Should I pay or go?

wooders

I'm soon to recieve £14880.

I owe £13200 on a car loan that has 4.5 years left to run of a 5 year term. I pay £266 per month for this. I believe the rate in 5.44% APR.

Q I have, should I pay this off?
Q Should I do something else? (spending it is not an option)

Comments please

W;)

tradetime

Well if the debt is well within your capacity you could lock the money into one of the fixed term deposits on offer at the moment of 7%, I think that beats your debt interest if I understand that correctly and consider paying it off next year.

wooders

Our Martin says I should pay off the debt first!

tradetime

wooders wrote: »

Our Martin says I should pay off the debt first!

As rule he does however....he also says...

The exceptions are in the few occasions when debts are cheaper than savings, or cost so much to pay off that there's no point:

If the interest rate on your debt is less than the amount your savings earn after tax then, providing you're financially disciplined, you can profit from building up savings and keep the debts. In effect you're being paid on money lent to you by the banks for nothing.

http://www.moneysavingexpert.com/cards/pay-off-debts#save

brownbabygirl

but is the calculation of APR the same as interest paid on money in a savings account?

CLAPTON

if you can get more than 5.44% after tax on your savings then consider keeping the savings if not then pay off the debt

RayWolfe

tradetime wrote: »

Well if the debt is well within your capacity you could lock the money into one of the fixed term deposits on offer at the moment of 7%, I think that beats your debt interest if I understand that correctly and consider paying it off next year.

7% .... less tax!

debbie42

Check for any early redemption penalties on the loan, and double check the interest before making the decision.

brownbabygirl

debbie42 wrote: »

Check for any early redemption penalties on the loan, and double check the interest before making the decision.

yep was thinking that as well.:T