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Pay off loan with savings?
Just after a bit of advice, not sure of the best place to go now for free financial advice.
I have an outstanding car loan which has 2 years left which I've just noticed I'm paying around £90/month interest on, after which there is the final lump sum payment. I am trying to save as much as possible at the moment to have money ready for that final lump, but obviously life happens so I'm not going to have it all and will need a smaller loan to help cover this final lump.
Now I do have some money set aside in an ISA (my rainy day/house emergency fund) which would go half way to paying off this final lump, but then obviously I don't have any contingency.
My thoughts are whether instead of putting money back every month for this, should I be look at paying off the current loan to reduce the £90/month interest or even look at using the my ISA to pay off a bigger chunk. I can only assume that by paying off the current 2 years earlier, it would being the final payment forward and then I would still have no savings to cover this, but then a newer loan would be less than my current 5.9%. Part of me wants to carry on with my rainy day fund and putting back some money every month, but then every month I'm obviously paying more in interest than I'm earning.
Hope this all makes sense and someone possibly has some thoughts on it.
Many thanks
I have an outstanding car loan which has 2 years left which I've just noticed I'm paying around £90/month interest on, after which there is the final lump sum payment. I am trying to save as much as possible at the moment to have money ready for that final lump, but obviously life happens so I'm not going to have it all and will need a smaller loan to help cover this final lump.
Now I do have some money set aside in an ISA (my rainy day/house emergency fund) which would go half way to paying off this final lump, but then obviously I don't have any contingency.
My thoughts are whether instead of putting money back every month for this, should I be look at paying off the current loan to reduce the £90/month interest or even look at using the my ISA to pay off a bigger chunk. I can only assume that by paying off the current 2 years earlier, it would being the final payment forward and then I would still have no savings to cover this, but then a newer loan would be less than my current 5.9%. Part of me wants to carry on with my rainy day fund and putting back some money every month, but then every month I'm obviously paying more in interest than I'm earning.
Hope this all makes sense and someone possibly has some thoughts on it.
Many thanks
0
Comments
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It's almost always better, in this financial climate, to pay off debts than to save. http://www.moneysavingexpert.com/savings/pay-off-debts?_ga=1.150161014.1767989173.1416486368Grateful to finally be debt free!0
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