what's the best option?

mtm81

Hi Everyone,
I have an outstanding personal loan with £5.8k left on the account.

I have that money saved and ready to pay it off...

However, - a few weeks ago - my car basically went into retirement. (by that I mean - it stopped wanting to work correctly and is going to cost a fortune to get back on the road - plus because it's totally unreilable I've spent loads on it anyways)..

So basically I also need to buy a new car,


I'm self-employed so as I know you guys will know - first impressions count for my clients with me.. therefore my car needs to be something decent (i.e not a banger)...

so if I pay off my loan (which has about 3 years left to run).. with the money I've left - I've only got the trade in value of my existing car (I'll only get about £3k for it)...

So I'd have to take out a new loan (of about £5k or thereabouts) to get a decent car.

So I'd be paying off one to start a new one :-(

The other option is to simply leave the existing loan and pay it off monthly as I am doing (which is not an issue money wish).. and use my savings to get the new car with...

What should I do?

thesaint

Work out which option is cheaper and take that option.

chani1

the best option is the latter as if the loan is front loaded interest you will have paid a huge chunk off already but by starting a new loan you will be back to square one therefore paying the interest 2x so it would make financial sense to use savings instead.