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Rouge
USA Fan
TD.com HOF Member - Class of 2014
Member since Oct 2004
101280 posts

Need some help with efficiency of paying off car loan

have a 48-month note at $312/month

if i pay the $312, I will have paid approximately $950 in interest over the term

looking for some equations to see if I add x dollars to the payment, how much will y interest be decreased over the term.

thanks so much


LSURussian
LSU Fan
Member since Feb 2005
85179 posts
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re: Need some help with efficiency of paying off car loan
The Microsoft Excel financial function on interest paid should do it for you.



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LSUSUPERSTAR
LSU Fan
TX
Member since Jan 2005
10750 posts
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re: Need some help with efficiency of paying off car loan
Bankrate.com


LSURussian
LSU Fan
Member since Feb 2005
85179 posts
Online

re: Need some help with efficiency of paying off car loan
quote:

Bankrate.com

Even better than Excel.


Rouge
USA Fan
TD.com HOF Member - Class of 2014
Member since Oct 2004
101280 posts

re: Need some help with efficiency of paying off car loan
thanks so much

paying an extra $50/month on the loan will only cut $140 off my interest over the term

dont believe time value of money makes it worth the extra monthly payment


Ace Midnight
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Between sanity and madness
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39879 posts
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re: Need some help with efficiency of paying off car loan
quote:

dont believe time value of money makes it worth the extra monthly payment


You're going to the trouble of figuring out the $s of interest the extra payment will save, but you are willing to "believe" it is not worth it without figuring out how much money you'll make putting that $50 in savings, mutual funds, CD, etc.?

That $140 is real, but the principal is real, too. If you don't put the $50 towards the car, what are you spending it on? Pizza? Call of Duty? Drugs?

This analysis seems penny wise and pound foolish.


LSURussian
LSU Fan
Member since Feb 2005
85179 posts
Online

re: Need some help with efficiency of paying off car loan
Your figures sound about right.

You can always estimate the interest savings on any simple interest loan, which you probably have.

If you increase the payment each month by 10%, your total interest savings will be approximately 10%. It's never exact.

In your case, if you increase your payment by $50 (16%, rounded) you will reduce your total interest paid by 15%, rounded.



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Rouge
USA Fan
TD.com HOF Member - Class of 2014
Member since Oct 2004
101280 posts

re: Need some help with efficiency of paying off car loan
the extra $50 will go towards other debt.


Ace Midnight
LSU Fan
Between sanity and madness
Member since Dec 2006
39879 posts
Online

re: Need some help with efficiency of paying off car loan
quote:

the extra $50 will go towards other debt.


If you're min-maxing, you always go towards the higher interest rate - if you're using Ramsey's debt snowball, you should pay the smallest balance off. In any event, good luck.
This post was edited on 3/22 at 9:40 am


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TDsngumbo
LSU Fan
Member since Oct 2011
7168 posts

re: Need some help with efficiency of paying off car loan
How much is your "play" money each month after everything else is paid? Whatever it is, cut it in half and use the other half as an extra payment each month.
Or if you really want to get serious about it, use all of your play money.
I have a 60 month note for $368/month that I pay $1,300 extra a month on. I got the car two years ago but just got serious about paying extra on it about 6 months ago. It will be paid off in less than a month


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