Loan Questions & Calculations

[daredevil096]

hi, i have two loans presently.The first one is with the credit union for 15164.20 @ 12.68% a.p.r. The second is with the bank for 5331.13 @ 9.3% a.p.r. (rate of interest 9%).Originally I thought that putting these into one big loan would be cheaper,quote i got for 20495.33 loan @7.3% = 633.85 p.m x 36mths=22818.60 (total repayable) . However my calculations indicate its cheaper to stay with single loans,these are as follows: Year 1-20495.33+ 7.3%(1496.16)=21991.49-repayments(12 x 633.85=7606.2)=14385.29. I continued this for the 36mths but there was still 794.54 to pay in year 4.I did the exact same type of sums for the single loans,can anyone tell me if im wrong to stay with single loans?

 

[Satanta]

It depends on your loans.

Is there a cost to clearing the bank/CU loan early? If so, what is it?

For the consolidated loan, can you make accelerated payments.... in other words... Any costs for clearing it early?

If you can answer no to all the above, then it would make economic sense to move.
Say you have two loans, one at 9.3% and one at 7.3%. Should they be for the same amount, with the same payments being made towards them, guess which will cost more?
With the two individual loans your monthly outgoings will be more than with the consolidated loan. If you can pay as much off the consolidated amount as you’re currently paying out you'll clear the balance in a shorter term and with financial savings. It's only by reducing the monthly payments and taking the money over a longer term that you'll find a lower % is costing you more.



For a closer look try http://www.drcalculator.com/ or any other online loan calculators.



If costs are associated with the clearing of the loan be sure to factor these in when crunching the numbers.