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    • Lum
    • By Lum 28th Mar 19, 3:19 PM
    • 6,368Posts
    • 3,887Thanks
    Pay off loan with redundancy money?
    • #1
    • 28th Mar 19, 3:19 PM
    Pay off loan with redundancy money? 28th Mar 19 at 3:19 PM
    I've just been told I'm getting made redundant on the 18th April, here's my situation.

    Loan: 16,000 remaining @ 7.9% APR. Paying 450/month
    Tandem credit card: 0 @ 18.9% APR. Paid in full every month. Credit limit: 6,000

    Barclaycard: 540 @ 0% APR. Paying 125 every month (used for annual insurance payments) credit limit: 1500. I can still make 0% purchases.

    My redundancy is 5800, with an additional 5800 pay in lieu of notice (9 weeks), my unemployment insurance will not pay out during the pay in lieu of notice, and will only really pay rent and bills I can prove, not including credit cards.

    I am also needing to move out of my current living situation as my housemate is terrible for my mental health, and I want to downsize anyway. I'll probably do this once my unemployment insurance starts paying out.

    My question is, assuming I don't find work, do I do the repay debt with savings thing. The examples all talk about credit card debt, but this is a (comparatively) cheap loan, which if things start to go wrong and I have to borrow a lot, could be replaced with a far more expensive debt.
Page 1
    • zx81
    • By zx81 28th Mar 19, 3:42 PM
    • 21,685 Posts
    • 23,578 Thanks
    • #2
    • 28th Mar 19, 3:42 PM
    • #2
    • 28th Mar 19, 3:42 PM
    Your loan has a fairly high APR, so in theory you should look to clear it.

    But you also need to keep some savings and will also need to keep up with the monthly payments even if you pay some off. You won't be able to get further borrowing until back in work.

    I wouldn't do anything immediately.
    • scaredofdebt
    • By scaredofdebt 29th Mar 19, 11:20 AM
    • 1,286 Posts
    • 630 Thanks
    • #3
    • 29th Mar 19, 11:20 AM
    • #3
    • 29th Mar 19, 11:20 AM
    Those APRs are not too high, I wouldn't do anything until I found another job and then look to pay off the highest APR debt.

    I assume the unemployment insurance will only pay for a certain period of time?

    Regardless, you are more likely to find another job if you are currently employed so put all the effort you can into finding another job before you leave the current employer. Just make sure you would still get the redundancy payment if you find another job in the meantime. With the timescales given I assume you would but worth asking the question.
    Make 2018 in 2018 Challenge - Total to date 2,108
    • Lum
    • By Lum 1st Apr 19, 10:06 PM
    • 6,368 Posts
    • 3,887 Thanks
    • #4
    • 1st Apr 19, 10:06 PM
    • #4
    • 1st Apr 19, 10:06 PM
    Does that mean I shouldn't mention that my current employment is ending when I apply for jobs?

    I haven't actually done a proper job application or interview in 15 years, so I have no idea what I'm doing any more.
    • TBagpuss
    • By TBagpuss 15th Apr 19, 3:21 PM
    • 7,223 Posts
    • 9,460 Thanks
    • #5
    • 15th Apr 19, 3:21 PM
    • #5
    • 15th Apr 19, 3:21 PM
    No, it's fine to tell employers that you are being made redundant. (particularly if it is becuase your employer is closing or relocating)

    If would be more of an issue if you had been sacked.

    It's commin to be asked why you are leaving your current job, and redundancy is a relatively 'good' reason as it doesn't imply anything bad about you, plus it often means you can start sooner than if you had to serve out a long notice period, which can be an advantage!

    It's easier to find work while you are employed because if you have been out of work for a while, potentialemployers may start to wonder why - i.e. whether you can't get / keep a job. So you are probably in a stronger position nw and for the next month or so, than you would be if you were applying in 2 months time, having been unemployed for 2 months, or after longer periods without a job.
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