What to do with an interest free loan?

sooty86

Hi all,

I'm lucky enough to be one of the few students graduating this year to have secured a job, and as part of my package I am being offered a £2000 interest-free loan to be paid back monthly over three years.

First of all, is there any reason for me not to take up the offer? And secondly, if I do choose to take the offer, how can I make the most of it?

Many thanks,

Pete

Primrose

My first reaction in these troubled financial times would be to steer clear of having any debts on principle, even if they're interest free. It's getting into debt or living beyond our personal and national incomes that has caused the financial mess we're now in.
However, if you want to take advantage of the loan, you could consider taking it and either putting it into a fixed interest two or three year bond at the best rate you can find or, as you're now about to become a tax payer, put the money into a tax-free Cash ISA, where it will earn you a little interest - but not much, judging by the miserable Cash ISA rates being offered by most providers at the moment. Good luck on securing a job. Don't rely on it being a secure one so make sure you try and put some emergency savings away every month to protect you against an unexpected redundancy further down the line. Often job cuts can be made on a "last in, first out" basis.

DiggerUK

@ sooty86,
Do you not have any student debts?

Could be a good way to pay some of them down and save on the interest. Especially as your loan is interest free.

Pay off some of the highest rate debt you have, by a reverse process it will be the best interest rate you get.

Good luck.