Pay off the car.
Use next car payment money for hookers/blow.
Subsequent car payments should go towards student loans.
Use next car payment money for hookers/blow.
Subsequent car payments should go towards student loans.
Pay off the car or put a dent in student loan?
- Thread starter musclefan21
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Buy a lot of mods for the car.
He was too busy spending it on hair
What are the interest rates on the loans? I assume the student loans are higher, likely 6-7% whereas your car loan is likely somewhere between 2-4%.
But ya, as others have said, pay off the loan with the highest interest rate.
But ya, as others have said, pay off the loan with the highest interest rate.
Pay off the highest interest rate first, then the unsecured debt if the interest rates are equal.
I've seen what the government can do to people that default on a student loan.
BTW, congrats on paying off any loan! It feels good eh?
E
I've seen what the government can do to people that default on a student loan.
BTW, congrats on paying off any loan! It feels good eh?
E
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Snowball debt, I'd pay the car off and throw that extra money on the student loans. Like others already said snowballing debt does work and you can get things paid off fast if you stick to it.
This, hands down.
It works because its a way to force payment discipline on someone and it gives them the warm, fuzzy feeling of having accomplished something. He'll pay it off faster if he pays down the higher interest rate debt first and does not reduce his monthly payments. His student loans are probably 7% to 9% unless they are subsidized. His car is probably 0% to 4%. Pay down the higher rate is an instant return on his money equal to the interest rate difference between the loans.
Use made up interest rates so it makes more sense.
Hypothetical car loan at 0.00% APR
Hypothetical student loan at 65.00% APR
Would you still pay off the car first?
Not with your made up numbers but yes and here is why: he specifically said he can pay off his car now or make a dent in the student loans. So if he applied the money to the student loans but still has the car payment he is sill getting hit on interest from TWO loans. Paying off the car is the best choice as it saves money immediately, reduces overall interest being paid immediately and allows him to apply the amount of the car payments toward the student loans. Paying it down faster.
No he won't.
He will still pay down FASTER and pay less overall interest if he pays a chunk of the higher rate loan first. It's math dude.my made up numbers proved the point. Two loans, six loans, thirty loans, who cares?
$10k loan at 0%
$20k loan at 10%
Same as a $30k loan at 6.66%
Pay off the $10k loan and you have a $20k loan at 10%
Pay $10k of the $20k loan and you have a combined remaining $20k loan at 5%.
$10k at 0%
$10k at 10%
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We don't know how much he owes on his car or school loans. His car might be at 10-12%....we don't know. I, myself would pay off the car instead of putting a dent in the student loan. You put a dent in it and you are still paying the same amount for both, yes the school loan will be lower now and paid off quicker, but you ae still paying the same. I'd rather have the car paid off and put that extra money on the school loan. Without knowing all the numbers we can guess all we want. Also, we don't know the rest of his situation, that would play a factor in it also. Your hypothetical numbers are just plain silly.
I believe the interest on the student loan is deductible. Interest on cars is not. Pay car off early and save interest payments on the car and get a tax deduction.
Depends on his situation and how many deductions he has it may not make a difference for federal taxes. Due to the tax cuts for 2018, this is the first time I've ever taken the standard deduction since I've entered the full-time workforce. The interest I paid on my mortgage and the property taxes we paid did not affect my 2018 tax return.
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Looking at how much I paid on the interest on my house just pisses me off. Buy a house for $200k and pay almost $400k if you do it in 30 years.
Curt@injected
Well-Known Member
Typically whichever has the highest rate unless it will put you close to paying either off. In that case put it toward the one you can pay off and then apply that payment toward the other.
Mannnn, me too.. I just bought my "forever home" in August, 2018...My payment is $1500/month and $900 of that is interest! This is only a 4.5% fixed rate too. Starting next month, I will be religiously adding at least an additional $500/month principal payment to get this shit knocked down. At that rate, I will be at 80% LTV in 2 years... It sucks paying the extra but all 5 vehicles and toys are paid for so I might as well put some money to good use
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Bought my home in June 2016 monthly payment is $1700, my rate is 3.875%. We try to put extra on every month also. We also have 5 cars, with 3 of them paid off. But I have 4 kids, so they eat up a lot of the money. If you can add $500 a month you could do a 15 year mortgage.
Im 34, just got married, no kids (yet) I may look into refi when I get to 80% LTV.
If by chance you are in New York I hear AOC has $3B extra she is looking to give away. Don't think she's into cars but you might work a deal on free education. You want to do it fast before she realizes the money is not really just sitting there.
Yea... front end of a mortgage is ugly.
We had 20% down, but the numbers on the statement still piss me off.
We had 20% down, but the numbers on the statement still piss me off.
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