Car Loan Payoff Question...

BlamoHammer

Platinum Member
Sep 21, 2002
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Do auto lending companies allow you to pay off the remaining balance of your loan with a credit card? I couldnt find the option anywhere on the website and so I wasn't sure if it's an option...
 

BlamoHammer

Platinum Member
Sep 21, 2002
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Originally posted by: dartworth
Call them in the moring...

Planned on it, just was wondering if anyone here could give me any info in the meantime. The lender in this case is Ford Motor Credit.
 

GagHalfrunt

Lifer
Apr 19, 2001
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Almost certainly, but check into 2 things:

1) Prepay penalty. Paying early can carry a hefty fine, like cashing in an IRA early. They contracted to get x dollars in interest and they want it.

2) True savings. On long term loans most of the interest is payed early in the billing and the principle is payed off last. If you've got 4 months left on a 4 year loan you've repaid all the interest already, the last few payments would be principle only and there would be no benefit to paying it off in one lump sum.
 

BlamoHammer

Platinum Member
Sep 21, 2002
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Originally posted by: GagHalfrunt
Almost certainly, but check into 2 things:

1) Prepay penalty. Paying early can carry a hefty fine, like cashing in an IRA early. They contracted to get x dollars in interest and they want it.

2) True savings. On long term loans most of the interest is payed early in the billing and the principle is payed off last. If you've got 4 months left on a 4 year loan you've repaid all the interest already, the last few payments would be principle only and there would be no benefit to paying it off in one lump sum.

Well this is the situation...

I got this car loan in the midst of repairing my credit and I am getting st@bbed with 22% interest. My girlfriend and I just opened up Visa that gives us 2.9% interest and it has a limit high enough to cover the remainder (about $5800). I thought it would obviously save me money to drop 20% in interest over the course of three years.
 

olds

Elite Member
Mar 3, 2000
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I don't think there are pre-payment penalties on auto loans. But they may not take a CC if your balance is high. They will take a check from the CC company. They don't like to get large CC payments because they don't get 100% of the money. It's not legal for them to tell you that just as it isn't legal to charge someone who is paying with Paypal more than a prson who is paying with cash.
 

olds

Elite Member
Mar 3, 2000
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Originally posted by: AngryPirate
Originally posted by: GagHalfrunt
Almost certainly, but check into 2 things:

1) Prepay penalty. Paying early can carry a hefty fine, like cashing in an IRA early. They contracted to get x dollars in interest and they want it.

2) True savings. On long term loans most of the interest is payed early in the billing and the principle is payed off last. If you've got 4 months left on a 4 year loan you've repaid all the interest already, the last few payments would be principle only and there would be no benefit to paying it off in one lump sum.

Well this is the situation...

I got this car loan in the midst of repairing my credit and I am getting st@bbed with 22% interest. My girlfriend and I just opened up Visa that gives us 2.9% interest and it has a limit high enough to cover the remainder (about $5800). I thought it would obviously save me money to drop 20% in interest over the course of three years.
Most new accounst allow balance transfers by using one of their checks. Just be sure you aren't charged a higher rate. Banks charge more for balance tranfers but they usually give you a break when you first sign up.

 

olds

Elite Member
Mar 3, 2000
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Originally posted by: AngryPirate
How would I get a check from my credit card company?
You usually get balance transfer checks. Just be sure to check the rate.

 

GagHalfrunt

Lifer
Apr 19, 2001
25,297
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YIKES!!!! 22% on a car loan? Did they at least have the courtesy to use a little K-Y Jelly on you first or did they just bend you over the desk?

In that case, you're likely to come out ahead even if there is a prepay penalty. If they don't take credit cards try to get a bank loan to finish off the rest. If the car is worth more than the value of the loan you should have no trouble. Be careful about carrying it on a credit card though, 2.9% is guaranteed to be an introductory rate. 6 months from now the rate could jump up to 30% and you'll be worse off. Make sure you do the math for the entire life of the loan before signing anything, something that looks like a good deal now might hurt you in the long run.
 

BlamoHammer

Platinum Member
Sep 21, 2002
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Originally posted by: GagHalfrunt
YIKES!!!! 22% on a car loan? Did they at least have the courtesy to use a little K-Y Jelly on you first or did they just bend you over the desk?

In that case, you're likely to come out ahead even if there is a prepay penalty. If they don't take credit cards try to get a bank loan to finish off the rest. If the car is worth more than the value of the loan you should have no trouble. Be careful about carrying it on a credit card though, 2.9% is guaranteed to be an introductory rate. 6 months from now the rate could jump up to 30% and you'll be worse off. Make sure you do the math for the entire life of the loan before signing anything, something that looks like a good deal now might hurt you in the long run.

