Should I ?

£-foolish

Hi

I have the opportunity to pay a £5000 loan back ..

there is 3 year's left on the repayments. It's not a problem debt and im tempted to just hang on to the the money in case I need it later on.

Paying this off will clear out my savings account

Is it wise to get rid of this or hang on to said moneys

Thanks

barbarawright

Is the interest rate on your savings account higher than you're paying on your loan? Thought not... Pay it off and save at the same rate (or sightly less - enjoy yourself!). If you really *need* the money later, you could take another loan but hopefully you won't need it before you build up some savings.

CHR15

Another vote for paying it off here.

Clear the loan but keep a direct debit of the same amount as the current payments going into a savings account. You can obviously live with the payments already so simply shift them into savings.

You save interest payments on the loan and receive interest on the savings (albeit mediocre amounts). It's a win/win.

Mallotum_X

Have you checked what penalties might be payable if you settle early?

dshart

I'm in the pay it off camp unless the settlement costs are very high. But I think if you check you will find that even with settlement costs you will be repaying less than if you ran the loan to term.

paddyrg

I differ - I say pay off a chunk of the loan, but KEEP A BUFFER in cash - that way an unexpected bill is not going to send you back to trying to borrow a few hundred quid short term, with only expensive overdrafts or PDL's as options. That buffer, maybe a grand, will keep you stable whilst you pay back the final grand (faster, as you can afford to overpay!)

£-foolish

CHR15 wrote: »

Another vote for paying it off here.

Clear the loan but keep a direct debit of the same amount as the current payments going into a savings account. You can obviously live with the payments already so simply shift them into savings.

You save interest payments on the loan and receive interest on the savings (albeit mediocre amounts). It's a win/win.

--- Thanks for the reply

Mallotum_X wrote: »

Have you checked what penalties might be payable if you settle early?

--- There are no penalties -- the settlement is £5500 there abouts or if i drag it over the next 3 years it will cost £6878.52 which kind of answers my own question.

paddyrg wrote: »

I differ - I say pay off a chunk of the loan, but KEEP A BUFFER in cash - that way an unexpected bill is not going to send you back to trying to borrow a few hundred quid short term, with only expensive overdrafts or PDL's as options. That buffer, maybe a grand, will keep you stable whilst you pay back the final grand (faster, as you can afford to overpay!)

--- Santander dont like this its either settle or nothing part payments stay in holding apparently and wont reduce my balance - according to customer services :S


Thanks for the help.. I will be loooking to settle as much as I like having that saftey net ive got to assume maybe in a years time I wont be in a possition to pay it at all beter safe than sorry i suppose