car loan - should I pay the settlement of keep going?

SusanShaw

Hi All,

I need a bit of advice.

I'm currently wondering what to do about my car. I took a loan out on it and the balance is £2303 and to settle is £2192.26. I currently pay £157 p/month so it should be paid off in 14 months. I'm due to have a baby in May so reducing any extra outgoings is really important. I have a few grand saved so can afford to pay this off. I'm also wondering whether to change my car to a more friendly one, currently have an Audi A3 (not the most economical). The car's worth about £2500.

I'm not sure what to do, I'd be saving £100 if I settle, but won't have as many savings. But if I do, I can trade the car in more easily for something possibly cheaper....? If I get a new car I would still have monthly payments but I should be able to reduce this below £150, shoudn't I?

Or I stay as I am, with the car as I know I can afford it.

thanks for any advice,
Sue

kev.s

if you can afford to pay it off then do it, you'll prob get rebate of charges for early settlement too.paying it off and trading for cheaper is a bad idea, you'll be worse off as you'll not get a great deal on the new car. if you pay it off and keep it, put the £150pm you was going to spend on new car and put it into your savings, it'll soon add up

SusanShaw

Thanks, I'm inclined to go that way...what does rebate of charges mean?

kev.s

you'll get an earlysettlment figure which means you don't pay the full interest amount, it won't be nothing earth shattering though, always a saving though

paddyrg

Whereas I'd normally say to get rid of the debts at almost any cost (as it were), you look like you'll save £110 from your figures, over 14 months that's about £2/week.<p>

Against that, you have a baby coming, a time when you will have all sorts of unexpected costs, so instant access to buffer/savings money will be vital. The last thing we want is for you to spend all your savings, hit an unexpected cost, then have to try to find a loan when you're not working and going to be a credit risk, and get forced into expensive debt with setup charges.<p>

Instead, I would say stay as you are, the 1 coffee/week you'd be saving probably isn't worth not having a cash buffer for. And if you're paying cash for baby goods, you may even be able to get some better deals too ;-)