Lurker delurking for advice

libgysig

Hello all!

Yesterday, inspired by this site, I phoned up Santander for a settlement figure on my car finance. It was £2140, and I'd like to use some of my student loan (£2300) to pay off the balance. Thankfully, I've not touched a penny of the student loan as I've been managing with the salary from my part time job. Firstly, do you guys think it's a good idea to pay off the finance? The loan has about 29 months to run and it's at 17.1% APR. I'd rather use the loan to pay off my debt than have it sit in the bank earning a paltry amount of interest...but I'm not an expert on these matters.

Secondly, if I pay off the finance, it means I'll have an extra £132 a month in my pocket. The OH and I disagree on what we should do with it. I want to use the whole amount as an OP on the mortgage while he thinks I should use it (or at least half of it) to replace the student loan, and then use it towards the mortgage. It'll take at least 16 months to replace the student loan and I'd rather it be going towards the mortgage plus I've still got three years of my degree to run (plus another four if I get into graduate entry medicine) so I'm not going to be repaying for a while yet.

What would you do if you were me? Thanks in advance for any advice

Lois_E

Pay off the car finance asap. Nothing you can do with that money will come anywhere near making up for the 17.1% APR.

As for what you should do with your extra £132 a month, do you have any other savings? It's good to have some kind of emergency fund that you can dip into when unexpected things happen, like a major car repair. So if your student loan savings were your emergency fund, then it would be good to build it back up again, at least a bit, even if not the whole amount.

Don't worry about having enough in an account somewhere to pay off the whole student loan. You'll never have to pay it all off at once, and it's very cheap borrowing. if you have been over-paying your mortgage, then when the time comes to pay off your student loan, you can rearrange your mortgage payments to make sure you have enough income to cover the student loan repayments. Your mortgage capital will be much less by then, so it won't be a problem. Anyway, you'll have more income by then if you've triggered student loan repayments.

RosieTiger

Agree with the other comment. Get that car loan gone that's a huge interest rate !

Spiggle

As a mature student paying her student loan off through salary, I 100% agree with the others. Pay the car loan off!

As for the monthly amounts, I can't put it any better than Lois E has. Only thing I'd suggest is that if you can achieve a compromise with OH it will make life easier in the long run.

All the best,
Spigs