Standard interest rate on the card is 9.9%. Even when it goes up to that it's a big savings.
 

RossMAN

Grand Nagus
Feb 24, 2000
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In your situation (ouch 22%?) I would definitely payoff your car loan with your cc.

Another added bonus you may not have considered is, you will OWN the car title and there will be no lien holders. So you can carry liability only insurance if you want.

Here's what you do:
1) Call Ford Motor Credit and ask for a 10 day payoff quote and the per diem. Ask them for their physical mailing address for payoff payments. Also ask them to confirm that they have your current mailing address and phone numbers. You wouldn't want your title mailed to a previous or incorrect address, would you?

2) Call your credit card company -or- login to their web site and request a balance transfer payable to Ford Motor Credit for the amount of the 10 day payoff. Give them Ford Motor Credit's complete name, your complete loan account number and their physical mailing address. Ask them if it's possible to expedite this since the payoff quote is only valid for 10 days.

3) Call Ford Motor Credit in 7 days to see if they received the payoff check.
 

BlamoHammer

Platinum Member
Sep 21, 2002
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Originally posted by: RossMAN
In your situation (ouch 22%?) I would definitely payoff your car loan with your cc.

Another added bonus you may not have considered is, you will OWN the car title and there will be no lien holders. So you can carry liability only insurance if you want.

Here's what you do:
1) Call Ford Motor Credit and ask for a 10 day payoff quote and the per diem. Ask them for their physical mailing address for payoff payments. Also ask them to confirm that they have your current mailing address and phone numbers. You wouldn't want your title mailed to a previous or incorrect address, would you?

2) Call your credit card company -or- login to their web site and request a balance transfer payable to Ford Motor Credit for the amount of the 10 day payoff. Give them Ford Motor Credit's complete name, your complete loan account number and their physical mailing address. Ask them if it's possible to expedite this since the payoff quote is only valid for 10 days.

3) Call Ford Motor Credit in 7 days to see if they received the payoff check.

Thanks RossMAN. I did contact Ford Motor Credit and they told me they do not accept CC as a form of payment. Would this preclude me from following the process that you just laid out?

And yes, I did consider the insurance aspect of owning my car. I don't drive the Civic currently, it is just sitting there waiting to be sold so having liability only on it will be another hefty savings per month.


*edit* just gave it more than 3 seconds of thought and no of course it wont matter. they will be sending a check to Ford for the amount owed on my account number. Duh...thanks again Ross
 

RossMAN

Grand Nagus
Feb 24, 2000
78,794
266
116
Originally posted by: AngryPirate
Originally posted by: RossMAN
In your situation (ouch 22%?) I would definitely payoff your car loan with your cc.

Another added bonus you may not have considered is, you will OWN the car title and there will be no lien holders. So you can carry liability only insurance if you want.

Here's what you do:
1) Call Ford Motor Credit and ask for a 10 day payoff quote and the per diem. Ask them for their physical mailing address for payoff payments. Also ask them to confirm that they have your current mailing address and phone numbers. You wouldn't want your title mailed to a previous or incorrect address, would you?

2) Call your credit card company -or- login to their web site and request a balance transfer payable to Ford Motor Credit for the amount of the 10 day payoff. Give them Ford Motor Credit's complete name, your complete loan account number and their physical mailing address. Ask them if it's possible to expedite this since the payoff quote is only valid for 10 days.

3) Call Ford Motor Credit in 7 days to see if they received the payoff check.

Thanks RossMAN. I did contact Ford Motor Credit and they told me they do not accept CC as a form of payment. Would this preclude me from following the process that you just laid out?

And yes, I did consider the insurance aspect of owning my car. I don't drive the Civic currently, it is just sitting there waiting to be sold so having liability only on it will be another hefty savings per month.


*edit* just gave it more than 3 seconds of thought and no of course it wont matter. they will be sending a check to Ford for the amount owed on my account number. Duh...thanks again Ross

D'oh you just edited your post. That's exactly it, Ford Motor Credit will receive a CHECK from your credit card company ... you won't call and provide them with your plastic 16 digits.

It's very important though to get an accurate 10 day payoff quote, the physical mailing address and ask your cc company one very important question.

This will be considered a BALANCE TRANSFER and not a CASH ADVANCE?

Balance Transfer gives you the good rate of 2.9%.

Cash Advance has no 25 day "grace" period and begins accruing interest immediately at 9.99% (sometimes the cash advance rate is higher than that of purchases).

If you are not driving the car, definitely do this ... not only will you save on the interest (2.9% vs 22%) you'll also save on going from full coverage comp & collision to liability only.