Author Topic: Car! GRRRR!  (Read 2227 times)

WARD

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Car! GRRRR!
« on: December 10, 2013, 06:43:05 AM »
Well, I made my mistake and now need help moving on.  We bought a brand new Honda CRV 3 years ago and took out a 5 year loan.  I am paying 548 a month and still have close to 12k to pay off.  I pay nearly 100 a month in interest and am wondering how others would approach this.  Do I just continue to pay normal or try to aggressively pay it off the last 2 years and not invest as much in my Roth, 401k, 529, etc...and pay it off quicker? 

Cooperd0g

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Re: Car! GRRRR!
« Reply #1 on: December 10, 2013, 07:40:31 AM »
What is the KBB value? Maybe sell it and get a cheaper car.

bogart

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Re: Car! GRRRR!
« Reply #2 on: December 10, 2013, 08:00:12 AM »
I could do the math, but since you're asking my help and not the other way around, what's the interest rate on the car loan?

willn

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Re: Car! GRRRR!
« Reply #3 on: December 10, 2013, 08:14:10 AM »
Math says, sell it.  Use this method:

1.  Look in mirror.  Say bad insulting things to self.  Punch self in face.

2.  Sell car.  Get 3K beater for cash. 

3. Save 548/month for 1 year. 

4. Sell beater for 3K. 

5.  Buy 10K car for cash that you saved.

6.  Look in mirror.  Say nice things to self.  Now genius self owns 10K car, only 1 year after being an idiot.

madage

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Re: Car! GRRRR!
« Reply #4 on: December 10, 2013, 09:11:26 AM »
Well, I made my mistake and now need help moving on.  We bought a brand new Honda CRV 3 years ago and took out a 5 year loan.  I am paying 548 a month and still have close to 12k to pay off.  I pay nearly 100 a month in interest and am wondering how others would approach this.  Do I just continue to pay normal or try to aggressively pay it off the last 2 years and not invest as much in my Roth, 401k, 529, etc...and pay it off quicker?

I ran a hypothetical calculation trying to match your numbers. Looks like your original loan was something like $25,000 at a rate of 11.35%! Unfortunately, you've already paid most of the interest. If you want to keep the vehicle, why don't you refinance it? If you have good credit it should be pretty easy for you to get a rate around 2%. See if you can get a 2-yr loan at ~2% and you'll save yourself about $1,200 in interest over the existing loan.

Heart of Tin

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Re: Car! GRRRR!
« Reply #5 on: December 10, 2013, 04:48:35 PM »
Well, I made my mistake and now need help moving on.  We bought a brand new Honda CRV 3 years ago and took out a 5 year loan.  I am paying 548 a month and still have close to 12k to pay off.  I pay nearly 100 a month in interest and am wondering how others would approach this.  Do I just continue to pay normal or try to aggressively pay it off the last 2 years and not invest as much in my Roth, 401k, 529, etc...and pay it off quicker?

I ran a hypothetical calculation trying to match your numbers. Looks like your original loan was something like $25,000 at a rate of 11.35%! Unfortunately, you've already paid most of the interest. If you want to keep the vehicle, why don't you refinance it? If you have good credit it should be pretty easy for you to get a rate around 2%. See if you can get a 2-yr loan at ~2% and you'll save yourself about $1,200 in interest over the existing loan.

Oooh! This is fun. My guess is: original loan $25,950 at 9.75% APR, 9.34% effective.
 
In that case you could still save nominally about $970 in interest payments over the life of the loan by refinancing to 2%; $930, by refinancing to 3%. Or, take the option that willn suggested, and save nominally about $6,575 over two years, possibly more if your savings go to investments, possibly less if your savings go to other debt.