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My brain is broken, do this math

D

dxkj

Lifer
$17,800 car loan at 6.25% for 5 years


option 1. pay 8000 off of that immediately
option 2. put 8000 into savings account at 3.3%


according to some calcs, i will only save $1300 in interest by doing option 1, but 1400 in the savings account for 5 years
 
Your math is definately wrong. Your basically making a 2.95% return over the savings account by paing the car down (yearly). This isn't even factoring that the savings income will be taxed.

a) Keep some cash for emergencies
b) Pay down all of your credit cards / car loans / other depreciable asset loans in order of highest to lowest interest rate.

Bill


 
buy a used car for $8k.
Click to expand...

:roll: Maybe he likes his car. Jumping into threads and posting useless advice is, well, useless.

Bill

And don't post again until you learn to use sig links....
 
Your calculations appear to be correct assuming you pay off $8000 as a downpayment and still keep a 5yr loan payment, just with a lowered monthly payment.
Its kind of foolish to take a 5yr loan out on just 10k.

If you mean you have a 5yr loan on 17,800, but just make a huge payment of $8000 to start with, then you'll be done with your loan well before 5 years. Looks like you'd have it paid off in under 3 years (assuming you started paying the regular monthly payment after the 1-time 8000 payment). That would end up saving quite a bit more in interest. Thats probably where the logical flaw in your calculation lies.
 
depends on the car loan.

Many of them the interet is flat for every payment and you have nothing to gain by paying off early.
 
Originally posted by: bsobel
buy a used car for $8k.
Click to expand...

:roll: Maybe he likes his car. Jumping into threads and posting useless advice is, well, useless.

Bill

And don't post again until you learn to use sig links....
Click to expand...

I bought a car with 100k bumper to bumper warranty and 30+mpg highway so I wouldnt have to deal with breaking down on my daily 170 mile commute.... I understand used cars + repair fees would be less, but it woudlnt make up for me missing work , or being stranded
 
Originally posted by: Jeraden
Your calculations appear to be correct assuming you pay off $8000 as a downpayment and still keep a 5yr loan payment, just with a lowered monthly payment.
Its kind of foolish to take a 5yr loan out on just 10k.

If you mean you have a 5yr loan on 17,800, but just make a huge payment of $8000 to start with, then you'll be done with your loan well before 5 years. Looks like you'd have it paid off in under 3 years (assuming you started paying the regular monthly payment after the 1-time 8000 payment). That would end up saving quite a bit more in interest. Thats probably where the logical flaw in your calculation lies.
Click to expand...

ding ding ding, found it right before i read your post


it would only be the remaining amount over 2.5 years or so instead, so i save $2100 by doing option 1
 
Originally posted by: bsobel
buy a used car for $8k.
Click to expand...

:roll: Maybe he likes his car. Jumping into threads and posting useless advice is, well, useless.

Bill

And don't post again until you learn to use sig links....
Click to expand...

relax.

that apr seems kinda high, do you have a credit union?



 
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