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Should I pay off a loan? Advise

wallsy
wallsy Posts: 27 Forumite
in Debt-free wannabe
Hi,

I have a few loans and one is for my car. I have been thinking of paying off this loan with savings. I could just about pay off the loan in full but this would leave no savings. Is it better to keep the cash on the hip so to speak or pay off the loan?

Cheers,

Wallsy

Comments

  • Malky
    Malky Posts: 694 Forumite
    No brainer. Pay off the loan. You'll earn more cash and save more money
    Very few people can afford to have savings whilst in debt so count yourself lucky that you're in the position to pay off one loan in one hit.
  • DarkConvict
    DarkConvict Posts: 6,347 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    Yes pay them off, if you fancy a read about this, try this Pay off debts with savings!

    Interest on loans, is nearly always more than savings. Unless there are early payment fees, or are 0%. But do give the above a read. Overall the golden rule is pay off the debts with the highest interest first.
    Although no trees were harmed during the creation of this post, a large number of electrons were greatly inconvenienced.

    There are two ways of constructing a software design: One way is to make it so simple that there are obviously no deficiencies, and the other way is to make it so complicated that there are no obvious deficiencies
  • Treadmill
    Treadmill Posts: 1,102 Forumite
    Paying off the loan will save you money in interest, and if you and anything like me, make you feel good because you'll owe less money
  • josephine82
    josephine82 Posts: 470 Forumite
    Part of the Furniture 100 Posts Photogenic Combo Breaker
    Definitely! You will be able to build up some savings again with what you will have been paying out in monthly payments I imagine, so I would go for it!

    The feeling of not having any loans/monthly payments is great. And then you will know you will own your car in full, and that you saved to pay for it- great feeling! :D
    Debt free as of 2 October 2009
    Mortgage free as of 27 March 2024
  • mummum2
    mummum2 Posts: 617 Forumite
    Part of the Furniture Combo Breaker
    I would pay off the loan, think one less debt to pay and savings can always build up again.
    Long Hauler No: 51
    DMP Mutal Support Thread No: 207
    Proud to be dealing with my debts
    DFD - June '13, aiming for December '12
  • Tixy
    Tixy Posts: 31,455 Forumite
    Hi Wallsy
    I'd suggest you pay off whichever of your 'few' loans have the highest APR (and also allows overpayments).
    A smile enriches those who receive without making poorer those who give
    or "It costs nowt to be nice"
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