Car Loan

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This topic contains 2 replies, has 2 voices, and was last updated by  Preston 9 months, 1 week ago.

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  • #162088
    Preston
    Participant

    Las September I financed a 2013 Nissan Leaf with 24,000 miles on it. Originally is sold for about 38,000. I got it for 10,000. in perfect condition. After adding a bumper to bumper warranty & taxes I owed aprox. 13,000. I financed for seven years with the intention of paying it off ASAP. I figure I can put back enough each month to pay the loan off in fourteen months. If I took the entire seven years to pay it off, I would have paid 20,188.56, which I do not plan to do. Since Sept. I’ve paid 1,442.04 so far. My question is, which is a cheaper way to pay off the loan; save up the entire amount it would take to pay off the loan in one lump sum, while I continue to pay the monthly bill of 240.34 for the next fourteen months, or make 3,000. dollar payments every four months? Would I save any more interest with larger payments every four months as opposed to one lump payment in fourteen months? I’m terrible with math and can’t wrap my head around it. Thanks, Preston Roe

    #162090
    Stacy JohnsonStacy Johnson
    Moderator

    Assuming you’re keeping your savings in a bank earning next to nothing, and you already have an emergency fund, you’re better off using extra cash as you get it to pay down the loan ASAP.

    #162103
    Preston
    Participant

    Thank you Stacy. Even with my lack of financial skills,(which is why I am so devoted to reading MTN and sharing it with family and friends) it didn’t make sense to wait more than a year to pay it off all @ once in lieu of making larger payments now. My only other concern was that my FICO score, since my house is paid for and I only have credit card credit, doesn’t show that I have enough diversity in types of credit, which is a minus. I wondered if maintaining a car loan for a short while would help or hurt my score. But it seems paying larger payments, more often, is the best route. That’s what I’ll do. -pr

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