pay it all off now or not??

ColinHackett

Morning all,

I'm after some advice as to what to do next.

I currently have a loan of 3K with lloyds paying £100 a month.
i also have 3.5K in an easy access ISA with halifax at 3%
and 2.2k in a 3 year fixed rate ISA with halifax 4.25% (just over 2 years to go!)

my mrs also has a loan with lloyds for about 2k paying £120 a month.

while the loan repayments are not a problem, payments made every month on time. i'm wondering if its worth using my savings to pay it all off.
Or shall i see if we can get a MBNA 0% money transfer for 20 months and pay it off that way, i know there is a 4 % transfer fee and to pay it all off in the 20 months the payments would go up to about £260 (only £40 more than we are paying now) but it would take 1.5 / 2 years off our DFD's. :j

Thoughts / sugestions ??

Thanks
Colin.

downsizer3

What are the interest rates on the loans?

ColinHackett

Not sure off the top of my head as the lloyds internet banking is rubish and doesnt show the loan % (you would have thought they would as its a pretty major detail!)

i think the wifes is at 16.10 and mines more like 25.

edit:- i have just had a play with the loan calculator and 21.5% comes out with the correct repayment over the term/ value i took.


i have all the paper work at home so will look it up tonight.

Little_Miss_Uni-Debt

Why not pay one off, then save back up and pay the other one off.

I think most people are reluctant to give up all of their savings because they would be without cash in an emergency.

As far as I can see if you paid both off now you'd still have £700 in savings which is a reasonable position to be in. However if you're reassured by having a larger savings pot, pay one off now and save the monthly payment instead.

That way both loans are paid off 1+ year early and you always have 2k+ in your account as backup.

fannyadams

READ THIS
find out how much to pay off the loans and what the APRs are.
then
if APR for loan is higher than APR on savings then use savings to pay off loan and then use money that you would have paid to loan to pay into regular savings account. unless you NEED the money for something else like living expenses...
and don't forget to reclaim the PPI from the loans of course!
HTH
FA
x

cookson

Looking at the interest rates on the loans, I would be tempted to pay them off now. And you should have plenty left over as a back up, just try and top that up with more savings as soon as you can.

[Deleted User]

Don't forget that, by paying them off early, the settlement figure should be quite a bit lower than the remaining payments, due to a decent chunk of interest being knocked off for the early settlement.

Malky

Pay off the loans. Emergency/savings fund will soon build up again if you're not paying out on other debts.
I fail to understand why people can get into debt but have money in savings accounts. What's the point of having savings if you're not going to spend them?