Cheapest way to settle a loan

Nodiggidy123

Nodiggidy123

Nodiggidy123

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In 8 days time in due to be debt free for the first time in 20 years.

For the last 6 months ive been making additional payments to my loan and have a outstanding amount of almost £1300

From the additional payments ive been recieving interest rebates. The last being around £25 for a 850 payment.

Im a little surprised that the interest rebate will only be circa £10 having just asked for a settlement figure.

Im aware the bank(im with tesco) loads on 2 months interest when you settle so wondering if it wouls be wiser to make another additional payment of £1299 and settle on £1?

Is this possible? Would it make a difference?
 
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no idea how they work out the settlement as normally loans are front loaded with interest.

I would just pay it off and be happy you are free from debts for the first time in a long time.

and then enjoy the feeling :)
 
I've got a loan with Clydesdale and every time I ask them how much is left to pay they always calculate the figure there & then. It fluctuates.

Also, loans are bad, don't do it. I certainly learned my lesson.
 
Diddums said:
I've got a loan with Clydesdale and every time I ask them how much is left to pay they always calculate the figure there & then. It fluctuates.

Also, loans are bad, don't do it. I certainly learned my lesson.
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Fixed rate loans are relatively safe as a known cost situation compared to something as simple as a Mortgage which people underestimate for the amount of burden it can place within a couple years payments can double (or more as we are abnormally low costed). I can imagine rates at 10% because thats the amount I used to get on my savings around the time UK was forced to leave the purcursor to the Euro. Switch to now and we arent especially far off that weak currency scenario, typically that leads to higher rates then expected or wanted. UK imports its energy and all sorts of reasons we can be forced into higher interest on debt. Luckily theres worse then us, in short pay off the variable rate debt first imo
 
Nodiggidy123 said:
In 8 days time in due to be debt free for the first time in 20 years.

For the last 6 months ive been making additional payments to my loan and have a outstanding amount of almost £1300

From the additional payments ive been recieving interest rebates. The last being around £25 for a 850 payment.

Im a little surprised that the interest rebate will only be circa £10 having just asked for a settlement figure.

Im aware the bank(im with tesco) loads on 2 months interest when you settle so wondering if it wouls be wiser to make another additional payment of £1299 and settle on £1?

Is this possible? Would it make a difference?
Click to expand...

If overpayments don't incur a penalty similar to 60 days' interest (which appears to be the case, normally there is a limit of how much you can overpay), then overpaying can be better.
 
Diddums said:
Also, loans are bad, don't do it. I certainly learned my lesson.
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That's a bit of a a blanket statement!

I'd say taking out a loan when you are unable to properly manage your finances or when it puts you in a position that you may struggle to make the repayments is a bad idea.

I always take out a loan to purchase my car, however I do this for two reasons:
  1. I receive a car allowance from work which covers the repayments and always ensure my borrowing / repayments keep me out of negative equity so I can sell the car at any time to pay off the loan and have enough to buy a run about
  2. My savings currently earn more than the 3.1% a loan costs me so there's no point paying off the loan (currently running at an average 10% return over the last 3 years through investments).

I'd have been significantly worse off paying cash for my car.

In mortgage terms I'm paying less than I would be renting a property, am building up equity and on house prices alone made 24% on the house value over 5 years on the last house. It also means that by the time I am 57 I will have a house that's paid for with no rent / mortgage payments.
 
chaparral said:
I got a loan for half the cost of my car but I have enough money in the bank to pay it off anytime I want....

I got the loan instead of using all my saving..
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Makes sense as long as your savings are working hard for you. Although always keeping a slush fund for a rainy day makes sense
 
Funnily enough I am making huge in roads into my loan and credit card at the minute. I've always had some kind of loan, credit card or bnpl and (maybe I'm getting old) I just can't be doing with debt anymore.
So I'm making massive overpayments just to clear them down. Don't like the feeling of being in debt, even though compared to some it's quite small.

also, materialistic things suddenly have no real importance to me?
 
Nodiggidy123 said:
In 8 days time in due to be debt free for the first time in 20 years.

For the last 6 months ive been making additional payments to my loan and have a outstanding amount of almost £1300

From the additional payments ive been recieving interest rebates. The last being around £25 for a 850 payment.

Im a little surprised that the interest rebate will only be circa £10 having just asked for a settlement figure.

Im aware the bank(im with tesco) loads on 2 months interest when you settle so wondering if it wouls be wiser to make another additional payment of £1299 and settle on £1?

Is this possible? Would it make a difference?
Click to expand...

I'm pretty sure the difference will be nominal but ring up and ask for numbers on both scenarios. Tesco Bank call centre has always been very helpful when I've called and they should be able to calculate the total cost to settle it all now versus making a £1200 payment then settling the balance.
 
Since we're talking about debt I should probably mention about going to another place that talks through all the various offers that might save a lot of money: forums.moneysavingexpert.com
I think they changed savings interest so its mostly not liable to income tax anymore, which is nice. One I noticed recently was nationwide regular saver, at 5% and maybe TSB since they got in trouble put their rate back up by way of apology
 
I can't wait to pay my loan off next year, like some others have said I won't be doing it again.

Still in huge amounts of debt due to mortgage, but the £200 a month from the loan can go into overpaying that instead :)
 
Its a great feeling when you do. Ive had debt since i was 21 (38 now) i was a total idiot when i was younger and peed it all away. its gone down then up for ny wedding etc. Glad to see the back of it.
 
ultralaser said:
I think it's harsh to say 'loans' are bad, if we didn't have them the vast majority of the country would never be able to afford a house,
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Think safe to say some loans are fine but you need to careful

But some loans are really bad..
One young person at my work place was going get a 5k loan for a motorbike put it over 5 or 6 years and pay back around 10k :eek: (I think it was even been more then 10k but I can't remember the exact figures he said now)
 
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chaparral said:
Think safe to say some loans are fine but you need to careful

But some loans are really bad..
One young person at my work place was going get a 5k loan for a motorbike put it over 5 or 6 years and pay back around 10k :eek: (I think it was even been more then 10k but I can't remember the exact figures he said now)
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But even in that case I wouldn't blame the availability of credit I'd blame an idiot for taking it out. Imagine if that credit line was the only way he could get a job, and that by paying £1,000 in interest it helped him take home a salary of £20,000 a year...

The real problem is that either we're too stupid to use credit or credit is offered to those that should never be offered it.
 
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