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Clearing Credit Union Loan With Savings/Shares

  • 03-01-2018 10:46am
    #1
    Paully D
    Registered Users, Registered Users 2 Posts: 28,710 ✭✭✭✭


    Hi guys,

    About 18 months ago I took out a car loan with the Credit Union.

    Since then, I have been paying back a little more than I was expected to and have now arrived at a stage whereby my savings/shares exceed the amount I need to pay back.

    Is it possible for me to now use these savings/shares to wipe the loan?

    If so, are there major pros and cons (about from being back to zilch in terms of what I have saved in the Credit Union) to doing so? I would likely continue to save with them anyway but it would be more sporadic and would give me a bit more flexibility from week to week.

    Thank you. :)


Comments

  • #2
    notharrypotter
    Closed Accounts Posts: 1,112 ✭✭✭notharrypotter


    Simple answer, once your shares exceed the outstanding balance of the loan you can clear it immediately.

    Now the more difficult bit.

    You have spent the last 18 months steadily paying off the loan.
    This should have built up a lifestyle where you did not need the repayment amount.

    However by your own admission your future saving ability would be spotty.

    Perhaps keep things going as they are as you seem to be able to live without the money.

    Once you are confident you can do without the money and will save for a rainy day then happy days and clear the outstanding balance then.


  • #3
    harr
    Registered Users, Registered Users 2 Posts: 4,494 ✭✭✭harr


    You can pay off your loan with savings no problem they might try to convince you to continue saving a small bit and paying off the loan.
    I have done it in the past and to be honest while it was nice to have my loan paid off I wasn’t nearly so good at saving or putting money away after I had paid off the loan.
    If you can I would keep my shares and if you are in a position to continue the loan payments and save a small bit then do that.
    Down side is you are still paying interest.

    If you think you can pay off loan and then put the money you were paying back into saving them do that ...I never could as I would always spend it on something so I was left with very little savings.


  • #4
    cruizer101
    Registered Users, Registered Users 2 Posts: 3,205 ✭✭✭cruizer101


    One thing to consider if you decide to keep paying off loan, which could be good idea to help you save, is to see can you change the loan to a within shares loan which should reduce the interest rate meaning it's not costing you as much


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