WWYD savings vs loan

[thequeenofsandwich]

Not financially savvy but need to make a £5000 purchase.
Question is- Should I use money from savings and pay back £100 per month or use finance with 11% interest for 5 years?
Dithering as it feels like a big hit to my savings
Give me a shake please

I can't help but am having the same dilemma. I need a new boiler and have enough savings to pay for it, but it would pretty much wipe them out and I have been thinking about a loan instead

I know that it's a no brainer - use the savings that are earning virtually no interest, rather than get a loan and pay interest - but its so hard! I like seeing money in my savings account!

How much do you have in savings?

I'd use the savings. Using the loan calculator on Money Saving Expert, a loan of £5000 at 11% over 5 years would cost £6,522.

www.moneysavingexpert.com/loans/personal-loan-calculator/

BeBraveAndBeKind yes now I see it like that that’s a lot of interest on top.
Like HilaryBriss it just reassures me seeing money in my savings “for a rainy day”
I need to set up a direct debit to put it back in or I won’t be disciplined enough
Thanks for giving me clarity

Use your savings.

Use your savings. If something disastrous happens later which means you need that money, get a loan then. Just try to repay your savings as quickly as you can.

@thequeenofsandwich

BeBraveAndBeKind yes now I see it like that that’s a lot of interest on top. Like HilaryBriss it just reassures me seeing money in my savings “for a rainy day” I need to set up a direct debit to put it back in or I won’t be disciplined enough Thanks for giving me clarity

This is surely your ‘rainy day’ though?

I’d rather pay for a loan and have money left in our savings for a real ‘lost our jobs’ type of emergency.

Savings. It is madness to pay 11% for a loan if you have savings. You will never earn 11% in savings

Just use your savings and save yourself the 11% interest and then pretend you have a loan payment and save it back up

Or take out a new interest free credit card. Set up a direct debit to pay off a set amount every month, making sure you've finished by the time the interest free period ends. You can often find 36 month offers.

I took out a loan instead of using my savings. I know I'm paying more but I just couldn't be without my cushion. If I lost my job tomorrow I could survive for 6 months and repay the loan while trying to find a job (or jobs)

Have you thought about doing half and half?

I get that feeling re savings, but 11% is shocking.

Thanks everyone
Job done , purchase made
Thinking it through my husband will be retired in 4 years and don’t want any loans or debts hanging over us