Car finance early repayment advice

spikeyross

Hi guys

I currently have 17 months left on my car at £331 a month.
This accumulates to roughly £5600.
I'm currently trying to save for a house deposit and have about 10k in savings.
Does it make sense to pay off my car credit now? Considering it would be at least another 1.5/ 2 years before I was looking for a house?

Thanks in advance

Time_to_face_the_music

spikeyross wrote: »

Hi guys

I currently have 17 months left on my car at £331 a month.
This accumulates to roughly £5600.
I'm currently trying to save for a house deposit and have about 10k in savings.
Does it make sense to pay off my car credit now? Considering it would be at least another 1.5/ 2 years before I was looking for a house?

Thanks in advance

Is there interest on the car loan? If so, unless you have a savings account where the interest is higher than you are paying on the loan, it makes sense to pay off the loan now, then use the monthly payments to top up you savings again.

You may want to see if you can edit your poll, it offers the option of yes or nob! :rotfl:

TTFTM x

enjoyyourshoes

Make sure there is no early or overpayment penalty.

If neither PAY IT OFF.

Its much better to have the benefit of compounding interest on savings rather than against you on DEBT.

When you are taking out Mortgage get one that allows (without penalty) to overpay & pay off loan earlier.

HSBC website has a 'tool' that allows you to see benefits in £ & reduced mortgage term if you overpay, great motivator to start doing it.

spikeyross

I've worked out, taking interest into account. I'd still have a larger deposit for a house after the finance term had finished though?