Clear my loan

S

scully

Registered User
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At the moment i have a 5000 loan out from GE Capital. I pay 155 a month over 4 years. Thats 7440 in total to pay back.

Im thinking of saving an amount every week with one of the online saving banks to build up a good interest plus savings so that i can pay off the full loan in 1 lump sum by summer 2006.

The loan was taken out in August 2005, and so far have 3 months of 155 paid. Whether i pay the loan early or not i still have to pay the total amount with interest.

Is this a good way to pay it off, or will i continue paying 155 a month.

I wanted to loan paid because with the loan i can only afford to borrow 150000 for a mortgage, but without the loan i can get 190000.
 
You're hitting one of the big disadvantages of fixed rate loans, i.e. the fact that you can't pay off the loan early without incurring penalties. If you need to get the loan cleared, then yes, I guess your approach would be the best option.
 
If you are stuck with paying off €7,440 in total on the original loan of €5,000 then there's presumably nothing you can do about that. So the only issue is whether to continue paying it back on the basis of the original term/repayments or to save up to clear it earlier. Since your priority seems to be to boost the amount that you could borrow for a mortgage by clearing this loan sooner then it looks like there's only one answer here. Work towards saving to clear the loan before it runs full term. I don't understand why you are unsure about this?
 
i wasnt sure if i wanted to scrape through till the summer while paying out 270 a week to pay of the full loan just to apply for a mortgage, or just pay off 40 a week(155/month) while having plenty of money to go on savings, car, holidays and entertainment etc. Only 23, worry about mortgages in maybe 3 years time.
 
scully said:
i wasnt sure if i wanted to scrape through till the summer while paying out 270 a week to pay of the full loan just to apply for a mortgage, or just pay off 40 a week(155/month)
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(€40 * 52 weeks) / 12 months = €173.33 per month. Where are you getting €155 from?
while having plenty of money to go on savings, car, holidays and entertainment etc. Only 23, worry about mortgages in maybe 3 years time.
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Well, nobody else can really make this call for you. If the loan will be cleared anyway by the time that you go looking for a mortgage then maybe there's no urgency in getting it cleared? On the other hand, rather than blowing all of your disposable income you might want to save some of it in preparation for buying a house. It's up to you really.
 
welll i usually looked at it as 40 a week for 4 weeks which was 160. It was easier to just budget 40.

If you had 230 left over at the end of the week. What would be best to put away for

Going on holidays in summer costing approx 5000 inc spending money
getting a car & insurance for approx 5000 in total by christmas
savings
 
scully said:
welll i usually looked at it as 40 a week for 4 weeks which was 160. It was easier to just budget 40.
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Not every month has four weeks and 12 months x 4 weeks = 48 weeks which leaves you 4 weeks short of a 52 week year so that sort of budgeting approach is dodgy.

If you had 230 left over at the end of the week. What would be best to put away for
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Are you already maximising your SSIA? Other than that it depends on your investment timeframe and goals, attitude to risk/volatility, existing debts/savings/investments etc. etc.

Going on holidays in summer costing approx 5000 inc spending money
getting a car & insurance for approx 5000 in total by christmas
savings
Click to expand...
I'm not sure what you're saying or asking here.
 
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