# Should I clear loan with Savings



## Tafa (14 Jun 2011)

Hi, this is my first time posting.  My husband has loans of approx 35,000 which are costing us 600 per month for the next 7 years, or less.  My daughter was left 25,000 and I have about 8,000 in savings so my question is - Should I use this money to clear the loan, I intend to set up a direct debit to put back the money we use from my daughter and have it paid back in 7 years.

Thank you


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## alexandra123 (14 Jun 2011)

What would the % interest be on the debt ?
What would the % interest be on the savings ?

If you pay the 33k off the debt will the loan company clear the interest on the loan ?
 Some loans require you to pay the full interest on the loan even if the loan is paid off early.

You would need to figure out which one outways the other.


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## Tafa (14 Jun 2011)

Thanks for your reply.

The loan is with the Credit Union and its costing us 200 per month in interest alone,  Of our Savings, we had put 25,000 (daughters money)in a savings account for 18 months and it only made 930 euro in that 18 months.  Should I be ringing the Credit Union and asking them for a balance if we were to clear the loan.


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## cnu (16 Jun 2011)

These days its quiet tough to get money from any institution, I wouldnt' take-part with precious cash, who knows something worse mite be round-the-corner.


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## cremeegg (18 Jun 2011)

Tafa said:


> Hi, this is my first time posting.  My husband has loans of approx 35,000 which are costing us 600 per month for the next 7 years, or less.  My daughter was left 25,000 and I have about 8,000 in savings so my question is - Should I use this money to clear the loan, I intend to set up a direct debit to put back the money we use from my daughter and have it paid back in 7 years.
> 
> Thank you



You need to consider this two ways. First from an accounting point of view, what is the APR on the loan, (about 13% based on €200 per month for €35,000) and what is the best interest could you get on the savings, maybe 3%. That shows that you would be about €1,750 per year better off using the savings to pay the loan. You would need to confirm these figures before making a decision. This suggests that you should pay off the loan.

The second way to consider it is to look at your own feelings and attitude. Would you feel more comfortable with the money available to you, are you likely to need money during the 7 years. Would you feel happier to be debt free. These are personal questions and you can only decide what your attitude is.

*IF* the CU loan really is at a 13% interest rate you probably should pay it off.


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## Jim2007 (18 Jun 2011)

Tafa said:


> Hi, this is my first time posting.  My husband has loans of approx 35,000 which are costing us 600 per month for the next 7 years, or less.  My daughter was left 25,000 and I have about 8,000 in savings so my question is - Should I use this money to clear the loan, I intend to set up a direct debit to put back the money we use from my daughter and have it paid back in 7 years.
> 
> Thank you



Well I would think that before you do anything you check if you have the right to use your daughter's money in this way...  If your daughter is a minor and you are acting as her guardian in this matter, then I doubt it.  On the other hand if your daughter is of age and she is willing to give the cash to you, that is a different matter.

Jim.


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