Best APR one can hope for - living with parents

adamditz

So, having recently decided it’s time to sort my life out and get on the property ladder, i’ve been putting aside £1500 a month and it’s mounting up nicely (albeit slower than i’d like )
Part of the sorting process, i was in a horrible negative equity PCP deal on an expensive audi, it was costing me a fortune to run, fortune to service etc etc. i took out a 10k loan with natwest at 12.9% apr, cleared the neg equity and bought a reliable little cheap to run and free (i’m a mechanic) to maintain car with it whilst still being able to mount up the mortgage deposit.

now the pcp deal is gone and forgotten and things are ticking along nicely, i’m now wanting to see if i can pay less interest on my loan. now, i need to give it a few months to let my credit file calm down a bit, but can i reaslisticly hope to beat that 12.9? i’ve had no defaults, fairly high CC limits with close to 0% utilisation and can think of no reason my credit isn’t in order!
any advice appreciated!

jonesMUFCforever

Use your savings to pay off the loan?
Then you can save £1500 per month plus the amount of the loan.
Yours savings will soon grow again.

adamditz

that!!!8217;s the obvious thing to do i know, but that puts me right back to square one savings wise and adds a minimum of 6 months saving time to get back to where i was, surely id do better in terms of growing my money getting on the property ladder asap no?

System

You're worse off because you're spending more money on interest on £10k than you are gaining in interest on the savings. You're not growing your money because whilst you're adding to the base fund any interest each monthly contribution would earn is more than swallowed up by the interest on the loan.

£10,000 borrowed over 5 years at 12.9% APR costs you £3,405 in interest, you repay £13,405. You basically throw away two and a bit months of the money you're putting aside on interest.

The other thing to consider is when you apply for a mortgage any existing loans affect how much you can borrow.

custardy

adamditz wrote: »

that!!!8217;s the obvious thing to do i know, but that puts me right back to square one savings wise and adds a minimum of 6 months saving time to get back to where i was, surely id do better in terms of growing my money getting on the property ladder asap no?

How do you think it will be in a new house wanting to do things, but having to spend the money on a loan?

MEM62

adamditz wrote: »

that!!!8217;s the obvious thing to do i know, but that puts me right back to square one savings wise and adds a minimum of 6 months saving time to get back to where i was, surely id do better in terms of growing my money getting on the property ladder asap no?

You are at square one anyway!

Any savings you have is effectively reduced/negated by the amount of debt that you carry - and the debt will be taken into consideration when the mortgage lender is looking at affordability.

Also, you pay from savings you have no interest (and your savings will not be earning you as much as the loan is costing you) Therefore, over time you are far better off clearing the loan from savings now. You need to make the decision based on facts and figures rather than what you are emotionally comfortable with.