What's the best thing to do with redundancy money?

Lorraine1863

I have a car loan of just over £10000 but also really want to buy a house.

My redundancy is nearly £21000. 

Should I pay off my car loan which finishes in 3 years or keep the money for a bigger deposit on a house? 

TheMilkmansDad

whats the APR of the loan? If it's higher than you'd get in a savings account (so around 0.6% easy access) then pay the loan off.

phillw

Check to see whether there is an early repayment charge for paying the loan off early.

MEM62

1) Clear the car loan
2) Re-direct the amount you were paying as repayments into your deposit savings

Job done!

AnnieB2018

Could you sell the car, clear the loan, buy a cheaper car and so end up with a car and a larger deposit?!

macman

It's very unlikely that your car loan APR is less than the rate you will be paying on your future mortgage. If your debt is expensive, then clear it.

Clive_Woody

Do you have a new job? If not I would hang on to the money as you may need this accessible in the short term, then consider how you want spend it. 

steampowered

Having a car loan will reduce the size of the mortgage you can get. The lender will take repayments off your income which reduces the amount they will lend.

Plus, you can't get a mortgage until you are settled in a new job anyway.

Pay off the car loan; pocket the interest you have saved; buy a house when you can get a mortgage.