Is paying my car off early a good idea? (car insurance, payments, vehicle)
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I just got a car which is 2009 Honda Civic and the price is $15,274 and I put down $5,000 down payment my loan terms is 36 months at 8.9% APR and the monthly payment is $327.89 a month
I am going to be paying $1,000 a month instead of $327.89 a month to pay my car off in 10 months instead of 3 years to save interest you probably would think I am crazy but do you think that is a good idea or no?
My only bill is car insurance which is $60 every month and phone bill which is $50 every month so I can afford to pay $1,000 a month car payment
Absolutely a good plan ! Anytime you can reduce the amount of interest paid out is a good thing. If you have the income to make the extra payment, do it. Ask your self this, what else could you have done with the extra money to equal or better paying out 8.9% interest ?? Not very much in these days :-(
I just got a car which is 2009 Honda Civic and the price is $15,274 and I put down $5,000 down payment my loan terms is 36 months at 8.9% APR and the monthly payment is $327.89 a month
I am going to be paying $1,000 a month instead of $327.89 a month to pay my car off in 10 months instead of 3 years to save interest you probably would think I am crazy but do you think that is a good idea or no?
My only bill is car insurance which is $60 every month and phone bill which is $50 every month so I can afford to pay $1,000 a month car payment
Thank you for your thoughts and suggestions!
8.9%? Whoah. That's expensive money. With that high a rate, I would pay it off early if I didn't need to be liquid and you have assurance of your financial situation and job security. After a year you can recoup your financial coffers just that much faster with no high interest loan to keep paying on. If you had a one of these 0% rates, then sure take your time and put that extra money in your IRA or something. Free loans are great. But 8.9% is horrible. And you are barely paying any principle in your payments right now, it is almost all interest. Paying that big down payment was good, that helps in making sure the car is worth more than what you owe through the term of the note. Make sure there is no early payoff penalty. Other than that, there isn't much of a downside to paying off that early.
YES! If you can afford to make more than the minimum monthly payment you should do so with any loan! It's a great feeling to receive the title to your vehicle after you've paid it off. I hope to someday learn the feeling of having a home (not on wheels) paid off with title in hand.
wow.. 8.9% in this economy? Your credit must be really bad or you didn't do any loan shopping.
Beside paying if off quickly, I would also look into getting a lower interests rate. Also note that if you pay more than the monthly payment, your next month due may be lowered. Don't get fool into thinking that you will pay off early if you just pay that amount. Keep paying extra on top of what the original scheduled payment.
wow.. 8.9% in this economy? Your credit must be really bad or you didn't do any loan shopping.
Beside paying if off quickly, I would also look into getting a lower interests rate. Also note that if you pay more than the monthly payment, your next month due may be lowered. Don't get fool into thinking that you will pay off early if you just pay that amount. Keep paying extra on top of what the original scheduled payment.
I have horrible credit, the other dealerships want 17% so no thanks on that so 8.9 is the best I can get....
Using the numbers you've provided, you would save $1017 in interest. Plus, you're done in 11 months vs 36.
Keep putting that $1000 into savings (doesn't pay anything right now, so I'll ignore interest) for the remaining 25 months and you'll have $25,000 PLUS your civic trade-in worth in 3 years if you want a new vehicle.
Or, just keep saving and use the money for a down-payment on a house, other investments, your retirement (if you're young, getting money into retirement funds is the smartest thing you can do right now as the compound interest makes the money for you the longer it has to work).
Using the numbers you've provided, you would save $1017 in interest. Plus, you're done in 11 months vs 36.
Keep putting that $1000 into savings (doesn't pay anything right now, so I'll ignore interest) for the remaining 25 months and you'll have $25,000 PLUS your civic trade-in worth in 3 years if you want a new vehicle.
Or, just keep saving and use the money for a down-payment on a house, other investments, your retirement (if you're young, getting money into retirement funds is the smartest thing you can do right now as the compound interest makes the money for you the longer it has to work).
By my book, it's smart.
I will not trade in, I will keep on driving until the wheels falls off! That is a good thought but I really really hate car payments....
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