Do I take out a loan to keep as an emergency fund?

foxy-stoat

Assuming the £166 a month is a loan over 4 years, then why not...it will cost you about £500 in interest for you to have £7500 sat in Premium Bonds. If you win the lowest prize 20 times in 4 years you will break even - you could be very lucky and get a big win.

If you can afford it then do it - but don't be borrowing money off family members though, that's a rubbish idea - monumentally stupid to offer an interest free loan for this reason also so do everyone a favour and gratefully decline the offer.

Or you could just get a credit card with £7500 limit and only use it in case of that £7500 emergency - that why it will cost you nothing until you need it and can save in the mean time.

Good luck and report back when you start winning - I had 3 wins a few months ago and one month I had 6 x £25 wins on the PB's.