Lending/borrowing our own money for a car

tanith

Does this make sense ........ OH needs to replace his car soon and we thought it would make sense to pay for it out of savings we have plus whatever he gets for the old one as its still roadworthy , he wants to replace the savings monthly plus some interest but I feel a bit mean asking him for interest on what technically is both our monies.... thoughts anyone?

pattycake

It makes sense to me to pay outright for something rather than borrowing. The interest rate on a loan is invariable more than the interest rate on savings. That is unless you are buying a brand new car and can sometimes get interest free credit.

I think it is an excellent idea to pay what would have been the interest back to yourselves. A win/win situation.

One point though, do not leave yourselves without any savings as a back up if things went wrong in your lives.

tanith

Thanks Pattycake just confirmed what I thought.... only reservation I have and its not very likely but I just panic at the thought that OH lost his job and couldn't replace what we spent... its been a great struggle and a long time to accumalate what little savings we have and once its gone its gone if we can't replace it.... but we'll get by as we do not intend spending all of our meagre savings on the car....

thanks

roswell

Just an idea but why not find out what the monthly finance deal would be, set a standing order for that amount monthly back to the savings account ??? obviousely you can be a bit more favourable on the interest rate to yourselves say boe rate - 1 % ??

tanith

I'll look into that roswell thanks.....