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Thread: To Pay Off or Not?

  1. MilitarySOS Jewel
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    #1

    To Pay Off or Not?

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    Admittedly, I'm not a very financial-savvy person so bear with me

    DH is reenlisting this month and there's a large bonus attached to it. We have two car payments, one with a year to go (my husband's jeep stateside that he bought before we got married for the stupid interest rate of 16% - makes me want to puke) and our primary car which has three-ish years left on it.

    I want to pay off the Jeep in full as soon as the bonus hits but does that save us any money? I'm not really sure. We also are hoping to sell the Audi out here before moving, which we owe far less than what it's worth, and then take any money on top of the dealer paying the loan plus whatever portion of the bonus we need to, and pay outright for a used mini-van stateside.

    I guess my question is two parts. One, is paying off the jeep in one lump sum beneficial, both monetary and credit wise or continue just paying the monthly payment from the bonus each month? 2 would be how does selling to a dealer work? DH and I discussed that basically if they come in at least $2k over what we owe, we'd be good since the car is just not working for us anymore, especially with road trips on the horizon.
  2. MilitarySOS Jewel
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    #2
    We do Dave Ramsey's baby steps so personally I'd dump the debt.

    Yes, paying off the Jeep saves you money. You save yourself 16% interest every month. Why give a bank 16%? Our experience we had one car loan, we paid it off a year later and it didn't affect DH's credit at all. If its something you've had around for a few years, yes your credit might dip a bit but it will bounce back. However, that will happen on any long-term loan if you pay it early or on the regular payment schedule. Being dinged for fulfilling your financial commitment, what a crock.

    As to selling at a dealer, I don't really know about. I'd start with asking yourself some questions. Are you financially in a position to take less than what the car is worth? Is your time more or less valuable than the difference it would be to sell it yourself? Do you have the the time it might take too sell? If you're happy with 2k over the loan as your minimum I'd go shop around at some dealers starting a bit higher than your asking and see what they settle on. You can always say no.
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    #3
    I'd definitely pay that off, after you make sure your savings are more than sufficient so you don't just end up borrowing more.
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    #4
    If the car is still under financing, the dealer will send a payoff to the lender and give you what's left, usually as a credit for the car your purchasing. You can goto kbb.com to find out various values of your car.
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    #5
    You'll have to check what the terms of the loan are on the Jeep. It will probably save you money but there are car loans where the interest is fixed, or where there is an early payoff penalty and if it happens to be one of those it may be less beneficial than paying off other loans.
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    #6
    I would pay off the jeep since you're keeping it and it has a ridiculous interest rate. You could either take the money you're paying on it and apply it to the Audi, bank it for the mini van, and/or also saving for the move.

    Not sure how this would work since you wouldn't be buying a vehicle then and at that dealership. But when we traded in DH's truck the dealership basically paid off the loan and then applied the rest to our van. Our loan is only for the amount the surplus didn't cover. But we got our van at the same place that bought DH's truck. I'd probably call around and ask what various dealerships policies are on that.
  7. Don't ever settle for less than you deserve.
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    #7
    Pay off the jeep you will save money. I mean thing about it those payments you are paying monthly, WITH interest, will be gone! So that is money in your pockets each month that would otherwise be flying out the window.

    Like take my car we paid it off in one lump sum. Payments were about $400 a month on it. Without that $400 a month going out the door for car payments we were able to then pay off DH's car faster by doubling the payments we made each month(his payments we small. Only a little over $100) AND we also save about an extra $100 a month with that car payment gone.

    Thanks to knocking out our biggest monthly payments when we could. We went from being "okay" financially and tight for money when anything big happened. To being able to say we can comfortably afford to bring our son into the world. With nice things he will need/I wanted for him already bought. Plus, we are in the process of house hunting. So we can become home owners in the near future, and we will be able to do so comfortably. All thanks to getting rid of my car payment, and savingg that money/using that extra money to knock out other debt. Making it where we saved even more.
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  8. aka Milfon2Wheelz
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    #8
    Pay it off and get your ass out here.

    How much longer til you're here???
  9. aka Milfon2Wheelz
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    #9
    Btw any advice from me take with a grain of salt. and tequila. and a lime. Cuz thats about where i am at tonight.
  10. MilitarySOS Jewel
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    #10
    Thanks everyone! Looks like the first step is to double check the terms of the Jeep loan but I'm thinking either way we slice it, pay that completely off is probably the way to go. I didn't realize about dealers only giving extra toward a trade in so we'll have to check on that.


    Quote Originally Posted by BraveLilToaster View Post
    Pay it off and get your ass out here.

    How much longer til you're here???
    Well, long story but I'll PM ya
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