Options on loan

col81

Hi, i have found out today that i am taking a paycut to the tune of £6k per year i am in a commission based job and they have changed the pay plan. I have a loan with Santander at 2.9% apr. I owe £11000 on it and i have £11000 in my isa. This was for a car that is also worth around £12k. The cost is £235 per month over 5 years of which i have 4 left approx. Shall i clear the loan with my savings? 

MorningcoffeeIV

It depends on the rates you're getting, whether you can afford the monthly repayments, emergency savings, you income prospects and so on.

CliveOfIndia

Can you still afford to make the contractual repayments on the loan, without stretching yourself financially?  If so, there's an argument to say you should keep your savings in place, as it's always prudent to have some savings to fall back on if the worst should happen.

But from a purely financial perspective, you need to weigh up how much you're paying in interest on the loan, versus what your savings are earning.  Also, you'd need to factor in any early settlement fees that may be imposed on the loan.

macman

Your ISA rate is?