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Pay off loan or save money

  • 21-10-2015 10:56pm
    #1
    Mc Love
    Registered Users, Registered Users 2 Posts: 14,015 ✭✭✭✭


    I have enough money to pay off my HP agreement and I was wondering if it would be better to pay this off this becoming the owner of the car or just put the money in a savings account and earn interest on the lump sum?

    The monthly repayments on the HP are fixed.


Comments

  • #2
    BuffyBot
    Registered Users, Registered Users 2 Posts: 24,924 ✭✭✭✭BuffyBot


    If the interest rate on the loan is greater than the interest offered by saving, you're generally better off clearing the loan.


  • #3
    TiGeR KiNgS
    Registered Users, Registered Users 2 Posts: 1,435 ✭✭✭TiGeR KiNgS


    Why don't you put the lump sum in a deposit account and earn interest while paying down the HP over the 5 or so years ?


  • #4
    Amirani
    Moderators, Society & Culture Moderators Posts: 12,527 Mod ✭✭✭✭Amirani


    Pay off loan.


  • #5
    TiGeR KiNgS
    Registered Users, Registered Users 2 Posts: 1,435 ✭✭✭TiGeR KiNgS


    BuffyBot wrote: »
    If the interest rate on the loan is greater than the interest offered by saving, you're generally better off clearing the loan.

    But in this case (HP agreement) the repayments are fixed. So capital + interest will be the same whether you pay in 1 year or 5 years.


  • #6
    Henry Ford III
    Moderators, Business & Finance Moderators Posts: 17,725 Mod ✭✭✭✭Henry Ford III


    TiGeR KiNgS wrote: »
    But in this case (HP agreement) the repayments are fixed. So capital + interest will be the same whether you pay in 1 year or 5 years.

    No. An early settlement figure will be offered.


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  • #7
    Mc Love
    Registered Users, Registered Users 2 Posts: 14,015 ✭✭✭✭Mc Love


    So on that basis, paying off the finance would be the better option?


  • #8
    newacc2015
    Closed Accounts Posts: 2,379 ✭✭✭newacc2015


    Mc Love wrote: »
    So on that basis, paying off the finance would be the better option?

    Whats the APR on the loan? Thats the only way to tell if its worth paying off the loan. If its a 0% HP agreement from VW bank keep it. If its a 5.9% HP from Ford pay off the car loan.


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