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For me it'd be of interest HOW you make your money and how flexible your cashflow is.....
The reason I say so is ...ppl like myself and others in sales/marketing ...(real estate agents, small biz owners, brokers etc)
expect to get large influxes of cash where I'd feel comfortable slicing down that 10k prior to that 1 year deadline, where the 0% turns to dust.
Now for a bus driver or a 'regular' check guy it's more complicated b/c on
one hand sure you can OWN the car but if you don't CREATE enough additional CASH that 10k or so is sitting there on a CC and again
your 'normal' predictable (as predicted) paycheck doesn't ;'showhow' become BIG enough to absorb that debt ....isn't that HOW the debt blew up
in the 1st place? I never like that, idea...not after living this long and understanding that for most ppl the only BIG chunks of income they ever get
is either a income tax refund, a personal injury 'settlement' or a surprise dead relative check like the OP....
I don't like those odds....
Not saying it's a done deal but the idea the sliding that 10k CC INTO the car loan (which PenFed allows) at the 2% would be of some interest
to me for a few reasons
1) The cost of the debt is CHEAP and the 'max' pay back is clear (which means I can control and BEAT it)
2) The benefit of the lowered CC util still applies (which increases credit score)
3) The auto loan is still reporting (although 'not' that big a deal IMO anyway...one can always add a 'dummy' secured loan just to 'have' an installer appearing)
This is made possible by the room in the car and the fact that PenFed will lend upto NADA value....
Now once the CC debt has been rolled into the car note (yes the car nopte is bigger but the CC required payments anyway, right?) one can
now aggresively ATTACK the principle, thus saving the % on the overall car note while killing the CC debt in one swipe.
The reason I say this is (as some of you know) I just bought my car w/ a NFCU auto...I'm 2 payments in @5%
While PenFed offered to refi at 2.49...then the rep say btw you can borrow up to VALUE
So, I can roll over 3k into my loan and although my note goes up like $75/mo
10 payments disappear ( 48 months to go vs 58)
over 3k of CC debt disappear
AND
the number in the total finance charge paid back is 40% LESS (just considering the auto...making the % paid towards the CC balance 'ghost')
And that's before one decides to aggressively KILL an installment loan......b/c the rate of 2% is so low it may or may not be 'that' important
to KILL loan early b/c as another poster said there are times where the use of the money elsewhere is more valuable than the 2% fixed vs the revolving nature of CC debt.
Again, how one makes their money is an important factor....regular check folks MUST see things differently IMHO
Whereas it may make more sense for me to 'invest' that cash in paying a college kid or a stay-at-home to pass out flyers or set appointments for me
knowing my return is gonna be much better than disappearing a cheap car note.....everybody's POV is going to depend on their POV
Thank you for you LONG thought out post -- amazing info !!!
however I'm a bit lost here -- are you saying I can roll my balance on my CC with PenFed INTO my Auto loan ??? I'm not sure I am reading that right, but It seems pretty confusing as they are 2 separate entities -- one is secured with a car, the other is 100% Unsecured loan.... elaborate here please?
I mean if that were the case, I could roll the $10k CC into my auto loan, then pay the $10k right back into the auto loan using my windfall $$, and be left with $10k more on the auto loan and a $0 balance on a $22.5k credit card???
Again ,confused lol
BTW I am a nurse with 2 jobs -- one which is private duty care and is paid by private families, and can often be very large sums of money -- I live in LA and have had very high profile cases, some which paid over $10k monthly easy. But it is sporadic, my PT job is a guaranteed check of course with a clinic.
@Anonymous wrote:BTW I am a nurse with 2 jobs -- one which is private duty care and is paid by private families, and can often be very large sums of money -- I live in LA and have had very high profile cases, some which paid over $10k monthly easy. But it is sporadic, my PT job is a guaranteed check of course with a clinic.
Sweet! Another RN in the building! I'm not alone! Okay, back to your post. And take advice from those up thread as there seems to be a lot of good advice coming at you. Good luck in whatever you decide.
Lets revisit this again Gemini --- im still waiting on the explanation of what is meany by "sliding CC debt into auto loan" LOL
It may be a good idea to take the 10k you make in a month from salary and pay off the car. Since you mention you also have a second month or more in which you make 10k per month, use that to pay off the credit cards.
Ok neighorbor...I'm in SoCal as well ...
And YES that's what I'm saying...
PenFed will lend you the extra 10k in value you said you have in the car
and just as I'm doing with them...they will cut you a check and you pay off the CC debt
This will ballon your car note but just as you said nothing prevents you from using your windfall to paydown the now larger car note.
Now, b/c you sling that Cali cash in big chunks from time to time ..
You can choose to pay it QUICK or pay it slow and EARN some money with that cash...again b/c the % rate PenFed charges is so low, it
makes it tempting to 'slow' pay and use the funds for other income producing activity (especially seeing that you sem to WANT to keep the install loan
on your reports anyway).
The only thing that I'd question in your scenario is will you 100% w/o fail pay off that CC using only the 0%...that being FOR SURE...
I can see how folks could argue the 0%....other than that I like the flat know number in the finance box as my max....which I can beat (by paying more in , just like you suggested)
Ex: A 10k auto @2.49 for 48 months w/ PenFed cost about $512 total over a 4 year period...that $125/yr ...about $11/mo but if paid off quicker even LESS
CC debt is harder to map as it revolves....but if one owed 6k on a car and used loan proceeds to kill off 4k in other debt ....that's a GREAT deal in my book.
I'm a little bit at a loss for words.
We will never see 2% loans again in our lifetime once they go away. Your student loans are higher than that nearly guarunteed, and any non-0% CC debt is higher than that.
Pay off all that crap first before paying back what amounts to a near free money loan. I know there's an emotional component but try not to make a financial mistake based on that, pay off what's costing you the most money first when you get a windfall and it's almost assuredly not the car loan.
If for no other reason, you can easily dump the car if needed, you can't even discharge student loans through a CH 7. Not even an IRS tax lien has that much control over your financial future if something goes sideways. Protect yourself first, always, rather than spending it on the financial equivalent of candy.