Quick advice on a loan please.

[SummerNameChanger]

I think this is a no brainer, but some confirmation would be great.

I have some credit card debt, one larger amount and one fairly small, total just over £5K.

On the larger one I'm paying a ridiculous amount of interest as the deal finish and I didn't notice, I was planning to look for a 0% deal elsewhere, but to be honest I'm getting no where with paying this off and want rid. It's old debt.

My bank has offered me a personal loan £5K over 3 years 6.7% total repayment £5,532.48 so £532 interest.

The monthly payment is about £31 a month more than I'm currently paying on the credit cards, but at least in 3 years it will be gone.

I would be able to pay the larger amount off in full, the smaller one would have about £300 on it which I could deal with other a few months, with some additional payments, once I'm past summer holiday costs etc.

I would cancel both cards, once paid off (gulp).

Have name changed as I tend to over share :)

[Fluffycloudland77]

I don't know, I'm assuming your not in a position to save up and pay it off in large chunks?.

If your not then pay them off and cancel the cards.

[SummerNameChanger]

Do nothing isn't an option, I could swap to a 0% credit card but the temptation would be just to pay off the minimum, so in three years I'm unlikely to have paid it off and I'd need to keep moving it around.

I was thinking this way I'm committed to the loan payment and at the end of three years its done.

Our mortgage ends in five years and I'm aiming to be debt free by then (with the exception of car payments).

TBH I thought this loan was a good deal, I've been offered much worse deals by other lenders, the interest on a loan from Sainsburys' was more than double the banks offer.

[GetStuffezd]

That is a very good rate,on the loan - I think I would do it.
I tried to find a decent loan for 5k recently and was getting insane APRs of 29% etc.

[HarrietSchulenberg]

If you can a 0% card go for it but cut the card up when it arrives so you can't use it, and immediately set up a standing order/direct debit to pay off the same amount as you say you can afford for the loan. You'll pay it off quicker by treating it ss a loan and save yourself the loan interest.

[Fluffycloudland77]

In that case go for it. Nice to be debt free.

[PearlyWhites]

It sound like a good idea to me the interest is low and you are committed to paying it off.

[SummerNameChanger]

Sounds like a plan then.

I was impressed with the interest rate, I don't think £532 is bad over 3 years.

Interestingly Sainsburys quoted me a similar deal on-line but then emailed me to call them, and the deal drastically changed, with the amount I'd pay back more than doubling. I had ticked the 3 month payment holiday option on-line and wondered if that makes them think you're struggling (in fact I was just thinking about more holiday spending money for our 2 weeks in Dorset) but in that case why offer it?

[AKissIsNotAContract]

If your mortgage ends in 5 years I'd be tempted to see if you can remortgage to clear the debt. It is likely to be a much lower interest rate than the loan

[SummerNameChanger]

I can't bear to go through the pain or re-mortgaging again, it's not that long since we did a deal and it was intended to see us through to the end.

Also, this loan is just for me, the mortgage is joint, I know mumsnet struggles with married couples with separate finances but it works for lots of people.

[MrsMoffat]

Get an interest free credit card, there are some with 27 months 0% now. Divide the outstanding amount by number of months 0%, set up a direct debit to pay that amount, cut up the new card and you have the equivalent of your bank loan at 0% and even with the transfer fee, you've saved £100s.

[AnythingNotEverything]

What mrs Moffat said. You'll clear it quicker and cheaper.

You're a grown up - you can be disciplined!

[TheOneAndOnlyReality]

Barclaycard are still offering 26 months at 0%.

The beauty of Barclaycard is that you can set up a direct debt for a fixed amount, not just the minimum.