Paying off Auto loan

DiamondK · ‎06-15-2012

I'm in the market to purchase a new car "Audi A5" within the next 12 months. I co-signed for a 72 month auto loan with boyfriend, "now he's my financee," 4yrs ago, because he was required to purchase a new car for work "that his company was rebursing him for the car payments". At the time he had just graduated college and he did not have good enough credit to obtain the loan with his credit only. Now, his job has made some changes and has ended the car program and we are now stuck with this auto loan. His credit score is now in the 700's. All payments were and are made on time. I've been reviewing our credit and paying off my cc's and reducing all my balances bring them to $0, before I seek financing for a new automobile. While reviewing my credit report, I noticed that we are upside down in this auto loan. We never considered before now paying off the loan because his employer was paying for the car. We will have too much negative equity to trade it in, so a trade-in will not be a good idea, plus, the car is still being used as a work vehicle and it is not his primary car, " he only uses it for work." So.............................from calculation.....we have 24 months left to pay on this car. We have decided to double the car payments to bring down the principle and pay this car off within 12 months so we can purchase my car and only have 1 car loan instead of 2 car loans. Right now, it seems like the smartest thing to do. My question is..... What do you think??

marty56 · ‎06-15-2012

Welcome to the forum and +1 on the idea to PIF the car loan and your plan. Also +1 on a cosign that worked and a being in a good relationship.

1/25/2021: FICO 850 EQ 848 TU 847 EX

Anonymous · ‎06-16-2012

DiamondK wrote:
...72 month auto loan
All payments were and are made on time
paying off my cc's and reducing all my balances bring them to $0
we are upside down in this auto loan
the car is still being used as a work vehicle and it is not his primary car
we have 24 months left to pay on this car
We have decided to double the car payments to bring down the principle and pay this car off within 12 months
...

Firstly, you've hit most of the key points there, and knowing the facts already puts you in good shape. Do you plan on keeping this car? What about savings, I take it that you are applying all extra cash to CC balances? What other cars do you own? Were you going to trade either of them in?

A "one (or better, zero) car note at a time" policy is very smart, and I'd stick to it if you can!

DiamondK · ‎06-16-2012

Answer to questions::::: 1. Yes, we plan on keeping the car as long as my fiancee is employed with the company that required him to purchase the car. He needs it for travel. 2. Yes, I do have savings and my fiancee has his on savings as well and we both have 401K's through our employers that we contribute to every pay period and both our employees match our contributions up to 6%. I do not want to pull money from my personal savings to pay off credit card debt. I think it will be better to work and pay off cc's within 12 months and i will still have enough to apply a few 100's to savings every month until I pay off my debt. Plus I picked-up a extra day every week at work to pay debt off. 3. I had 2 vehicles, but now i'm down to 1 car, due to a car accident that totaled out my '03 Chevy Impala in May '12. That car was the one I drove the most and it was payed for as well. My insurance did pay me for the totaled out vehicle and I put that check in my saving to use for a down payment for my next vehicle. I do own a Lincoln Navigator as well, which I'm driving now, it's paid for as well. It wasn't my everyday vehicle b/c I would only drive it at leisure. "I do not plan on trading it in".......,,,....."I already own it." His primary personal vehicle is paid for as well. The car we are upside-down in is the only car note we have b/w the 2 of us. Which, we plan on paying it off within 12 months before we seek financing for me a new car. We are both just hitting 30, have military backgrounds, college degrees that allowed us to obtain good paying jobs. We both watched our parents struggle with finances and just want to have our finances and credit in order before we get married and have kids.