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Advice on paying off loan

Regular Contributor

Advice on paying off loan

I need some advice. I plan on going to law school next year, so there's a big possibility that I will not be working.

I want to get my car loan paid off ASAP. I planned on doubling payments to have it paid off in a year. Due to the darn economy, my company implemented pay cuts. I'm not sure doubling is possible anymore….

 

As of today I owe around $12,300. My APR is 18% (I know it's bad). My payments are $515. I got the loan in 2005 with a 72 month term. I cannot afford to make huge payments each month, but I was thinking about making monthly payments of at least $100 over the current payment.

 

Does anyone have any advice on getting this paid quicker?

Thanks!

4/23/08 EX-614 EQ-624 TU-635
5/6/08 EX-660 EQ-628 TU-685
5/12/08 EX-660 EQ-652 TU-685
12/08/08 EX-670 EQ-670 TU-674
Message 1 of 6
5 REPLIES
Senior Contributor

Re: Advice on paying off loan

I would get with a Credit Union and discuss refinance options.  18% is killing you on that balance.  Too much of your payment is interest.

 

Paying the $100 extra is going to get you $1200 closer to paid off.  You mentioned doubling...is that out of the picture now due to cuts at work?

 

Also, this is a good time of year for a SPRING CLEAN garage sale or ebay sale or craigslist sale or all of the above.  Sell some stuff....we all accumulate stuff we don't need, don't use, don't want, don't remember is even there, is a luxury we can do without, in the attic, closet, under the bed and gathering dust while losing value.  People raise from hundreds to even thousands depending on their accumulation of "stuff" so look around and take advantage.

 

You also may want to consider looking at selling the car and buying a less expensive pre-owned through a Credit Union at lower rates.  You'll have lower balance and less interest, lower payment too.  You have to decide on that based upon your equity position in the vehicle.

 

Do you have savings/emergency funds?  With work cuts, I would seriously consider getting into a lower priced auto, lower rate and start saving some reserves just in case the pay cuts become job cuts. Smiley Happy

 

Always have a plan b in the works when you can....all or nothing, best of case scenarios are not the best way to plan going into law school meaning you have less time and more expenses.

Message Edited by txjohn on 04-15-2009 02:03 PM

Credit Scoring 101 - Tuscani   *  Guide to Common Abbreviations
Frequently Requested Threads * FICO High Achievers  *  FICO Score Estimator


09/03/2009 TU: 777, EQ: 776 ($8 balance on an account dropped me out of 780's)
03/28/2009 TU: 814, EQ: 810, EX: 781 (02/12/2009)
05/18/2005 TU: 563, EQ: 580, EX: 549
Message 2 of 6
Regular Contributor

Re: Advice on paying off loan

Thanks for the reply.  Doubling isn't totally out of the question.  I could try for as long as it works. 

I have savings, but it goes toward tuition and any expenses I'll have during law school.  I'd rather not touch it....

 

My car is a 2003 and has about 96,000 miles on it.  Will banks still refi that?  Can you refi with your current lender?

4/23/08 EX-614 EQ-624 TU-635
5/6/08 EX-660 EQ-628 TU-685
5/12/08 EX-660 EQ-652 TU-685
12/08/08 EX-670 EQ-670 TU-674
Message 3 of 6
Senior Contributor

Re: Advice on paying off loan

Some might.  100k is a threshhold which would keep you out of many lenders.  I would call around.  Try Alliant, PenFed and any locals you want to try.  I would explain the school part and wanting to reduce interest and accelerate payoff in prep for school.  Leave the job cuts part out Smiley Happy

 

Right now I wouldn't deplete your cash reserves.  And I would probably suggest putting a little extra into it each month.  If you can double down on the payments, maybe you go 60-70% more and 30% to savings just so you have some discretionary cash.  For now you need to enjoy the best things in life which are free, and save your cash or pay it to debt....so get a written budget and a tight belt Smiley Happy

 

Also, if you put your cash (current and ongoing) into a savings account with the Credit Union (and direct deposit check if possible) this will add substantially to your credibility with them and increase chances of loan and better rates.  Bank and save where you get service and credit and appreciation for the relationship.

Message Edited by txjohn on 04-15-2009 02:14 PM

Credit Scoring 101 - Tuscani   *  Guide to Common Abbreviations
Frequently Requested Threads * FICO High Achievers  *  FICO Score Estimator


09/03/2009 TU: 777, EQ: 776 ($8 balance on an account dropped me out of 780's)
03/28/2009 TU: 814, EQ: 810, EX: 781 (02/12/2009)
05/18/2005 TU: 563, EQ: 580, EX: 549
Message 4 of 6
Regular Contributor

Re: Advice on paying off loan

Will do!  I have an online savings account that gets auto deposits every week.

Thanks!

4/23/08 EX-614 EQ-624 TU-635
5/6/08 EX-660 EQ-628 TU-685
5/12/08 EX-660 EQ-652 TU-685
12/08/08 EX-670 EQ-670 TU-674
Message 5 of 6
Established Contributor

Re: Advice on paying off loan


lawskool09 wrote:

I need some advice. I plan on going to law school next year, so there's a big possibility that I will not be working.

I want to get my car loan paid off ASAP. I planned on doubling payments to have it paid off in a year. Due to the darn economy, my company implemented pay cuts. I'm not sure doubling is possible anymore….

 

As of today I owe around $12,300. My APR is 18% (I know it's bad). My payments are $515. I got the loan in 2005 with a 72 month term. I cannot afford to make huge payments each month, but I was thinking about making monthly payments of at least $100 over the current payment.

 

Does anyone have any advice on getting this paid quicker?

Thanks!


 

Pay $310 every 2 weeks instead of one pymnt every month. This will help cut down on the interest you are paying on the loan and will help you pay it off quicker.
Message 6 of 6