Paying off car

aidso

I didn't know what section to put this in as it crosses a few forums...

I have a car on finance which I am paying off each month. I am not in debt and can comfortably make the payments.
I want to get myself on the property ladder, but based on the car payments I believe I wont be able to borrow as much as I think, because of these payments.
Every week I put money into an ISA to go towards a deposit on a house and have been building on this for a while now.

Am I better putting this "ISA savings" money every week, towards extra car payments thus paying off the finance quicker?
Am I better taking the entire ISA and using it to pay off the car all at once and then starting to save my house deposit all over again?

Example with figures:
Car = £340/month
Savings = £100/week into ISA
Car Balance = £6000 based on a final date of October 2013.

I am led to believe that if I pay the car off now, it would be considerably less than £6000 because of some sort of cumulative interest.

Pay off car quicker with £100 a week extra going to the car instead?

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Pay off the entire car loan now with ISA and be left with no ISA and have to start again, but have no car debt?
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Thanks

lamarsi

if the interest on your ISA is less than the % on your car loan I would pay it off and start again, I've been working thru my debts by taking them on at a time, and won't consider saving anything until I can get a better rate for savings than the interest on my debts

Tixy

Paying off the car in full now will save you interst overall.
Thats because the interest you are earning on your savings will be at a lower APR that the interest you are paying on the debt.

Is the £6000 the total amount of payments left to go? If so then the settlement balance would be less than that.

First I would talk to an independant mortgage broker to see how much you would likely be able to borrow whilst you still have the loan outstanding - and how much you would likely be able to borrow if you did not.

aidso

Hmm ok thanks.
I think im gonna find out how much to settle now and think about paying it off in full.