Does this make sense?

[Deleted User]

It doesn't make any difference where the money is coming from. You're earning less interest on the savings and paying more interest on the borrowed money.

It's a guaranteed get-poor-quick scheme.

Tixy

This doesn't make financial sense.
You need to look at a 3year period, and you need factor in the interest you would earn over 3years by saving the £440ish a month (that you would have otherwise spent on loan repayments).

Over 3 years - option 1 use savings, put aside £440 a month - interest over 3 years £512 (ish). Overall Income £512.

Option take out loan and repay over 3 years interest paid on loan £856, interest earned on £15k savings £945 Overall Income £89.

bargainbetty

Just a thought, and I know that this might seem outrageous, but why do you need to buy a new car costing £15k?

I have a five year old car that cost £7k. It's Kia Ce'ed, drives like a dream and has economical repair and running costs. Seats five with comfort and seems to be like a Tardis when carrying stuff.

Could you not reduce your car expectations to a point where you can have a car and savings?

ViolaLass

You call it trolling, I call it being blunt.

CLAPTON

Chris_Corbett wrote: »

Kind of but not really as the the payments will be coming out of my monthly salary so yes it's money I could be putting away gradually but the nett interest on that would take a long time to accumulate based on payment of £300 odd a month.

It's difficult to know whether this is a wind up or you genuinely don't understand the maths

however if you really believe you can borrow at 3.7% and save the money at 2.3% and make a profit then none of us would ever have to work for a living.

Chris_Corbett

bargainbetty - I have to buy a car that less than 3 years old in order to qualify fro car allowance and I need it to do 30,000 miles a year in.

That's the bit that everyone is missing - I will need to get some finance anyway, just later in the year. I am just bringing it forward,securing an ISA allowance, getting a good rate of fiance whilst it's on offer, and offsetting some of the interest.

Anyway beginning to wish I hadn't asked.

Moderators - please close this thread.

Foxy-Stoat_3

bargainbetty wrote: »

Just a thought, and I know that this might seem outrageous, but why do you need to buy a new car costing £15k?

I have a five year old car that cost £7k. It's Kia Ce'ed, drives like a dream and has economical repair and running costs. Seats five with comfort and seems to be like a Tardis when carrying stuff.

Could you not reduce your car expectations to a point where you can have a car and savings?

Just to give some balance to this tread, my 10 year old Vectra cost £1500, also drives like a dream, cheap to repair and running costs and have carried my fair share of crappolia to the tip !

Tixy

Chris_Corbett wrote: »

That's the bit that everyone is missing - I will need to get some finance anyway, just later in the year. I am just bringing it forward,securing an ISA allowance, getting a good rate of fiance whilst it's on offer, and offsetting some of the interest.

Bit confused on the highlighted point. Why do you need to get some finance anyway? Or are you saying you don't have £15k in savings at the moment?

Chris_Corbett

OK to close off then:

Loan - £15,000
Interest at 3.7% APR over 3 years = £856.20 (use a loan calculator)
Total = £15,856

ISA - Deposit £15,000
Year 1 interest at 2.1% = £315
Year 2 interest = £321.62
Year 3 interest = £328.36
Total interest earned = £964.98
Total interest paid on loan = £856.20

Tixy

Chris_Corbett wrote: »

OK to close off then:

Loan - £15,000
Interest at 3.7% APR over 3 years = £856.20 (use a loan calculator)
Total = £15,856

ISA - Deposit £15,000
Year 1 interest at 2.1% = £315
Year 2 interest = £321.62
Year 3 interest = £328.36
Total interest earned = £964.98
Total interest paid on loan = £856.20

Have you looked at the figures I put in my earlier post? They are pretty much same as yours, except you have missed out the £500 odd you would earn anyway by saving each month.

Tixy wrote: »

This doesn't make financial sense.
You need to look at a 3year period, and you need factor in the interest you would earn over 3years by saving the £440ish a month (that you would have otherwise spent on loan repayments).

Over 3 years - option 1 use savings, put aside £440 a month - interest over 3 years £512 (ish). Overall Income £512.

Option take out loan and repay over 3 years interest paid on loan £856, interest earned on £15k savings £945 Overall Income £89.