Sign up with GoogleAbout a year ago I bought my car from a private seller and financed it through Wesbank. But due to it being a private sale they were very sticky about it and in the end I settled for a not so ideal fixed interest rate of 11%. I figured that I got the car at a good price and really wanted it so I wasn't going to let a couple of Rands each month be a deal breaker.
Now I realised today that the interest rate on my overdraft facility on my cheque account is at prime (8.5%).
So I thought why don't I increase my overdraft limit (still have to check whether this influences my rate though)? Then settle the outstanding vehicle loan. This would mean I would sit with a large overdrawn cheque account. Each month my salary is deposited into the cheque account and my expenses paid through the month. This also means the effective interest rate on the overdraft will be even less than 8.5%. Over the next couple of month the overdaft will reduce as it is paid off instead of having a monthly installment on my car.
Is this a good idea or am I missing something?
The only drawback I can see is that in case of an emergency I would not have access to my overdraft facility, but I still have credit cards if push comes to shove.
Now I realised today that the interest rate on my overdraft facility on my cheque account is at prime (8.5%).
So I thought why don't I increase my overdraft limit (still have to check whether this influences my rate though)? Then settle the outstanding vehicle loan. This would mean I would sit with a large overdrawn cheque account. Each month my salary is deposited into the cheque account and my expenses paid through the month. This also means the effective interest rate on the overdraft will be even less than 8.5%. Over the next couple of month the overdaft will reduce as it is paid off instead of having a monthly installment on my car.
Is this a good idea or am I missing something?
The only drawback I can see is that in case of an emergency I would not have access to my overdraft facility, but I still have credit cards if push comes to shove.
