Good idea? Bad Idea? Finance question

[envo]

I took out a personal loan 2 years ago (5 year term), of which the capital I've paid off thus far is only 12k (which sent up a red flag for me) yearly I pay in about 31k, so it made me investigate this further as I felt the number never really goes down.

I've essentially just paid the interest, and it really doesn't look like it will be ending very soon. With an interest rate of 31%, I've been considering using my revolving loan and budget facility on my credit card (both at 18% interest) to pay it off in one go, then settle the debt on those two over the same period of time I have left on the personal loan.

I think I might save quite a few bucks like this, but want the general opinion of the board here.

 

[IzZzy]

That's how loans amortize. There's plenty of free schedules that will show you the capital interest split over the life of the loan. Capital is always paid off last.

You need to do the math here: Whilst there might be lower interest on the credit card, you would essentially just be refinancing your capital whereas now, in the current loan, you are starting to etch away at the capital.

But I see that you want to pay it over the same period of time. Then it sounds like the better option, but do the math.

 

[Cius]

If you keep your payments the same then it would be better to move it to the lower interest rate facility obviously.

 

[AnibugZA]

31% interest in insanity.
If there is any way for you to move it to a different facility with a lower interest rate, do it. Do it sooner rather than later.
But you HAVE to keep paying it off at the same rate - don't let the lower interest rate make you lazy.

 

[OrbitalDawn]

Yeah. And never take such a loan again, if at all possible. Awful, terrible debt traps.

 

[yebocan]

31%! - I know at times, you have no other choice...but 31%! that is hectic on a new level

 

[envo]

Thanks for the advice. Yea, I had to take the loan unfortunately (I shopped around beforehand with no success)

Think I'll settle it today.

 

[CamiKaze]

31%! - I know at times, you have no other choice...but 31%! that is hectic on a new level

the maximum amount of interest when consolidating your accounts at Capitec is 30%. Correct me if I am wrong.

 

[reactor_sa]

31%

 

[Rocket-Boy]

Personal loans are evil things, They normally penalize you for settling them early too.

 

[Shi]

Good luck dude. The problem I have with moving it to your credit card is that it is down to personal discipline to keep paying this off month after month. Have the personal loan, obligates you to pay it off every month. At the end of the day, the sooner you pay this high interest rate loan off the better. There are other ways of resolving this example another personal loan but one with a lower interest rate, selling some unused items (cash crusaders, etc), credit card (like you mentioned).

Let us know how things turn out, please.

 

[envo]

I'll try and remember to let you guys know what happened, but I'm planning to push this to my budget facility on my credit card which forces a monthly fee that is less than I currently pay for the loan. I just setup a monthly transfer to automatically transfer the full amount to my cc instead of just the minimum.

Trying to find out now if there are any penalties

 

[HapticSimian]

I'll try and remember to let you guys know what happened, but I'm planning to push this to my budget facility on my credit card which forces a monthly fee that is less than I currently pay for the loan. I just setup a monthly transfer to automatically transfer the full amount to my cc instead of just the minimum.

Trying to find out now if there are any penalties

If it's a loan through a registered credit provider, and for an amount of R250k or less (I'm assuming it is a lot less, given the interest rate) there cannot be any penalty for settling early.

 

[yebocan]

the maximum of consolidation your accounts at Capitec is 30%. Correct me if I am wrong.

No idea...I stay away from credit...

 

[envo]

If it's a loan through a registered credit provider, and for an amount of R250k or less (I'm assuming it is a lot less, given the interest rate) there cannot be any penalty for settling early.

Yup, found that out a bit earlier. Going to settle it tomorrow as the debit order went off this morning.

 

[hellfire]

I took out a personal loan 2 years ago (5 year term), of which the capital I've paid off thus far is only 12k (which sent up a red flag for me) yearly I pay in about 31k, so it made me investigate this further as I felt the number never really goes down.

I've essentially just paid the interest, and it really doesn't look like it will be ending very soon. With an interest rate of 31%, I've been considering using my revolving loan and budget facility on my credit card (both at 18% interest) to pay it off in one go, then settle the debt on those two over the same period of time I have left on the personal loan.

I think I might save quite a few bucks like this, but want the general opinion of the board here.

Do exactly as you suggested. Good plan.