Increase overdraft or pay off loan?

magnate · #1 (**permalink**) 12-07-2006, 02:04 PM

Hi everyone! A friend got a loan for £7500, if he increased his overdraft and paid off his loan would this be cheaper?
He banks with Natwest and got the loan from them to. He have about £500c in bank at the moment and a £2.5k overdraft limit. He doesnt' know if it would be cheaper for him to get a larger overdraft limit and always try and keep it in credit to pay off his loan with what he can?

sweeps · #2 (**permalink**) 12-07-2006, 02:14 PM

First, on this site any time was one of the choices is "pay off loan", 19 out of 20 responses will be "pay off loan". Doesn't matter what the other choice is.

Second, it's impossible to tell which one would be cheaper without knowing the interest rates charged on the overdraft loan versus the other loan.