Peer to peer or clear student debt

Madjh

With £5000 available, Is it wiser to pay off a deferred £5000 student loan dating from 1996-1999, or to defer it again and invest the money in the peer-to-peer site Funding Circle.

Ricardo1980

Depends on interest you have to pay for that debt and interest you receive from lending. In FC (as any other P2P platform), interest is variable, and there is a number of defaults. Anyway, you have average numbers in their websites. Also check tax considerations.
At the moment there is no IFSA for FC, so you have to pay taxes (if more than CG allowance).
However, you can use FC sme fund to put it inside an ISA (and save time not selecting the loans).

How much interest do you pay for that debt?

Trentenders

Why Funding Circle? P2P yes, but FC no. Explore options of other platforms to find one of the better ones.

Ricardo1980

Here a lot of info:
http://p2pindependentforum.com/
http://www.p2pfinancenews.co.uk/

Madjh

Currently interest is 1.6 per cent on Student Loan. Now established that it is not worth repaying so long as you are under the deferment limit - as the remaining balance is written off in 2023.
Remaining question is whether to invest in Funding Circle or in a 5% savings account with Santander, Nationwide, or TSB.
Further question - is it better to keep £20.000 in a 1.5% Santander 123 account or transfer gradually into relatively small 5% savings accounts (Santander/TSB/M&S/FIrst: £250 per month limit; Nationwide £500 per month)