Need some help with efficiency of paying off car loan | TigerDroppings.com

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Rouge

# 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

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LSURussian

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

The Microsoft Excel financial function on interest paid should do it for you.

Replies (0)
LSUSUPERSTAR

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

Bankrate.com

LSURussian

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

quote:

Bankrate.com

Even better than Excel.

Rouge

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

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

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

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

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

the extra \$50 will go towards other debt.

Ace Midnight

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

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