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 07:10:46 · 19 answers · asked by Sudeep 1 in Cars & Transportation ➔ Other - Cars & Transportation
I finance people at work and i am always talking to people who hang themselves with financing. Pay it off as soon as you can. That way, you wont pay as much interest, plus, you will have better credit. Any open account shows up on your credit report, which makes it harder to get loans and such. Definately pay it off as soon as you can, while you have the means. You will regret it later if you dont, and your pocket will be much emptier.
Dont zero out your bank account; just make as big of a payment as you can afford to do. That way, you wont have to make as many payments that with that interest.
If you get into an accident your insurance (depending on type and extent, liability, etc) will cover the accident, regardless of if the car is being financed. Talk to your insurance company to be sure of the terms of coverage.
2006-07-18 07:17:42 · answer #1 · answered by Eternal Sunshine 3 · 0⤊ 0⤋
Sometimes there are penalties for paying off a loan early. The best thing you can do is talk to your bank and find out if there are any such penalities there. If not by all means pay it off. Then start putting those payments into a savings account. You'll be surprised how quickly it will build up. You would still have to carry the insurance on it. Shop around for the best insurance that suits your needs.
2006-07-18 07:19:11 · answer #2 · answered by Auntiem115 6 · 0⤊ 0⤋
Don't use all of your expendable income/savings to pay the car off. Yes, you will save interest payments, however you will have not cash for "just in case"
Make large payments and pay it off early.
In the case of an accident it depends upon the damage to the vehicle - is it fixable, drivable, totaled. This, along with your financing contract will determine your responsibility.
The other advantage to paying off the car, once you decide to sell it, you wil have gotten the use out of the vehicle and the ability to realize the blue book value (or just less if selling to a dealer) of the vehicle.
2006-07-18 07:17:23 · answer #3 · answered by Anonymous · 0⤊ 0⤋
Cash is KING!!!
Do not go cash poor. That being said, the quicker that you pay off the car the better. Theoretically, if you can earn a higher interest rate with the cash in hand than you loose in interest, you are ahead by keeping the note. This is a rare case, however.
Your insurance will cover the payoff of the car if you total it. That is why the financing bank requires it. It is to protect them, not you.
2006-07-18 07:12:43 · answer #4 · answered by mykidsRmylife 4 · 0⤊ 0⤋
First of all, you pay a lot more at the end of the day. If you pay off your car now you will also have a lot more money every month. I bought a car on loan and paid for about two years after which I got some extra money and paid it off. I havn't looked back since.
2006-07-18 07:16:23 · answer #5 · answered by Anonymous · 0⤊ 0⤋
you have to read your contracts to know that... and compute all possible scenarios.
have fun.
by the way, people will sometimes tell you that it is good to never have any debt, but it's not always true: look at how the government works, how big companies work : they get a loan and make more money out of it than they pay to the bank.
If you think you can make more money out of the money you have in your desposit than you will have to pay for your loan, then don't pay it off.
2006-07-18 07:17:14 · answer #6 · answered by Anonymous · 0⤊ 0⤋
The benefit of paying is slowly is that you won't have to put all the money together to pay it off. Another benefit is that it helps your credit. The bad thing about paying it off slowly is the interest.
2006-07-18 07:14:15 · answer #7 · answered by peony1418 3 · 0⤊ 0⤋
yes . if you pay off your car you dont have to keep full coverage on the car and you save money by not having to pay finance charges and the intrest on the loan and then the car is all yours
2006-07-18 07:13:55 · answer #8 · answered by mopargrl73 3 · 0⤊ 0⤋
You can also just throw a few grand at the loan; that will reduce the total amount of interest you end up paying a lot.
2006-07-18 07:15:17 · answer #9 · answered by Anonymous · 0⤊ 0⤋
I think you should pay it off. You can still keep full coverage if you want, but you could drop collision and comprehensive if you want to take that risk and only carry liability if it is paid off. However if you have credit card debt, pay that off first. There is no benefit to paying that extra interest.
2006-07-18 07:14:38 · answer #10 · answered by BonesofaTeacher 7 · 0⤊ 0⤋