Need advice - do I pay back loan early?

turquoise88

Hi all


I have a personal loan which I took out to pay for a car. The loan amount was £8000.


I have £4000 remaining on the loan and have the money in savings to pay it off, which would leave me with about £3800 remaining in that savings account.


My question is, should I pay the loan off early? Are there any benefits in continuing to pay it off as normal or paying off additional amounts per month without paying it all off in total?


I'm just weighing up options as my husband and I are looking to move house soon and will obviously need to declare all outgoings on a mortgage application, and we will need to borrow quite a bit more money for the next purchase. I was wondering whether clearing the loan may help and also be a weight off my shoulders.


Thank you.

MallyGirl

are there any penalties for early payment?

DCFC79

You could make a large payment to reduce the payments so paying less each month.

[Deleted User]

DCFC79 wrote: »

You could make a large payment to reduce the payments so paying less each month.

I don't think that will work. The contractual payments would remain the same, they would just finish earlier.

foxy-stoat

Clear the loan with savings now and set up a standing order to your savings account the same amount as your loan payment.

Your loan interest will almost certainly be more than the savings rate.