Good or bad idea?

[sammyboy]

i'm trying to get my car paid off ASAP. I'm trying to do this in 3yrs. I put $4000 down and I pay 250 a month. In two years thats $6000+4000=$10,000. So I called my dealer and said how much would I have left and he said about $14,000 by the time 2010 comes along. So I was going to drop lets say another $6000 in one shot and then have 8,000 left. Maybe my parents will give me 2grand who knows but that leaves me with 6gs left to pay. If I can afford to put a little more money a month prob an extra $100 make it $350 I should have it paid off a bit faster. Does it sound like a smart move?

[marlin29311]

2 schools of thought on this.

1 - pay it off as soon as you can and save yourself the interest in the long run.

2 - interest rates are in the crapper right now and aren't coming back up anytime soon because of the recession - you can hold out and keep making smaller payments without having to incur a lot more interest payments, and save the $100 a month for something else.

I lean towards #1 - I hate debts.

[Viper5000]

Id say if you have the money, go ahead and make bigger payments, just don't short change yourself.....

heck, I'm putting down $1K every month to pay off my coupe....

[dldjros69]

1. I may be wrong but i think you pay off the interest before you start paying on the principle. You took the loan for 5 years, so the interest is already figured out.

2. Dont make larger payments make many smaller payments. That way if you break your ankle (like me) or get fired. You are ahead on your bills. So if you were to drop 5k dont do it on 1 payment but over the course of 10 or so.

[marlin29311]

1. I may be wrong but i think you pay off the interest before you start paying on the principle. You took the loan for 5 years, so the interest is already figured out.

That's if you are just making standard payments on a loan - anything over and above the standard payment can be applied to the principal of the loan.

[Marisha]

I'm with marlin on this one. Pay it off as soon as possible. That's what I'm trying to do. Aiming for 1 year...got 2 months to go. I can tell you for certain that for me interest isn't already figured in there and that the sooner I pay it off the less I'm going to end up paying in the long run. Not an accountant here or even ever had one of these, but you might be thinking about how mortgages work. (someone correct me if I'm wrong on that one)

So if you want to pay less in the long run and it won't be a hardship to you, go ahead and pay it off sooner.

[SniperJoe]

I agree with most everyone here ... pay if off as soon as possible.

[Mr. Music]

If you have the money, rid yourself of the debt ASAP. I was able to pay my car off in 8 months; if I wouldn't have, I'd have a really hard time making the payments right now. That can happen to anybody.

[PhEnoM]

I say pay it off BUT only if you have the money if all you have saved is 5g dont throw 5 g in. Save 2 g "just in case" and use 3g. I feel that 2g is always good to have saved, if anything goes wrong that isn't under warranted it will cover that and you won't ever be worrying gl

[Rmuth25]

The faster you get out of debt the better. In any situation.

[Rmuth25]

Yea the one caveat is if you are not sure about your income prospects for the next few years, then it is probably a good idea to just keep doing the normal payments. However, if your income should be steady and is relatively safe, its always best to get out of debt asap. Especially when it comes to cars, it hurts to have to pay interest on something that loses value lol.

[Andy_G]

In a recession cash is king. Save your cash. Keep the debt if you can handle it.

IMO!

Andy

[Heels1010]

i am a math teacher and i'll tell you that i agree with mostly what everyone said. FIRST make sure your loan allows u to pay it off early. sometimes if u dont ask companies sign you for a "close loan" of sorst which slap you with a fine for paying it early. when i bought my car they had me signed up for that and i told them to remove it or i would not buy the car. i would call and see if you have this type of loan. yes paying off the loan quickly will minimize intrerest, but if u lose your job or can't make payments they will take your car as collateral or hold your parents responsible if they cosigned the loan. also one you start missing payments your interest may rise and u will be slapped with nasty fees. If i were you i would double your payments and save the rest in a savings account.. when u have enough in the savings account to pay it in full, then do so. also when you go to pay in full call them to find out the amount u need to pay because the payment in full differs from your statement. hope this helps

[DAAN.]

I can tell you if it's a smart move if you tell me what's your interest rate

[sammyboy]

I say pay it off BUT only if you have the money if all you have saved is 5g dont throw 5 g in. Save 2 g "just in case" and use 3g. I feel that 2g is always good to have saved, if anything goes wrong that isn't under warranted it will cover that and you won't ever be worrying gl

Yeah thats the thing I don't want to throw all of it down, I should save some just incase I lose my job or something.