- My Forums
- Tiger Rant
- LSU Recruiting
- SEC Rant
- Saints Talk
- Pelicans Talk
- More Sports Board
- Fantasy Sports
- Golf Board
- Soccer Board
- O-T Lounge
- Tech Board
- Home/Garden Board
- Outdoor Board
- Health/Fitness Board
- Movie/TV Board
- Book Board
- Music Board
- Political Talk
- Money Talk
- Fark Board
- Gaming Board
- Travel Board
- Food/Drink Board
- Ticket Exchange
- TD Help Board
Customize My Forums- View All Forums
- Show Left Links
- Topic Sort Options
- Trending Topics
- Recent Topics
- Active Topics
Started By
Message
Paying off car faster than normal monthly rates
Posted on 3/15/15 at 8:03 pm
Posted on 3/15/15 at 8:03 pm
Long story short...I pay $375 on my car for 36 months. My rate is 3.41%. However, I made a $1,500 extra payment last week on the capital. Will this automatically adjust my $375 monthly rate or will that stay the same? How do payments on capital affect this?
4
Posted on 3/15/15 at 8:14 pm to rpg37
The payment will stay the same. You will just be done faster And thus pay less total interest.
I would have kept that 1,500 but that's me. The savings over the life of that loan will be peanuts
I would have kept that 1,500 but that's me. The savings over the life of that loan will be peanuts
Posted on 3/15/15 at 8:25 pm to Mr.Perfect
Yeah, I was surprised my adviser suggested it, something about it being a depreciating item. But, I still max out the retirement accounts, so I am just pushing my savings in there. I agree, I am really only going to save maybe $500 total...
Posted on 3/15/15 at 8:25 pm to Mr.Perfect
I would have done what you did- I know thatmoney is probably better served in An IRA, but I strive to be done with car notes, while at the same time driving a nice car/truck. I bought a new F-150 last May, and I'd like to,have it paid off in the next 3 years, even thought it's a 5 year loan.
My goal is to pay cash or finance for 1 year our next car . I may never make it, but I hate paying a car note
My goal is to pay cash or finance for 1 year our next car . I may never make it, but I hate paying a car note
Posted on 3/15/15 at 8:42 pm to rpg37
You knocked off 4 months and saved about $150 in interest payments.
You can go to bankrate.com and scroll down to the calculators and go to auto loan calculators (obviously) and input your loan terms.
It also lets you apply extra payments to see how it will effect the length and interest payments on the loan.
You can go to bankrate.com and scroll down to the calculators and go to auto loan calculators (obviously) and input your loan terms.
It also lets you apply extra payments to see how it will effect the length and interest payments on the loan.
This post was edited on 3/15/15 at 8:49 pm
Posted on 3/15/15 at 9:04 pm to rpg37
Not many places to park money to get a guaranteed 3.4% return these days.
Posted on 3/16/15 at 12:42 am to kaaj24
quote:
Not many places to park money to get a guaranteed 3.4% return these days.
Am I the only one who finds this line of thinking somewhat silly at times?
Posted on 3/16/15 at 2:34 am to BlackCloud
quote:
You knocked off 4 months and saved about $150 in interest payments.
Which is not a terrible return on $1500 - and works better early in a loan.
If he had 4 months left - maybe I sock that money in the emergency fund (if needed) or find some other debt to work on.
But, elimination of debt securing depreciating assets is almost never the wrong thing to do with a windfall.
Posted on 3/16/15 at 2:34 am to Teddy Ruxpin
quote:
Am I the only one who finds this line of thinking somewhat silly at times?
But its guaranteed!!!!
Posted on 3/16/15 at 2:36 am to Volvagia
quote:
But its guaranteed!!!!
You cannot lose money on interest you don't pay on money you don't borrow - at the end of the day, not taking out a loan or eliminating it early IS a "guaranteed" return, in that it avoids a negative return. In the real world, that is the same thing (although it generally doesn't compound the same).
Posted on 3/16/15 at 6:44 am to rpg37
A 3.4% guaranteed rate for a relatively short-term note is pretty good these days, provided you have the cash on hand this isn't a bad idea although you aren't saving that much.
The fact that the car is a rapidly depreciating asset matters b/c it is security for the loan. If you total your car tomorrow the full balance of the loan becomes due immediately and the insured value of the car won't be enough to cover it. That said, if you just squirrel the money away instead then it probably won't matter much either way.
