Do i pay off my loan or not?
Discussion
Just s quick one really.
I'm currently paying £200pm on a loan which has 11 payments left. I have the money to pay it off today (settlement around £1900)
Would I be foolish to put the 2k I have in an account somewhere for 'what if' and carry on paying the loan, or should I just settle it?
Thanks.
I'm currently paying £200pm on a loan which has 11 payments left. I have the money to pay it off today (settlement around £1900)
Would I be foolish to put the 2k I have in an account somewhere for 'what if' and carry on paying the loan, or should I just settle it?
Thanks.
What is the loan rate?
What realistic rate can you earn doing other stuff with the money? (Savings, investment, gambling etc.)
If the loan rate is higher, pay it off. If it isn't, don't.
Insert small benefit of piece of mind into the loan rate if required. (I'd get rid of the debt as soon as possible, and pay an extra £200 a month into my mortgage if I were you.)
What realistic rate can you earn doing other stuff with the money? (Savings, investment, gambling etc.)
If the loan rate is higher, pay it off. If it isn't, don't.
Insert small benefit of piece of mind into the loan rate if required. (I'd get rid of the debt as soon as possible, and pay an extra £200 a month into my mortgage if I were you.)
The other posters are right in saying pay the loan off.
However, on the other hand you may find that once you pay the loan off you might then adjust your lifestyle to make use of the extra £200 per month rather than saving it (i.e. buying crap that you don't really need but don't treat yourself to presently).
I'd say if you're comfortable financially right now then continue to pay for the next 11 months (you've probably paid most of the interest off by now), put the £2000 in an ISA and then 11 months down the line you've still paid the loan off and also have your £2000 (+ interest) lump sum available for whatever you choose.
However, on the other hand you may find that once you pay the loan off you might then adjust your lifestyle to make use of the extra £200 per month rather than saving it (i.e. buying crap that you don't really need but don't treat yourself to presently).
I'd say if you're comfortable financially right now then continue to pay for the next 11 months (you've probably paid most of the interest off by now), put the £2000 in an ISA and then 11 months down the line you've still paid the loan off and also have your £2000 (+ interest) lump sum available for whatever you choose.
Settle it.
This year I have cleared virtually ALL of my debt. I have the finance on the car to get rid of (car is for sale anyway as I own our Mk1 Golf outright) and then I am debt free to buy a house this year
You will feel so happy when its done and you could just bank the £200 every month anyway!
This year I have cleared virtually ALL of my debt. I have the finance on the car to get rid of (car is for sale anyway as I own our Mk1 Golf outright) and then I am debt free to buy a house this year
You will feel so happy when its done and you could just bank the £200 every month anyway!
I have a similar situation, I have a loan that ends may 15th next year, I just under £400 a month back and I think the settlement is almost affordable, I am torn as to whether to plow my bonuses into the last of my creidt card debt, or the loan to settle early, the loan has a lower APR I suppose so it makes sense to do the card first.
okgo said:
I have a similar situation, I have a loan that ends may 15th next year, I just under £400 a month back and I think the settlement is almost affordable, I am torn as to whether to plow my bonuses into the last of my creidt card debt, or the loan to settle early, the loan has a lower APR I suppose so it makes sense to do the card first.
Yep, as the loan has a definitive end date, the CC doesn't.Gassing Station | Finance | Top of Page | What's New | My Stuff