Pay off loan with savings?

PandaPants_2

I have a personal loan with around £1150 left on it, was originally £1500. I have £2000 savings and i was wondering if i should pay the loan off with the savings?

The interest is 9.9% and im sure there is a fee for paying it off early as it was taken over 2 years. I cant really figure out if its worth paying it all off and putting the £75 loan payment into my savings account or just letting it run its course?

I dont really feel that a loan is a stressful debt as it just comes out of the bank each month and is not accruing interest.

Any suggestions/opinions?

Thanks

whatatwit

Find out if there is a penalty on early repayment of loan.
What sort of interest rate does your savings get?

Are you likely to need the savings for something else in the forseeable future?

PandaPants_2

I was keeping the cash towards a mortgage deposit but with the prices of property in my area theres no chance in the forseeable future.....

I have 2 ISA's both about 5%...

finallydebtfree!!

I have just paid off the remainder of my £2000 loan with my savings, it left me with just £800 put away for a rainy day, but what ive done since paying off my loan is put the monthly payment I would have had for the loan directly into my savings account on the same day the loan payment would have gone out, its much more exciting seeing your savings grow than it is watching the loan balance decrease!! and I now have over £1200 in my savings account already and I only paid off the loan 2 months ago! hope this helps

PandaPants_2

I rang the bank, thee would charge me about an extra £9 early repayment fee. I thought it was much more!! lol

Annie_Fanny

PandaPants wrote:

I rang the bank, thee would charge me about an extra £9 early repayment fee. I thought it was much more!! lol

What is your decision?!

PandaPants_2

finallydebtfree, the only thing that worries me is that i have nohting to fall back on in a financial crises. It would take me nearly a year to build my savings back up!

Im considering just paying the remainder of my credit card (£550) off with my savings and trying to pay that back with my 2nd part-time job.

Decisions decisions...

Rgc_3

Hi

I ve just put an opinion on another thread almost exactly like yours and this may sound like im contradicting myself but in your case id pay off the debt so any money goes directly into savings(the reason it differs from the other post is simple physcology(i really must learn to spell that word)the other poster could possibly feel more motivated knowing there is a start to his/her savings for a downpayment once the debt is paid off and that is my only reason for suggesting it but there is no argument..it is better to pay off debts than to have an ongoing debt


so a long story short...id pay it off if i were in your shoes

PandaPants_2

Annie Fannie - i have no idea! LOL

I think ill just go with the credit card idea!

PabloNeruda

A complete no-brainer. Pay off the loan.

james32_uk

Ask the loan company for a settlement balance. If you will save more paying off early than you'd earn interest on £1150 worth of savings then do it!