Bottom line is that provided you don't need the cash for something later this isn't a bad idea although it probably isn't a major financial decision either.
The fact that the car is a rapidly depreciating asset matters b/c it is security for the loan. If you total your car tomorrow the full balance of the loan becomes due immediately and the insured value of the car won't be enough to cover it. That said, if you just squirrel the money away instead then it probably won't matter much either way.
Bottom line is that provided you don't need the cash for something later this isn't a bad idea although it probably isn't a major financial decision either.
Posted on 3/16/15 at 7:45 am to foshizzle
quote:
The fact that the car is a rapidly depreciating asset matters b/c it is security for the loan. If you total your car tomorrow the full balance of the loan becomes due immediately and the insured value of the car won't be enough to cover it. That said, if you just squirrel the money away instead then it probably won't matter much either way.
Isn't that what gap insurance (and not the almost $1000 version offered by the dealer's finance office) is for?
Posted on 3/16/15 at 8:37 am to Ace Midnight
It's not that it isn't guaranteed.
It's that while it ISN'T guaranteed, you can easily earn double that rate in returns in an index fund over a longer period of time.....and it is a pretty safe bet to assume as such if you can just let it ride for a couple of years.
Opportunity costs, opportunity costs, opportunity costs.....
It's that while it ISN'T guaranteed, you can easily earn double that rate in returns in an index fund over a longer period of time.....and it is a pretty safe bet to assume as such if you can just let it ride for a couple of years.
Opportunity costs, opportunity costs, opportunity costs.....
This post was edited on 3/16/15 at 8:44 am
Posted on 3/16/15 at 8:43 am to foshizzle
quote:
If you total your car tomorrow the full balance of the loan becomes due immediately and the insured value of the car won't be enough to cover it.
Doesn't this statement assume:
1) owner put no money down on purchase
AND
2) it is in the early phases of the loan.
If you are unfortunate enough to total your car in the first 18 months or so, then yeah you probably will be underwater with it. But beyond that, and perhaps even earlier than that if you bought a low end model of a good brand, you won't lose out.
Hell, I came out ahead on my car being totaled vs what I owed two years in it, by about a grand.
Posted on 3/16/15 at 10:30 pm to LNCHBOX
quote:
Isn't that what gap insurance (and not the almost $1000 version offered by the dealer's finance office) is for?
Yes - but I would argue that the price of gap insurance is absurdly high no matter who offers it.
Posted on 3/16/15 at 10:32 pm to Volvagia
quote:
It's that while it ISN'T guaranteed, you can easily earn double that rate in returns in an index fund over a longer period of time
I've bolded the important point here. Yes, over the long run you're right but with a (for example) 3 year car note you are by definition not in a long-run situation unless you can pay it off quickly if needed. If you can, then by all means.
Posted on 3/16/15 at 10:33 pm to Volvagia
quote:
Doesn't this statement assume:
Perhaps, but that didn't appear to be the OP's situation.
Posted on 3/16/15 at 11:11 pm to foshizzle
I got it for less than $300 on my most recent vehicle. Cheap peace of mind over the first couple years of the loan if you ask me.
Posted on 3/17/15 at 8:16 am to rpg37
quote:
Yeah, I was surprised my adviser suggested it, something about it being a depreciating item. But, I still max out the retirement accounts, so I am just pushing my savings in there. I agree, I am really only going to save maybe $500 total...
unless your hitting a fixed income status around the time this $1500 would accelerate payoff, I'd be looking at a new advisor
Posted on 3/17/15 at 2:29 pm to ItNeverRains
I agree with the payoff.
I hate debt.
I will take a guaranteed -(-3.4%) every day. To beat that in a short term investment, I have to make 3.4% + Short Term gains Tax % + investment advisor fees + MORE.
It sounds easy to do, but it is not.
I prefer to pay off ALL DEBT(unless it is free 0%) and then invest for the long haul.
I hate debt.
I will take a guaranteed -(-3.4%) every day. To beat that in a short term investment, I have to make 3.4% + Short Term gains Tax % + investment advisor fees + MORE.
It sounds easy to do, but it is not.
I prefer to pay off ALL DEBT(unless it is free 0%) and then invest for the long haul.
Page 1 of 1
Popular
Back to top
Follow TigerDroppings for LSU Football News