Should I pay off early or put my money to use? [23, M]

[Deleted User] · 16 July 2018 at 7:48PM

I decided that I wanted to study at a vocational college, receiving a scholarship for £3000 per year against my fees. To pay for the remainder of my fees, my mum took a low-interest bank loan on my behalf, which I pay back at a monthly rate of around £150. (3% interest loan - fixed rate). This is to be payed over 36 months and I am currently on the 11th month. I have now graduated and still have a total of around £3500 left to pay off - I recently picked up a second job ontop of my current job bumping my hours over 40 hours a week.

Now the question, is it better to:

A: Increase my monthly payments and pay off the loan early.
B: Just continue to pay the set monthly payments for another two years?

I ask this because if for example I had an income of £800 pm, payed £150 I would be left with £650. I live rent free although I'm thinking about offering to pay towards utility bills (mortgage is paid on house) Couldn't I put this money to work for me, seeing as now matte how quick I pay the loan, the same amount will be paid.

Apologies for the weird layout of this post. Need some thoughts / opinions / advice on this

If any info is missing, ask!

[Deleted User] · 16 July 2018 at 7:54PM

Deleted_User wrote: »

Couldn't I put this money to work for me, seeing as now matte how quick I pay the loan, the same amount will be paid.

That is only true if the loan was from some unofficial source - eg a backstreet lender. In which case I would still settle it as soon as you can, in cash rather than body parts.

Any legitimate loan will see you paying less if you settle early.

If you think you can earn more than 3%, after tax, then you could keep the loan running and invest.

BrassicWoman · 17 July 2018 at 5:09AM

As it is your mum's debt, not yours, I would get it paid off as soon as possible. That seems fairest! Then you can make decisions about your own money afterwards.