Do I pay off my loan?

[newbie1984]

Before I fell pregnant I started saving to pay off my loan (around £3k) I have since managed to save enough and some extra to cover it. I then fell pregnant and am conscious we have no savings and nearly £4k in savings would be a nice backup should we struggle on just my OHs wage. Now here is my dilemma. Do I just pay off my loan which costs £200 per month (not sure on interest rate, around 9%) and then it's gone or do I keep enough to cover my payments for the time I'm planning to stay off work, and then keep the rest as savings? What would you do? It would give me a couple of grand as savings once I've held back loan payments for a year. Once I'm back at work I can equally afford to pay my monthly payments.

 

[MrsT2011]

Personally I would pay off the loan then start fresh. No point paying interest if you can avoid it. X

 

[Jaxx01]

Wss ^^ xx

 

[Loula]

defo pay it off if u have it xx

 

[newbie1984]

That's what my OH says too. I guess I'd rather be poorer and know the loan is gone than cover it and have an extra couple months mortgage.

 

[newbie1984]

Thanks ladies. X

 

[kellylou]

We are just clearing our finances and would deffo advise pay off the loan x

 

[Rowesb]

pay of the loan and start saving the amount you have been paying each month x

 

[newbie1984]

I'll pay it off today. I wont be able to save the extra money when on maternity leave as I'll be on SSP for 36 weeks but we will cope!

 

[Rowesb]

but at least there is £200 less to find each month

 

[newbie1984]

Good point! X

 

[kellylou]

Just make sure you have enough for the final settlement fee x

 

[tiggerbounce77]

Definitely pay it off, just think how much extra you can save in interest x

 

[daisyduke76]

Someone once said to me that there's no point keeping savings whilst you have debts to pay off as the interest on your debt is far greater than the interest on your savings, so it makes sense to get rid of the debt! The only exception would be a student loan as the interest rate is at the rate of inflation.

Anyway, sorry for rambling - yes, pay off the debt, and as the other girls have suggested, why not save the money you paid off each month? You'll soon build your savings back up!

xx

 

[TORino]

I actually wouldn't pay it off.

I have been in a similar situation with some credit card balances. I spent my pregnancy saving up several thousand pounds so I could pay my bills when maternity pay stops. I could have used this money to clear the credit card balances but I chose not to. The balances are not accruing interest as I switched them to long term 0% cards which is different to your situation.

I can pay the minimum off the cards whilst my income is low using my savings and I will sort it out when I go back to work. I wanted to have as long off as possible so clearing debts with my savings would have meant I have to go back to work sooner.