Loan : Should I pay it off or not?

LeonThePro_2

I have a personal loan for £5800 @ 7.9% taken out in March 06 over 36 months @ £180.86 a month. I have come into some money and I am no able to pay it off. The question is should I pay it off in one go or put the money into a seperate account and continue till the end. Which is the best option to save money.

Text from loan info:
If you settle your loan early, the settlement amount that you would have to pay per £100 borrowed would be as follows, for example, if you wanted to settle when a quarter of the repayment period had passed the settlement amount per £1000 borrowed would £709.56, half period £501.94, three quarters £265.69

Not sure what the above means.

Thanks for any help.

Graeme7777

Hi,

The best solution is to get a settlement amount from the lender.

standupguy

Looking at your figures it looks like after Mays payment you will have 10 payments to go - approx £1880 balance.

The settlement figure will be less but most of the interest has already been paid so I would think your settlement figure will be around £1800.

If you put £1800 in the bank and pay tax on the interest it will earn you up to £80 over 10 months.

So not much in it either way.

As most of the interest has been paid on your loan the remaining 10 months is cheap money really.

If you have thoughts of taking another loan in the next 10 months may be better to put the cash in the bank and use that as it will be cheaper.

If not, better to get rid of the loan