Loan taken out - advice needed

mo112

Hi,

A couple of months of ago - i really needed some money to clear debt, so i took out a loan of 7000, and need to repay 7230 in 16 months.

this is taken monthly of around 450 a month, my salary per month is around 1200;

Currently in my bank i have around 4500, should i save up to pay off this loan as a one off or shall i put most of the 4500 into a savings account, or just wait the 16 months until the loan is paid off?

thank you

Are there maybe anymore other ways i could invest/use this month in my bank?

Kind regards

m112

opinions4u

Who is your loan with?

What is the APR?

How does the lender treat overpayments?

dresdendave

mo112 wrote: »

Hi,

A couple of months of ago - i really needed some money to clear debt, so i took out a loan of 7000, and need to repay 7230 in 16 months.

As you have now realised (hopefully) you have not cleared any debt, you've just moved it to a different lender. This could be a small step in the right direction if the new debt is at a better APR.

mo112 wrote: »

Currently in my bank i have around 4500, should i save up to pay off this loan as a one off or shall i put most of the 4500 into a savings account, or just wait the 16 months until the loan is paid off?

m112

What APR are you earning on your savings? Unless it is higher than the APR on your loan then you are wasting money. Keep a small amount back as an emergency fund, then talk to your lender about repaying a chunk of the loan with the rest. Although there may be some form of penalty for early repayments, the interest you save should outweigh this.

mo112

dresdendave wrote: »

As you have now realised (hopefully) you have not cleared any debt, you've just moved it to a different lender. This could be a small step in the right direction if the new debt is at a better APR.





What APR are you earning on your savings? Unless it is higher than the APR on your loan then you are wasting money. Keep a small amount back as an emergency fund, then talk to your lender about repaying a chunk of the loan with the rest. Although there may be some form of penalty for early repayments, the interest you save should outweigh this.

Thank you for your reply;

I am earning on my savings 1.69% - on my tax free cash eisa
hsbc uk

and my loan is 4.8% p.a

I would assume that this means my loan is more costly, therefore, better to just wait out the 18 months of hte loan and pay it off and budget carefully.

it is with HSBC my loan.

mo112

the lender with overpayments - i think they charge me a months interest!! unless i pay it all off in one lump sum

CKhalvashi

mo112 wrote: »

the lender with overpayments - i think they charge me a months interest!! unless i pay it all off in one lump sum

1 months interest will be 0.4%, whereas you'll lose IEO 4% by keeping it the way it is and not paying it.

CK

ViolaLass

mo112 wrote: »

Thank you for your reply;

I am earning on my savings 1.69% - on my tax free cash eisa
hsbc uk

and my loan is 4.8% p.a

I would assume that this means my loan is more costly, therefore, better to just wait out the 18 months of hte loan and pay it off and budget carefully.

it is with HSBC my loan.

That doesn't make sense. Since your loan is more expensive, it would make sense to get it paid off as soon as possible, subject to overpayment penalties. You need to find out exactly what these are.