Advice - keep saving or increase loan repayments?

P

pipedreamer

Registered User
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Hi all

Just a quick question, looking for some advice really - I have quite a large loan at the moment (26k balance) and when my SSIA matures next month I aim to pay it directly off this loan reducing the balance to 17k.

My question is should I then increase the repayments to clear the loan off faster (by the amount I would normally have saved in SSIA) or should I continue to save this money every month in a saving scheme.

If the latter is the advice given has anyone any recommendations scheme wise?

Thanks
 
Unless you are confident that you can earn more interest on your savings (very unlikely) than you are paying on your loan it makes sense to pay off the loan.
 
Unless the loan is at mortgage interest rates (and possibly even if it is!) then it's probably a no brainer to reduce or clear it as quickly as possible and not to save money that could otherwise be used to do this until the loan is cleared.
 
Ring the bank and ask them to crunch the numbers too. You want to see if you can get an interest rebate on the bit you've paid off and that the interest is lowered. You'll still have to pay back all your loan obviously but you don't if you can help it want to be paying back interest on €26000 when you then only owe €17000. i'd ask them to give you the figures if you were to pay off a lump sum and then reschedule so that you can compare with the original loan. Check it out first though before you actually go ahead.
 
Thrifty said:
Ring the bank and ask them to crunch the numbers too. You want to see if you can get an interest rebate on the bit you've paid off and that the interest is lowered. You'll still have to pay back all your loan obviously but you don't if you can help it want to be paying back interest on €26000 when you then only owe €17000. i'd ask them to give you the figures if you were to pay off a lump sum and then reschedule so that you can compare with the original loan. Check it out first though before you actually go ahead.
Click to expand...

Very good point. Some fixed rate loans with bank force you to pay the same amount of interest no matter how quickly you pay off the loan. A friend of mine found this out recently....to her cost. If the OP has this type of loan then I might just keep it ticking over and do something better with the money! Perhaps they will reschedule for you.
 
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