Should we consolidate our loans?

pickle9910

Last year my husband and I each got a loan (we have savings but didn't want to spend them).

We can afford the repayments but I was wondering if it would be beneficial & cheaper if we consolidated our loads (both are with Hitachi).

Are there any pro's and con's?

TIA!

Pixie5740

Probably not.

There are several threads about this topic already on this board. Why not read them and see what you think?

bargainbetty

What are the interest rates on the loans compared to the rates on your savings? If you are paying unnecessary interest to borrow money when you don't need to, then you have a much better option for saving money than consolidating.

Pay them off, and rebuild your savings using the same (or greater) monthly payment that you would have paid to the bank.

CLAPTON

pickle9910 wrote: »

Last year my husband and I each got a loan (we have savings but didn't want to spend them).

We can afford the repayments but I was wondering if it would be beneficial & cheaper if we consolidated our loads (both are with Hitachi).

Are there any pro's and con's?

TIA!

why did you get a loan
why did your husband get a loan

why don't you want to spend your savings ?

andyfromotley

In general terms getting loans whilst you have savings is crazy. You end up paying far more in interest on your loan than you get on your savings.

Unless there is a compelling reason, don't consolidate your loans pay them off with your savings!

DCFC79

Use your savings

pickle9910

Thanks.for all your replies

We got the loans for a scooter and dentistry work. DH didn't want to spend our savings as he is worried we will not replace them to the same level (life happens and it would be easier to say we won't save this month because the children need xyz, where we HAVE to make the loan repayments). We know the rates for savers are rubbish, and not comparable to the interest rate we're paying on the loans but as this isn't an option for us I think we will keep everything as it is. Thank you

geoffken

Discipline is needed.
If somebody was swapping your £10 notes for fivers you would soon stop doing it.
That is exactly what you are doing.
Paying £10 in interest and getting £5 in savings

DCFC79

Discipline is definitely what you need.

Nasqueron

pickle9910 wrote: »

Thanks.for all your replies

We got the loans for a scooter and dentistry work. DH didn't want to spend our savings as he is worried we will not replace them to the same level (life happens and it would be easier to say we won't save this month because the children need xyz, where we HAVE to make the loan repayments). We know the rates for savers are rubbish, and not comparable to the interest rate we're paying on the loans but as this isn't an option for us I think we will keep everything as it is. Thank you

Imagine you have £10,000 in savings at maybe 2% interest annually in an ISA - that's £200 a year interest

You have say £10,000 in loans paying what, 4,5,10%? That's paying £400-£1000 a year in interest

It is not economical or fiscal sense in any stretch to have savings earning a pittance while you pay more interest on the loans losing you money every month

Simply pay off the loan (even if just the one with higher APR) with savings, then use the money you were paying in loan repayments to rebuild savings, repeat for the other

andyfromotley

pickle9910 wrote: »

Thanks.for all your replies

We got the loans for a scooter and dentistry work. DH didn't want to spend our savings as he is worried we will not replace them to the same level (life happens and it would be easier to say we won't save this month because the children need xyz, where we HAVE to make the loan repayments). We know the rates for savers are rubbish, and not comparable to the interest rate we're paying on the loans but as this isn't an option for us I think we will keep everything as it is. Thank you

Hi pickle,

i do understand the security that savings bring. However i am trying to think of a friendly way to say this..... your thinking on this is just plain old dumb!!
There is no point in saving if you aren't going to use it when you need it and instead take on expensive debt.

Please sit down with your husband, think this through and rethink about paying off the loan with the savings, you will soon have an emergency pot built back up again. How about just paying off ones of the loans from savings as a first step. Theres a a quote i saw which really struck a chord with me goes something like this

'Every penny you pay in interest is your past stealing from your future'