Dilema - Loan V Endowment

niceday999

I have an Endowment with Clerical Medical ( with profits )? for £25,000
I took it out in 1992 for 25 years.its due to expire in December 2017
I pay 34.75 per month and have paid in a total of £7089 and by December 2017 I will have paid a further £3336.00
I rang yesterday to get a surrender value as we no longer need it ( mortgage paid off )and want to fund the purchase of a 2nd car.
surrender value £7570
I also asked about payout in December 2017 she gave me 3 PROJECTED payouts of :
£12,800 @ 4%
£14,600 @ 6%
£16,700 @ 8%
although she said the rate was more near 1.5% at the minute?????
also said if i was to pay the payments up until December 2017 I would be guaranteed a minimum of £11,306

The last statement i received from them said :
SUM ASSURED £8275 NEW REGULAR BONUS £100
TOTAL REGULAR BONUS £3031 TOTAL INITIAL BENEFIT £25,000
Can anyone advise whether I should cash it in ( after 31st ec when I get my next bonus ) or take a loan for £7000 ish
Not sure what to do

noh

In a similar situation I would surrender the policy and then start saving an amount equal to what loan repayments would be on the sum plus the amount of the endowment premium.

A loan of £7000 at 9% over 36 months would be about £220 a month plus about £30 so would put £250 a month into the best instant access savings account I could find.
There is little point in earning 1.5% on a sum of money while paying 9 or 10% to borrow the same sum from someone else

opinions4u

Is the endowment policy being used to repay a mortgage?

This is a rather key piece of information.

EDIT: Thanks to Noh for pointing out my lack of attention to detail! Apologies to the OP as well.

Based on the info provided I'd kill the policy off sooner rather than later.

noh

opinions4u wrote: »

Is the endowment policy being used to repay a mortgage?

This is a rather key piece of information.

niceday999 wrote:-

I rang yesterday to get a surrender value as we no longer need it ( mortgage paid off )

dimbo61

( mortgage paid off )
My vote is with noh
GOOD LUCK

EdInvestor

niceday999 wrote: »

Can anyone advise whether I should cash it in ( after 31st ec when I get my next bonus ) or take a loan for £7000 ish
Not sure what to do

What interest rate would you pay on the loan?

firesidemaid

i did a similar thing a couple of years back and never regretted it.

if you carry on paying in for another 8 years you might 'make' 1000 pounds over what you have paid in.

if you took the money out now, added to it each month and put it all in an isa you would make loads more than that! likewise use it to pay for a car for free - also you are able to negotiate better for cars with cash than with a loan.

niceday999

EdInvestor wrote: »

What interest rate would you pay on the loan?[/QUOTE%]
prob around 8% have not checked yet.....

mikeouk

firesidemaid wrote: »

also you are able to negotiate better for cars with cash than with a loan.

wrong,,,,,its the opposite actualy, if you take the dealer finance, they have the oppertunity to make commision from the finance company