Right now I guess I would have the exact amount to pay off my car that I bought on LOAN. If I pay it completely then I will have no money left with me in the bank.
Is there any benefit of paying the loan slowly. I think the bad side of this is that if I would be paying slowly is that I would be paying the interest too. I have full coverage on the car as it is financed. In case of an accident, is it my responsibility to pay off the car. Would the insurance cover it ? Would my financing bank pay for it ?
2006-07-18 07:10:39 · 6 answers · asked by Sudeep 1 in Cars & Transportation ➔ Other - Cars & Transportation
First thing get gap insurance to cover the vehicle in case it does get totaled, and the difference will be paid off. Secondly don't pay it off completely but just stay ahead of the payments, so that whenever you go to trade it in down the road you will get money back and not have to tack on money onto the new vehicle. Finally, you don't want to deplete your account because if something were to come up where you need to drop some big bucks what will you do then?
2006-07-18 07:16:29 · answer #1 · answered by tex-mex 1 · 1⤊ 0⤋
Well, I wouldnt spend every penny you have in the bank to pay it off. What if you get sick or hurt and cant work? You should have an emergency fund (they say about 6 months worth of expenses) saved up. Outside of that though, yes, usually paying off a loan like this as quickly as possible is a good idea.
As far as the insurance, the insurance company would pay the amount that your car is worth if it got totaled. As long as you still have a loan, they would send the amount that you own to the bank to pay off the loan, and you would get to keep the rest, if there is any left. If the car is worth less than you owe and you total it, its possible you would have to pay some money to the bank, especially considering that you probably have some sort of deductible.
2006-07-18 07:15:58 · answer #2 · answered by bmwdriver11 7 · 0⤊ 0⤋
there are advantages to paying off a car loan early. first, if the interest is greater than that of your savings account, it might be wise to pay it off. but, if your interest in the bank is higher, then it wouldnt wise to use higher earning interest money to pay off a lower interest loan. make sense? you could lose more than you save, if you get my drift. if you total your car, you are responsible for the difference the insurance company pays and what you owe. lets say you owe $5000 and the insurance company says the resale value of the car is $4000, then you would have to pay the bank $1000. an accident doesnt affect the loan. you still owe them, even though your car is in the junk yard. here's a thought...after you pay your car off, find out what the blue book value is. it might be wise at that time to lower your insurance to PL/PD instead of full coverage. it could save you a bundle that you could use to down pay a new car if you have an at fault accident and total your car. if someone hits you, they have to replace the value of your car at the time of loss, not necessarily a car like you have. tricky, isnt it. ask your banker and insurance company and possibly a good car salesman which would be the best to do for your particular situation.
2006-07-18 07:23:35 · answer #3 · answered by kiowa 2 · 0⤊ 0⤋
It depends on your credit score, if you have great credit then pay off the car, if not make more than the required payment and pay the car off faster. This way you can re-establish good credit.
The car will be paid off depending on your insurance coverage, you might also to need to add what is called GAP insurance. This insurance guarantees that the car will be paid off should anything happen to it. Mainly look at the value of the car, if you wreck it without total coverage can you afford to replace it...
2006-07-18 07:18:47 · answer #4 · answered by crownroyalneat 1 · 0⤊ 0⤋
Don't pay it off if it leaves your bank account empty. If you get sick or injured and can't work, you'll have nothing to live on. Plus, making payments on time or paying ahead a bit will do wonders for your credit rating and credit score.
Once you have it paid down more, and you have more than enough to pay the remaining loan, then you can consider paying it off. But make sure what you have left is enough to live off for a few months if you had to.
2006-07-18 07:22:31 · answer #5 · answered by Ralfcoder 7 · 0⤊ 0⤋
YEAH WHY BLOW $$ ON INTEREST
2006-07-18 07:12:22 · answer #6 · answered by Penney S 6 · 0⤊ 0⤋