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Can I take out a loan, and then put this cash into an ISA for the full tax free period?

by Jerrers 11 August 2009 |

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I hope to be able to raise enough extra spare cash for a holiday in the future

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arfan posted
Technically you could, but the interest you would be paying on the loan would far outweigh any interest earned in the ISA. In addition you would have to make monthly payments for the loan.
Unless the loan you are reffering to is a Student Loan, in which case you could. If you don't need a student loan it is a good idea to take it anyway and put it into a savings account. However student loans are paid in installments, so you couldn't put it in at the start of the year (in Scotland anyway, not sure about England/Wales)
Posted on 11 August 2009 | Love 0 loves Report
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rowlystravel posted
worst idea ever, dont take offence, but if you need a loan, then you cannot currently afford a holiday. do some careful budgeting and make priorities for thinngs you want and things you need
then you should get on track for saving for a holiday you can enjoy worry free
Posted on 11 August 2009 | Love 2 loves Report
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arfan posted
From the way I interpreted his question, was that he was wondering if he could make a profit by putting the loan into an ISA, and use the interest to help pay for a holiday. Which is possible only if the loan is a Student Loan.
Posted on 12 August 2009 | Love 0 loves Report
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Jerrers posted
thanks to these recommendations
It makes it easier to hear what others have to say before a choice is made
My next project will be to move mortgage from fixed to SVR, but at the same time hoping to switch lender with no fees to pay. Is this possible?
Posted on 12 August 2009 | Love 0 loves Report
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SoftwareBear posted
Student loans aren't interest free ... interest is accrued from the moment the money is released to the borrower ... they just don't start paying it back until they earn enough ... but the interest is still rocking up in the mean time.
You're unlikely to make enough money for a holiday ... unless you holidays are very frugal.
The student loan rate is currently 1.5% but has been over 5% at one point.
Switching mortgage ... unlikely to be free for a while ... unless the APR is horrible or with huge penalties ... best seeking advisor.
Posted on 13 August 2009 | Love 0 loves Report
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arfan posted
From September student loans will be interest free, but you are right usually student loans aren't interest free. The interest is however linked to inflation, and is technically meant to be free (although at 0% they won't be 'free' as the interest rate should really be -0.4% as the economy was in decline when the interestr rate was set).
So although interest is being charged it is not costing any more in real terms. If you keep your student loan in a half decent savings account, it will earn more interest than what is being charged. Even if it is at 5%, the savings accounts at that time will probably be offering rates over 5%.
I agree that at the current interest rates this method won't raise enough to pay for a whole holiday. But it's always good to make a little extra cash!
Posted on 13 August 2009 | Love 0 loves Report
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Jerrers posted
I was thinking of a frugal holiday in Canada, but at present have not determined which year it will be beneficial to go . ..
Posted on 13 August 2009 | Love 0 loves Report

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