# clear a car loan or hold onto money



## Bulmers32 (10 Aug 2009)

Hi all,

Just wondering if i could get some advice, i have an outstanding carloan for 16k which i could clear with my savings, should i clear this off?

The problem is that my job is looking a bit dodgy ( not recession, we just lost a big contract to a competitor ) so not sure what will happen, should be ok for next 6 months but after xmas, who knows.

My thought was that i am better off piling money into my savings now so i have something in case i lose my job, and if i do, just sell the car and clear the loan, car is worth approx 6-7k more than the loan, or am i better to clear the loan now,and save the 490 / month it costs to repay?

Is it generally advised to clear loans if possible?


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## spursman (10 Aug 2009)

clear it off. you are giving away money by paying this loan


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## bigbadostric (10 Aug 2009)

spursman said:


> clear it off. you are giving away money by paying this loan


 
I would disagree if job looking unsecure. Normally of course you would pay off loan, but there are no guarantees that money will be accessible if you do pay it off, as you would be unlikely to get credit without a job.

Keep a safety net for now.


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## Bulmers32 (10 Aug 2009)

bigbadostric said:


> I would disagree if job looking unsecure. Normally of course you would pay off loan, but there are no guarantees that money will be accessible if you do pay it off, as you would be unlikely to get credit without a job.
> 
> Keep a safety net for now.


 
really, i always thought it was better to have a loan cleared off and own something, thinking would be if job went pear, could just offload the motor?

If keep it and lose job, will have to dip into savings to pay the loan back?


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## niceoneted (11 Aug 2009)

There are a few ways of looking at this. 
You can clear the loan possibly having some money left over from savings or depleting your savings totally. You can then start to save the 490 a month plus what ever other spare cash you have, now is the time for you to be cutting back and learning to be on a tight budget - just in case you lose the job and it also allows you to save to your max. 

You could not pay the loan off but save like mad and make all the cut backs you can now. If you lose your job and are planning on selling the car use the proceeds of the sale to clear it off. 

You could sell your car now and use the excess in the value to buy something alot smaller, older and cheap to run. Thus holding on to your savings and not having 490 to pay out a month. 

This all depends on the amount outstanding on the loan which you don't mention is it 3k/13k or 23k.It would also be a help to know will you have big obligations like mortgage etc if you lose your job?  It will make a difference in what I would do personally. 

Will you be entitled to redundancy if you lose your job? You could factor this in. Also is it possible for you to start looking for another job now or even part time work so you will have some work if you lose your job.


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## Bulmers32 (11 Aug 2009)

niceoneted said:


> This all depends on the amount outstanding on the loan which you don't mention is it 3k/13k or 23k.It would also be a help to know will you have big obligations like mortgage etc if you lose your job? It will make a difference in what I would do personally.
> 
> Will you be entitled to redundancy if you lose your job? You could factor this in. Also is it possible for you to start looking for another job now or even part time work so you will have some work if you lose your job.


 
Hi,

The outstanding amount on the loan is 16k, car is worth approx 23k. I have a mortgage, married, both working but we discussed last night and we could afford to run the household on 1 sal, mortgage is low, 750/month and no kids, wife earns 55k so should be ok in that respect.

I have only been with this company 18 months so redundo wont be much for me, they'd prob offer 6-7 weeks i would say.

I have started looking and am waiting on a few calls back.

I have 24k in savings, so am wondering should i use 16k to clear this loan off, i think my job should be ok until xmas anyway aswell.

I just think we would be in a better position if the loan was gone so would only have normal household bills to maintain, which we have also started to learn to cut back on too..

tks for the reply


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## niceoneted (11 Aug 2009)

Apologies, I missed that you had outstanding balance of loan in first post. 
Given the further info you have provided I would clear the loan - only unless it is fixed in which case you will be hit with penalties and it won't be worth it. 
You will still have 8k in saving and can add 3k to this minimum before you might lose your job. 
You could also look at down grading the car if you think this might help especially if your wife has a good car - or down grade one of them. 
Has your wife any outstanding loans or savings or when you say I do you mean we?
Is her job secure? 
Hope yours is safe in the end it is a worrying time.


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## monascribe18 (11 Aug 2009)

high priced cars a money box with no ass in it


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## cancan (11 Aug 2009)

Why not sell the car, buy a banger, and boost your savings.
Having a 23k car while facing redundancy seems a little excessive.

Use this to get your financial house in order now in case of the worst.
If the worst does not happen, you'll at least having savings that you can use more effectively.


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## Bulmers32 (11 Aug 2009)

cancan said:


> Why not sell the car, buy a banger, and boost your savings.
> Having a 23k car while facing redundancy seems a little excessive.
> 
> Use this to get your financial house in order now in case of the worst.
> If the worst does not happen, you'll at least having savings that you can use more effectively.


 
agreed but when i got the job, it was "secure" and should have been, redundo risk is not due to recession, more due to loss of a major contract which happened quickly and took company by suprise, not much that could have been done..i get a good wage ( 75k + bonus ) and car allowance ( 900 / month b4 tax ) so bought a nice car. Car originally cost 29k but only borrowed 20k so car will always be worth more than cost of repaying loan, incase situation like this occured.

I had thought about selling and just getting something smaller and keeping savings but i dont think the situation is that deperate yet.

I think i'll clear the loan off the car and just start saving really hard in the meantime, this seems to be the general consensus aswell.

cheers for the replies.


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## gembem (12 Aug 2009)

not to put a dampner on it but if you're only in the job 18 months you're not entitled to statutory "redundo" as you call it so what makes you think you'll get 6-7 weeks off them?! will you have 2 years done by the time you think it'll come to "redundo" being offered?


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## Locke (12 Aug 2009)

I'd pay off the loan. Get it out of the way. You should have some savings then but tbh getting rid of a loan is the best thing you can do. If you do find yourself in difficulties, at least the car loan will be gone.


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## moneyhoney (12 Aug 2009)

gembem said:


> not to put a dampner on it but if you're only in the job 18 months you're not entitled to statutory "redundo" as you call it so what makes you think you'll get 6-7 weeks off them?! will you have 2 years done by the time you think it'll come to "redundo" being offered?



Are those rules not only for statutory redundancy? Any company can pay what they want/can?


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## gembem (13 Aug 2009)

moneyhoney said:


> Are those rules not only for statutory redundancy? Any company can pay what they want/can?


 
you need to have 2 years done in order to get statutory redundancy which is 2 weeks for every year you worked and it's capped at €600 p.w. but a company is under no obligation to pay out anything extra on top of that


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## so-crates (13 Aug 2009)

And by the same token a company is entitled to pay redundancy to people who do not meet the criteria for statutory if they so wish. The OP is speculating alright but that doesn't mean that he is speculating without some insight to his company policies on this matter.

As to the original question, I'd undoubtedly pay the loan off if there were no penalties. If you only had the loan amount in savings I'd be more cautious but in this case, the OP will still have a balance of €8k and the enhanced saving opportunity of not having to repay the loan.


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