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Should I pay off my loan early?
Hi all.
I have approximately £3k on a loan for my car. I have recently bought my first property and put another £3k on an 0 per cent credit card.
I have around £5k in a isa.
I'm not sure what/if I have in terms of early repayment penalty...but I have around 2.5 years left paying £130pcm.
Think it's worth spending my saving to pay off my loan earlier, assuming the penalty is small??
I have approximately £3k on a loan for my car. I have recently bought my first property and put another £3k on an 0 per cent credit card.
I have around £5k in a isa.
I'm not sure what/if I have in terms of early repayment penalty...but I have around 2.5 years left paying £130pcm.
Think it's worth spending my saving to pay off my loan earlier, assuming the penalty is small??
0
Comments
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It really depends on how much interest you get from your savings compared to how much interest you pay in your loan. Usually though, it would be better to pay off the loan first.0
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You need to find out if there's a penalty.
What's the APR on the loan?
Some banks offer an overpayments calculator on their internet banking. If your loan has this feature, it may be worth playing with some figures.I’m a Forum Ambassador and I support the Forum Team on the Budgeting & Bank Accounts, Credit Cards, Credit File & Ratings and Energy boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.
You don't have to be the best -
Just be better than you were yesterday.0 -
On the other hand you only have relatively small change in that ISA for a rainy day. Will you put that £130 away or spend it ? How are you intending to pay off the 0% card ?0
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I think my interest rate is 5%.
Once my loan is paid off the extra money will start paying off my credit card0 -
If it was me, I would pay it off 100%0
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If you are paying more interest on the loan than you are receiving on the isa and there is no early repayment penalty then yes I would pay it off and divert loan payments to credit card.I’m a Forum Ambassador and I support the Forum Team on the Debt free Wannabe, Budgeting and Banking and Savings and Investment boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.
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Click on this link for a Statement of Accounts that can be posted on the DebtFree Wannabe board: https://lemonfool.co.uk/financecalculators/soa.php0
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