Need a bit of advice re repaying a loan.

raggydoll_2

I currently have a loan with cahoot which i took out about 3 yrs ago as a 5 yr loan of about 6k to consolidate debts from uni. Its a flexible loan that i have dipped into again and again and have never really paid any off. It now stands at just under £5800. The interest rate has risen and risen and is now 15+% minimum payments are £119 p/month but i have been overpaying at £150 p/month. I'd really like to get rid of this debt as soon as possible and can afford to definitely pay £150 off of it but would hope to overpay as much as possible. Now my dilemma is, the best alternative loan i have found is with moneyback bank at 9.4%, £144 over 4 yrs. But early repayment charges are a %age per thousand pounds borrowed equivalent to the remaining term on the loan. Which seems a lot so would i be better sticking with cahoot and ensuring i overpay each month to get rid of it? or is there a better option?

Eshka_2

Stick with overpaying the Cahoot loan imo - taking out another is a bad, bad, bad idea, as you know yourself you always end up 'dipping' and things don't quite work out as you'd intended.

That's just my ha'pence worth, sadly I don't have lots of expertise but I can offer you my gut feeling!

angelavdavis

Hi Raggydoll,

So, moving is likely to cost you too much in penalty and let's face it, you are considering moving to (albeit a lower %) a longer term, so you pay a reduced rate interest for a year longer than planned, plus get a penalty! I think you need to forget that one!

I think you should sit down and list out your income and outgoings and see if there are any areas where you could cut back so you can overpay as much as possible every month. Post your SOA on here if you think the good folk on here could help advise.

Another option is transferring 90% of the loan to a cheaper rate (but don't extend the period), but keeping a small amount in the cahoot loan over the original term to avoid paying penalty charges. Then ensure you pay both regular payments, throwing more money where possible.

The big big thing here though is that once you have paid off the loan portion - don't don't build it up again and end up with more debt!

raggydoll_2

I definitely wont be dipping into it again, not now ive got my sights on being mortgage free by the time we are 40!!!

Sorry to be a bit dim but ive wondered since i arrived here what does SOA stand for?? I will post mine as i think i've done as much as i can so would be good to let a fresh pair of eyes look at it. Should i do that here ir in a seperate thread?? I reckon i could up it to £200 p/month.

ETA the high early repayment charges would be if i paid the new moneyback loan off early not the cahoot which i can't remember how much they charge but its not huge if i remember correctly.

nimbo

an SOA is a state of affairs.

eg.
i earn £XXXX a month,
my rent is £xxxx a month,
my leccie bill is £xxxx

it's just a way to show others where all your money goes, so they can try to point you in the right direction of how much you could be able to pay...

nimbo

http://forums.moneysavingexpert.com/....html?t=107280

if you click on this it might take you to the relevant page (or then again not as i am just a bit blonde.) but it is to found on the newbies borad...

raggydoll_2

Ok here goes - monthly costs from April 08 when i will go part time at work to spend the rest of my time developing my new business which i am assuming will make nothing in year 1.

OH salary - £1151
OH average tips and extra work - £50
My salary - £799
My travel expenses - £50
TOTAL IN - £2050

Mortgage - £469
Council tax - £88 (for 10 months of the year)
Oil - £100 (£400 3 times a year - we are looking at changing to alternative heating/hot water methods)
Electricity - £28
Water - £15
Phone & Broadband - £40
Coal - average £20 if spread throughout the year
TV licence - £11
Dog worming and vaccinations - £5 spread throughour the year
Building and contents insurance - £35
Insurance - £16 (cant remember which way round these are but 1 is PPI for mortgage and the other is an insurance to cover OH's salary from when he was SE, need to review these!
Insurance - £8
Life insurance - £34
Food shopping £180 - a little high i know but we only eat local and organic which seems to mean costs can be a little higher
OH and my contact lenses - £28
OH and my car insurances - £50 - we cant manage without cars due to living in the sticks and working in opposite directions!!
Car tax - £22 spread over year
MOTs/services etc - averaged over year £25
Car finance payments £112
Petrol £100
Parking £40
Horse insurances (public liability only) - £10 averaged over year
Hay - £50
Horse Feed & supplements - £40
Field rent - £17
Farrier - £65
Horses worming & vaccinations - £20
My mobile - £10
OH mobile - £15
occassional lunch money - £20
Loan repayments currently - £150
Birthdays and christmas etc - £50 averaged out
Haircuts average £10
Extras and personal spending money (£100 each) - £200
TOTAL OUT - £1873

REMAINING - £177 for all other personal stuff and household disasters.

This is based on a minimum income and we intend to be bringing in more than this through several means such as ebaying, hopefully the new business, selling eggs from our new chickens etc etc

All opinions welcomed

raggydoll_2

Is there a better place to post the SOA for comment??

Blackcat_4

This might be a bit 'out of the box thinking' but why not use this strategy?

Borrow the money @ 9.4%, but don't payoff Cahoot (redemption penalty to high. Keep the borrowed money safe in a savings account (DO NOT SPEND IT!!!). Stop paying cahoot and write to them saying you are in 'difficulty' offer a small token payment per month if they stop all interest and charges. two months down the road offer to settle the debt as you have borrowed ofF family, etc. Offer 60% of the debt owed (or 60p in the £), I'm confident they will accept.

The negative is you will be issued with a defualt notice which will hit your credit rating. But hay, you'll save c£2k

YOU SHOULD NOT DO THIS IF YOU ARE LIKELY TO SPEND THE MONEY YOU BORROW.