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Old 07-17-2012, 10:36 AM
 
51 posts, read 38,556 times
Reputation: 10

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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

Thank you for your thoughts and suggestions!
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Old 07-17-2012, 10:48 AM
 
Location: OH>IL>CO>CT
4,099 posts, read 6,244,631 times
Reputation: 5312
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 :-(
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Old 07-17-2012, 10:53 AM
 
Location: Richardson, TX
8,672 posts, read 10,702,965 times
Reputation: 3668
Quote:
Originally Posted by IWannaBeFree View Post
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.

Last edited by PanTerra; 07-17-2012 at 11:04 AM..
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Old 07-17-2012, 10:56 AM
 
Location: Lafayette, Louisiana
14,096 posts, read 21,714,538 times
Reputation: 7932
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.
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Old 07-17-2012, 11:09 AM
 
Location: Mount Laurel
4,106 posts, read 7,349,532 times
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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.
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Old 07-17-2012, 11:13 AM
 
51 posts, read 38,556 times
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Quote:
Originally Posted by sj08054 View Post
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....
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Old 07-17-2012, 11:16 AM
 
Location: Central Texas
13,721 posts, read 23,077,192 times
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Pay it off early if you can, especially at that rate. You'll be free and clear in a a hurry with a nice reliable car.
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Old 07-17-2012, 11:16 AM
 
Location: Richardson, TX
8,672 posts, read 10,702,965 times
Reputation: 3668
Quote:
Originally Posted by IWannaBeFree View Post
I have horrible credit, the other dealerships want 17% so no thanks on that so 8.9 is the best I can get....
Paying it off early can only help that. That is great if you can pay it off early, by years even. A lot of people can't.
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Old 07-17-2012, 11:17 AM
 
Location: Warm Springs, GA
2,946 posts, read 4,969,478 times
Reputation: 5972
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.
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Old 07-17-2012, 11:20 AM
 
51 posts, read 38,556 times
Reputation: 10
Quote:
Originally Posted by Brian_M View Post
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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