Loan or save

Macgirl78

Hi there,

I have a 2.9% loan with about 14 payments left on it (£2100 ish). I also have 2 savings accounts that I put into in lieu of pet insurance that have accrued in total just over £3000. The interest is 2.9% and 2.7% which is less that I though it was tbh!

Would it be more prudent to pay off the loan (early repayment allowing) or keep the pet savings and just wait? 

The money I’d save from the loan payment I would squirrel away to help towards my mortgage when our current product ends in 2 years.

Thanks in advance. I know there are questions like this elsewhere but I couldn’t find one more recent than 2018 and things have changed since then!!!!

[Deleted User]

Being savings in lieu of pet insurance, I’d err on the side of caution. What type of pet are we talking? Parrot, pay the loan off. Dog, keep the savings where they are. If you use that money, then suddenly find you need it back, where would you turn? Another loan, credit card? Such a thing could then torpedo your squirrelling away plans.

Maybe instead go halfway and pay a grand off the loan. Decent pet savings would still exist, and the loan balance slides towards the sub £1,000 point.

Pet insurance is the one thing I left alone when cutting my costs recently. It’s now my most expensive monthly debit, but I dare not cancel it. Had I done the savings method instead, I’d be just as fearful of using it for something else, considering the wild costs of pet healthcare.

theoretica

The loan is charging 2.9% interest and your savings paying at least 2.7%?  So about £4 a year difference on 2k?  Personally I would go for the flexibility of savings - you can always pay a chunk off the mortgage later with them.  If you paid off the loan would you be disciplined enough to put the full payment (or more) into savings, of is the discipline of the needed payment useful to you?

fatbelly

Of course if your savings were earning a little more, this would be an easy decision

WYSPECIAL

Move your savings, you should be getting far more interest than that in the current climate and could still keep it easy access.

If you save regularly for your pet potential expenses look at the rates you would get on a regular saver account.

If there are no penalties for paying a lump sum off the loan and you’d prefer to do so the at least keep some of your pet fund. You have been prudent to save it but you never know when you will need to dip into it.

Macgirl78

Thank you everyone. 

I have 2 dogs and a cat. 

I would put it away, I am very disciplined.
I didn’t expect to dip in to the pet savings for anything other than emergencies. Paying the loan off would leave nearly £1000 in the pets accounts.

I’ll have a look at higher interest saving accounts and also see if I can pay a chunk of the loan. 

Thanks again👍🏻

zedonk

Speaking as someone with uninsured pets, don't underestimate how much vet bills can be! A scan or surgery can easily cost £1K and my cat's blood tests (needed every few months to monitor a long-term condition) are £200 each time.

enthusiasticsaver

I think I would move it into a higher interest earning account.  I know vet bills can be expensive so  I would hesitate to deplete savings if you have no insurance.  Do you have other savings? 

Macgirl78

Thank you.

I have other savings for other things. The account with the mortgage savings in is the most sparse as other things take priority which is why I was thinking of using the loan money for that but yes the pet savings would be depleted considerably. 

I don’t have insurance because if it’s never needed it’s a waste hence why I’m saving. Still being responsible without feeling like I’m wasting money.

I definitely look into a higher interest account but use the high ones attached to my current accounts for other things (and you tend to only be allowed one).

cheers everyone 

[Deleted User]

Going a bit off-topic, but don’t overlook that some pet insurances also include third-party liability. If one of your dogs goes rogue and causes a car crash, or spooks horses with riders, for example, or happens to eat a random stranger’s leg, you’d have some cover for any claims potentially coming your way. 

I have lost grip of my dog’s lead in the past, and one time he has bolted onto the road in front of a lorry that had to slam to a halt Everyone survived, no claims, thankfully. But, it’s something I never expected would happen, yet it did. 100% an accident, though makes me think about what could have happened (lorry smashes into a car). Consequently, I value the public liability cover as equally as I do the healthcare cover.