Loan Refinance - worth pulling extra for emergency fund?
Discussion
Hi.
I am about to refinance my car, is only a fiesta, nothing special - I have £6k left on it and I am about to knock 3.4% off the interest rate over the same term, currently 33 months. It will be coming off a traditional HP and onto a personal loan.
My pay is not great at the moment as I m midway on retraining, so basically running student finances and as such I don t have a lot, actually anything in savings.
Considering pulling down an extra £5k and extending the loan out to 48 months to use as an emergency fund.
This is my only debt, I don t run out but it s paycheck to paycheck at the moment and will remain that way for the next 12 months, after that I should have £5k+ to save a year. I’m not overly interested in paying the loan off early so that money will go straight to a LISA.
It really does affect my MH not having anything to fall back on hence why considering this.
Does anybody have any thoughts?
I am about to refinance my car, is only a fiesta, nothing special - I have £6k left on it and I am about to knock 3.4% off the interest rate over the same term, currently 33 months. It will be coming off a traditional HP and onto a personal loan.
My pay is not great at the moment as I m midway on retraining, so basically running student finances and as such I don t have a lot, actually anything in savings.
Considering pulling down an extra £5k and extending the loan out to 48 months to use as an emergency fund.
This is my only debt, I don t run out but it s paycheck to paycheck at the moment and will remain that way for the next 12 months, after that I should have £5k+ to save a year. I’m not overly interested in paying the loan off early so that money will go straight to a LISA.
It really does affect my MH not having anything to fall back on hence why considering this.
Does anybody have any thoughts?
Edited by PovertyPrince on Thursday 27th November 12:12
Edible Roadkill said:
Refinancing - great !
Additional borrowing to sit in a bank account (just in case) terrible idea !
You ll be paying interest on money sat doing nothing.
Take what you owe now on as low a term as possible and aim to be debt free.
Probably agree that in the OP's situation, taking extra debt on might not entirely make sense.Additional borrowing to sit in a bank account (just in case) terrible idea !
You ll be paying interest on money sat doing nothing.
Take what you owe now on as low a term as possible and aim to be debt free.
Although it's also fair to point out that borrowing money at roughly 4% and then putting it in an account that is returning roughly 4% means that you are really just paying for a bit of liquidity.
i.e.. you are "buying" a bit of piece of mind (the cashflow of the emergency fund) for almost nothing....
Apart from it s not an emergency fund it s borrowed debt costing interest !?
I also doubt there’s anything to put that money into that will negate the interest which is instantly accessible.
I d be trying to get that car paid off asap, then get an emergency fund 3-6 months of outgoings. Then think about a LISA.
I also doubt there’s anything to put that money into that will negate the interest which is instantly accessible.
I d be trying to get that car paid off asap, then get an emergency fund 3-6 months of outgoings. Then think about a LISA.
Edited by Edible Roadkill on Thursday 27th November 12:27
You’ve posted many different messages here in the forum all discussing your financial challenges (and also your huge piles of money)
So it might not be what you want to hear, but borrowing more is an insane idea especially if you’re not very good with money and don’t seem to enjoy working very much.
So it might not be what you want to hear, but borrowing more is an insane idea especially if you’re not very good with money and don’t seem to enjoy working very much.
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