Hi,
I hope this is allowed as I’m seeking some advice.
For context, I earn £60-85k a year. Plenty of disposable income of roughly 2k+ a month after everything is covered.
Now I have a loan that has £8k left on 29months (7.9% apr) that costs me £300 a month. I’m after purchasing another classic car (I have 3 already, it’s a passion working on them). I’m looking to spend £20k and I’m unsure if I should pay it off outright which I have the money available or should I pay off the loan (8k) and just get another loan and keep paying the new loan and put back into savings?
I was just going to pay it off outright but I had a thought the other day. Appreciate the advice.
*I already have a mortgage on a forever home that I overpay each month
Thanks
Advice on to payoff a loan and start a new one.
byu/Dismal-Vegetable-549 inpersonalfinance
Posted by Dismal-Vegetable-549
3 Comments
Yeah I get the feeling you don’t exactly know what you’re really doing…
You mentioned a loan with 7.9% interest. It’s basic principle this needs to be paid off even before investing due to the near 8% rate.
What rate would the new £20k loan come in at, and are there any early repayment fees on your current one? At 7.9% you’re effectively guaranteed that cost, so clearing the £8k first is the safer move, then decide on the car separately, just be careful not to stack new debt for a non-essential if it starts eating into that £2k buffer.
What’s the new APR and cost of opening the loan. Are there any early payment penalties on your current loan?