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Loan question

  • 16-08-2009 4:45pm
    #1
    mandysmithers
    Closed Accounts Posts: 231 ✭✭


    Apologies if this is in the wrong forum, but I don't know where else to post it. Move it if needs be!

    Anyway, I currently have a balance of about €8000 in a loan, with 3 years left on it. I also have a balance of about €3000 on my credit card. I pay €230 into my loan each month.

    I want to start saving for a deposit for a house, but was thinking of clearing my CC first. However, that'd take me a good while, and I wouldn't be able to start saving towards a deposit for ages!

    So I was thinking of getting a loan for €11000 to cover my current €8000 loan, and the CC balance. I've done some research, and the repayments over 4 years (so one year more than I was planning on having loan repayments) would be about €280, which is only €50 more than I'm currently paying. This also means that I could start saving for a deposit now, and would have the guts of a deposit saved this time next year.

    Does anyone have any advice on this idea? I was thinking it would be good to clear the CC, so the interest wouldn't be building up.

    Thanks in advance!


Comments

  • #2
    Pablo Sanchez
    Closed Accounts Posts: 1,207 ✭✭✭Pablo Sanchez


    Im no expert but i would have always thought that it would serve your needs a lot better to pay off your debts before you start saving for anything. The interest rate your paying on your debts is always going to be more than what you are getting on deposit.

    I would imagine that most variable rate loans would be cheaper than the rate you are paying on your credit card. Check the rates on your existing loan and see if it is worth your while bundling your CC debt with your other loan.

    If some months your can afford to pay more than your scheduled repayments, pay these directly into your loan account to reduce this balance. When you are debt free, plough all you can into your savings.

    This is purely my own two cents and i would listen to professional opinions as well!


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