Loan v savings - thoughts?

[AddictedtoCrunchies]

I have a loan with an outstanding balance of £3300. If I put all my instant access savings into one place, it's about the same amount so enough to clear the loan.

Loan APR is 9.9% over 30 months paying £123.98pm. It's important to note I'm still within the 14 day cancellation period so can repay with no interest penalty. I have to do this by Thursday so day after tomorrow.

Cons are I'd have no instant access savings. However I do have a credit card with 0 balance and a £4k limit so if the boiler went I'd be ok. Also I save around £300 a month plus I'd have the loan repayment I wouldn't have to pay so I would be able to replenish the savings slowly but surely. I've also potentially got £2k coming in November from some shares.

Pros are I'd not be paying a loan repayment, or any interest. I'd be out of debt excluding mortgage. My heart would be lighter.

I know the Martin Lewis style advice is to always clear debt because the interest isn't matched by savings. And I'm inclined to do that.

Thoughts MN

I would - without a doubt- not take on the loan.

We are currently working super hard to upsize further in 4 years time for our big house purchase - and diverting everything we have into overpaying the mortgage and saving/investing. The first step to that was to get rid of all debts (little loans, CC balances) - and the feeling of being 100% debt free - with a solid plan in place of saving/overpaying mortgage is brilliant.

You dont "need" the loan. Dont take it on

Thank you. That's where I'm at too. Am 52 in September and hoping to take my pensions at 60. Being debt free feels like a key part of that.

I would also clear the loan. You have a c/c for emergencies but hopefully you won't need to and can get to building up your savings pot asap.

Why do you think you need the loan in the first place?

Onlyrainbows I've just had some work done on the house which I paid for with the loan (I had the money 12 days ago). In hindsight I should have just paid it out of savings but I guess I made a rushed decision which is very unlike me. Hence my reflection now that I made the wrong decision.

And because I'm within the 14 day cancellation period I can clear it with no penalty.

I would clear the loan. It saves you money in the long run and you still have an emergency credit card.

Thanks all. Decision made and the loan is going.