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Paying off a longer term loan early
This seems too easy and probably wont work but would love to hear some advice.
I'm looking to take out a personal loan with the bank and ideally would like it over 5yrs but my budget is £380p/m
£21k over 5yrs is £417, rate is 7.4% fixed.
£21k over 8yrs is £288, same rate 7.4%
Is there a way of working out how much I'd need to over pay each month so that I finish the 8yr loan in 5yrs?
I.e. £100 p/m equates to £6,000 I would have overpaid.
thank you
Comments
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MSE has one for mortgages, it might work for you:
https://www.moneysavingexpert.com/mortgages/mortgage-overpayment-calculator/Sam Vimes' Boots Theory of Socioeconomic Unfairness:
People are rich because they spend less money. A poor man buys $10 boots that last a season or two before he's walking in wet shoes and has to buy another pair. A rich man buys $50 boots that are made better and give him 10 years of dry feet. The poor man has spent $100 over those 10 years and still has wet feet.
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If you want to repay £21k over 5 years then perhaps it's worth getting quotes from different banks0
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You would also need to look at the loan T&C's to see what it says about overpayments and how they will be treated.0
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As above you need to read the T&Cs over additional payments.The above rates are based on daily interest on the outstanding balance so to pay off the 8 year loan in 5 years you need to pay at the 5 year rate so an additional £417 - £288 = £129 pm. As you only have £92 pm spare that will pay the loan off in around 5y 8m
Never associate with idiots on their own level, because, being an intelligent man, you'll try to deal with them on their level - and on their level they'll beat you every time.
Being hated by idiots is the price you pay for not being one of them.
Jean Cocteau 1889-1963
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