70k Debt which you pay first.

Hicky34

Hello I am new here and I am looking for some advice.

After years of chasing debts and watching them spiral I have taken stock and would like some advice on which direction to go next.

For some background I am in a good career with good pension options and relatively good job security.

I am accommodated and mortgage free.

I divorced in 2016 and accumulation of debt is between 2008 and 2016.

I have no credit card debt.
I have no overdraft
I have never missed a payment.

I have a personal loan for £35k at 13.44% with 8 years to run and £49449 to repay.

I have PCP for my car that is £19777@ 9.7% due to run out in. Dec 20 where I either give up the car or refinance for the balance as it is not covered in the 48 months of payment you pay only expected depreciation.

I am running the 80/20 zero sum budgeting where I save 20% of my post tax income and 80% to cover needs/wants.

My question is each loan has no extra payment penalties so which do I pay first?
Logically I would make extra payments on the one with higher APR.

But as the PCP original term ends sooner If I make extra payments there I will reduce the amount I will need to refinance to pay off the car complete where it will the. Become an asset not a liability.

Ideas welcome.

BabyStepper

Hi there

If you are mortgage free and have been saving 20% of your income then you will have a big amount of savings to pay off the debt. Great news. How much do you have in savings? I'd advise keeping £1,000 as an emergency fund and throwing the rest at the higher interest debt.

If you post a statement of affairs we will all be able to advise more accurately.

ANDY597

Have a look on the Google for a snowball calculator, you plug the details of your debts and interest rates in, what you can afford to pay and it will calculate what order to pay things off.

As a generalisation, paying off the larger debt with the higher interest rate would be the way to go

Lots of information on the main mse site on driving down interest rates using 0 percent cards, low cost loans etc.

Id politely suggest that would be your next best steps. Great way to save money is to reduce what your having to pay back in the bigger picture.

Hope this helps.

[Deleted User]

Hi,

Welcome to DFW.

I would pay off as much as I could to the loan cos that's a higher interest rate.

I used all of my savings to pay off my debt cos it was just playing on my mind too much, that might not be for you though.

How much savings do you have? Could you use a portion of it to pay down your debt and keep some for an emergency fund?

Good luck.

Dxxx

Buffythedebtslayer

I am not that great with money stuff (obviously why I am here!) But my gut says pay off the loan cos it is higher interest rate and it would be a relief? to not have the payment each month.

Good on you for being so disciplined with the CC and overdraft etc.