthly repayments.

I can understand this tactic if you said that you wanted to move debt to a safer place - also under some circumstances and depending on the relevant interest rates this may save you some interest.

If you want to post the actual numbers someone may be able to help you with the maths

gwynlas

The current loan would be front loaded with interest so you would not save very much by paying it off early. It sounds as though you are trying to reduce outgoings on a monthly basis. Please be aware of increasing your borrowing to help in the short term. Many of us on the forum have ended up with larger debts because of this.

CliveOfIndia

gwynlas said:

The current loan would be front loaded with interest

No it wouldn't, this practice has been illegal for many years now.

You'll always save some interest by paying off a loan early.  It's just a question of whether the interest you'll save will offset the cost of securing the funds you use to pay it off.