Clearing loan - what are my options?

edited 30 November -1 at 1:00AM in Loans
2 replies 536 views
jont999jont999 Forumite
31 Posts
edited 30 November -1 at 1:00AM in Loans
I'm looking to clear my loan with the AA as fast as possible, it's currently at 7.7% for about £5k and I'm paying just under £200 a month.

What are my options?
I was wandering if it was possible to shunt the loan to a 0% credit card and pay it off quickly or maybe move it to a longer term at a lower rate and over pay to clear it fast or is my only option just to shop around for the best deal?

Replies

  • RafterRafter Forumite
    3.8K Posts
    Generally it isn't possible to flexibly pay a balance of your loan without incurring penalties.

    7.7% isn't a bad rate at the moment, unless you can raise the full £5k from 0% cards and savings you probably can't do much better unless your credit rating is very good.

    You could get a Egg flexible loan at 9.9% and then use 0% cards to offset and repay faster but the balance transfer fees might wipe out your benefits.

    You could earn 6% plus after tax on a regular amount paid into an ISA - if you can save £250 a month for the next 12 months, and continue to repay your AA loan, you should be able to pay off your loan in full in 12 months time.

    A more efficient way of using 0% cards is to use them for purchases and then transfer the money saved to savings. That way no transfer fees. You just need to be really organised to avoid late payments and have other cards in place when the 0% period is up.

    Paying 20% plus on a credit card after the 0% period, or racking up £12 fees for late payments can soon wipe out any interest savings you make though - so make sure you are very organised.

    Good luck

    R.
    Smile :), it makes people wonder what you have been up to.
  • cool, thanks for the info!
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