Barclay's Career Development Loan

Zelie

Hi All,

I have a CDL with Barclays which is charging me around £200 interest per quarter and payments of £181.

I also have An ISA with £4000 and another £2000 saved. These are savings for a deposit on a house.

Given that the remains of my loan just about equal my savings would it be better to just pay off the loan and be done with it? Or let it carry on? It would be nice to get rid of the debt but I'm not sure I want to set myself back to zero with regard to buying a house.

Advice would be appreciated!

Storm

You'll be paying a far higher interest rate on the loan as opposed to what you're gaining on the savings, so I would say to pay it off - you'll be able to put the extra £181 a month onto a standing order into your ISA as well as what you regularly save, and it will build up again in no time!

If you're worried about not having some kind of savings 'buffer' leave £500 - £1000 there in case of emergencies. On extremely rough figures I reckon your interest rate on your loan is about 14% apr, and I'm guessing your savings are probably only getting 5%ish?

rog2

I agree with Storm. Also, the fact that you will have no other current loans and have demonstrated good payment will help your case when you do apply for a mortgage.

MickMack

Storm wrote: »

You'll be paying a far higher interest rate on the loan as opposed to what you're gaining on the savings, so I would say to pay it off - you'll be able to put the extra £181 a month onto a standing order into your ISA as well as what you regularly save, and it will build up again in no time!

If you're worried about not having some kind of savings 'buffer' leave £500 - £1000 there in case of emergencies. On extremely rough figures I reckon your interest rate on your loan is about 14% apr, and I'm guessing your savings are probably only getting 5%ish?

I totally agree,

If you think about it another way, your worried about setting yourself back to zero with the house deposit.

Currently you have a situation where you are actually losing roughly 9% (14% loan - 5% ISA) on your savings by holding on to them. By using your savings to pay off the loan and starting from scratch again you clear your debt and begin to earn 5% (or so) on your savings as you go!

Plus being able to go looking for a mortgage deal having cleared your debt and gathered up a deposit you should be in a much better position.

Zelie

Thanks for the advice. I'd completely overlooked the difference in interest rates and yes, that will make a huge difference!