Should I pay off my loan early?

richard_lindsay

I have a year to go on a loan and have recently saved the required funds to pay it off early. There are no penalties for doing so.
By paying it off early, I would save £56.36.
Do you think I should pay it off? I would appreciate any other advice too.
Thanks

[Deleted User]

If the loan APR is more than your savings rate, yes.

DrEskimo

We don't have enough information to say. Do you have any other savings beyond the money you have to pay off the loan?
Given the current situation, it might be more prudent to keep the money in case the worse happens. At £56 over a year, it's either not a bit loan, or a very low APR?

richard_lindsay

DrEskimo said:

We don't have enough information to say. Do you have any other savings beyond the money you have to pay off the loan?
Given the current situation, it might be more prudent to keep the money in case the worse happens. At £56 over a year, it's either not a bit loan, or a very low APR?

Thanks for replying.
Yes I have managed to save more than the amount needed to pay off the loan.
It was a £16,000, 4 year loan at 3.3% APR.

jay1804

Yes

If you feel like you are financially secure  and won't need the money in the near future, then pay it off. 

KTMRider

Yes

I'd say yes, if you're making a saving and can afford to do so.
I've just asked Admiral for a settlement figure for my existing loan and they are not giving me any rebate but are actually wanting to charge me an additional £31.04 for the privilege to do so!  I'm sure it'll be in the small print somewhere but I've asked them to rethink their offer, if they don't I'll just continue paying them the money back monthly and save £31.04.
Kind of crazy for a company to offer a disincentive to paying them their money early in such uncertain times!

[Deleted User]

It depends on whether you are viewing the current balance or the full amount to term.  A settlement figure will always be higher than the current balance, due to the two months early settlement interest.

If you're viewing the full amount to term, then the settlement figure will be less than that.

Clive_Woody

Yes

I would pay it off now, then put what would have been your monthly payments into a savings account so you have a decent pot of money and you won't need a loan in the future.