£25000 loan... ARGH!

sali_mali

Hello everyone, I hope someone can give me some advice! :hello:

I'm off to med school in September so have had to take out a loan to pay for it. I've been through all of my finances, looking at students loans and grants etc and have figured out I need to borrow £25000 from HSBC as a Professional Studies Loan. So far, so scary.

Anyway, HSBC will pay me the loan however I like, so at the moment I've requested it to me paid to me in installments so that I won't spend it all at once! But then yesterday I had a flash of inspiration... Why not get it all in a lump and then stick in into some sort of high interest bond/ISA/something?

By the time I'm in a position to pay anything back I'll owe HSBC over £41000 :eek: I'd like to have some sort of saving to give myself some breathing space, maybe I could use it for a deposit on a flat or something because I'll have NO spare money when I graduate!

Can anybody advise me on the best thing I could do with this loan? I'll need just over £8000 for my first year of Med school, so have £17000 to play with... Any ideas?

aurora_borealis_2

Is this the right forum for this, I wonder?

pandas66

YOu can trust me with it

then I can get a new car and come and visit...........although you won't be allowed in the car:rotfl:

Gemmzie

Hi sali_mali,
£17k - well you can't stick that much in an ISA in one go, only £3600 so that leaves £13.4k. I'd stick it in a medium interest account with easy access and no withdrawal fees, so you can drip it into a current account to give yourself a wage.

Maybe Egg Saver, 6.3% for the first year - then get an Egg Money card to link to it - do your spending on the Egg Money card and earn 1% cashback too.

sali_mali

Thanks for the SENSIBLE (yes I'm looking at you panda :rotfl:) answer Gemmzie. I thought maybe I should keep any interest in a seperate account so I'll have a lump of savings when I'm a graduate?

Are there any risks to keeping that much money in a bond or similar? I know I'm covered up to £35000 by the FSA if the bank goes under or something, so that's ok... I just feel this interest seems to just be free money... Is there a downside to my plan?

Gemmzie

What's the interest rate on the loan and when does it start?

sali_mali

I can't remember the interest rate! I get the contract and all of the details next week so can update then. I've got six months after graduating before I have to start paying it back though, and it'll be about £450 a month for 96 months repayments :eek:

Gemmzie

That's 15%! What kind of loan is it? A career development loan? Is this a second degree?

sali_mali

Yes it's called a proffesional studies loan and this will be my second degree. It's pretty horrible but unfortunately it's my only choice

Gemmzie

It'll be worth it when you qualify though

You need to find out for sure whether you pay interest on the whole lot from when you receive the loan or only interest on the instalment you've been paid to decide how to draw on it.

But the savings advice above is probably the best way as you don't want to go into shares and risk loosing some of the capital!

RAS

Can i ask why you are borrowing this as one lump sum?

Could you not take out smaller loans each year, so that you do not have to pay interest on a load of money that you do not need immediately?