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Better to pay incrementally or with lump sum

  • 25-02-2015 1:05am
    #1
    eeguy
    Closed Accounts Posts: 3,478 ✭✭✭


    Hi,

    Quick question on a loan I recently took out.

    I got a €6000 on a fixed interest rate from Ulster Bank. My repayments are approx 300 a month but I have the capacity to pay more back.

    My question is whether it's better to pay the extra back every month or so with my regular payment or throw the extra money into a savings account until I have enough to cover the balance of the loan?


Comments

  • #2
    Henry Ford III
    Moderators, Business & Finance Moderators Posts: 17,861 Mod ✭✭✭✭Henry Ford III


    Repay the loan if they'll allow it. The interest rate on the loan will be higher than that on a deposit account.


  • #3
    chris85
    Registered Users, Registered Users 2 Posts: 4,502 ✭✭✭chris85


    Henry Ford III wrote: »
    Repay the loan if they'll allow it. The interest rate on the loan will be higher than that on a deposit account.

    +1 but OP its a fixed rate product so very often these dont allow extra repayments or there is a penalty for this. Need to check with your bank what the situation is.


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