I just got a 6 year auto loan for $291 a month. Should I pay more than the $291 each month? I'm trying to build my credit rating up, but yet I don't want to pay on it for 6 years either. I know I'll be paying over $3000 in interest if I just make the basic payment for 6 years. That's a lot of money! I know people that just pay cash for cars, but when they do this...how do they even have a credit rating? Just need some finanical advice here!
2006-11-15 11:07:33 · 10 answers · asked by Anonymous in Business & Finance ➔ Credit
Check the loan to see if it has a pre-payment penalty clause in it. If it does, I'd take the extra payment and put it in an interest bearing savings account created specifically for your car loan. After 4 or 5 years, you should be able to make payments using just your special savings account.
If your car loan doesn't have a pre-payment penalty clause, I'd just go ahead and pay additional each month towards your car loan.
2006-11-15 11:28:11 · answer #1 · answered by Anonymous · 0⤊ 0⤋
Paying it off quicker can never hurt but will have little affect on your overall score. The account will reflect 60 mos x $291 mo and your debt ratios are based on that regardless of the accelerated payment.
The same can not be said for credit card or other revolving debt. These will improve dramatically based on what you pay.
I write a blog on the subject of credit management, mortgages, real estate trends, etc. Check it out for more information that may be helpful.
2006-11-15 20:07:39 · answer #2 · answered by Anonymous · 0⤊ 0⤋
Most times when you get a car loan it is not a simple interest loan. Meaning the interest is figured at the time of purchase and that it is the same if you pay it off in 72 months or 2 months. It is not like a home mortgage. Best advice to better your credit is to make sure your payments are all on time.
2006-11-15 19:26:05 · answer #3 · answered by dudeman 4 · 1⤊ 1⤋
you can make additional payments to pay the car off sooner, but my advise would be to make as many payments as you can (6 months, 1 year) to establish a payment history and then if you can, pay it off. Depending also on how you file your taxes... the interest on the car loan can not be considered a deduction. Most people don't keep their cars that long (6 years). So more than likely, you'll want to sell it and get another car... try not to trade it in unless you have no choice. You'll get more money for the car if you sell it yourself.. so keep it in tip/top shape.
2006-11-15 19:16:48 · answer #4 · answered by tampico 6 · 0⤊ 0⤋
Dude! You are going to pay 6 years long for something that will be worthless in 4 years, not very prudent. Follow the people who pay cash! I don't have loans on anything, own everything outright. If I get laid off - everyone kann kiss my a** and I'm going on vacation for a year!
The US American system actually represses common people by extending them lots and lots of credit, which they will spend their whole lives trying to pay back. Your will be trapped like a rat! I'm almost 40 and have "0" credit rating, and this effects my life absolutely zero.
2006-11-15 19:14:24 · answer #5 · answered by Sanmigsean 6 · 0⤊ 0⤋
SMR,
It's always a good idea to pay more than the minimum amount.
When I bought my new car in 2001, I paid $50 - $200 more each month.
When I lost my job, car payments didn't stress me because I was so far ahead (I still paid something on it though I didn't have to).
I ended up paying the car off early due to that logic.
2006-11-15 20:16:43 · answer #6 · answered by Anonymous · 0⤊ 0⤋
Um, they don't have a credit rating if they pay cash unless they have credit cards or something. I would HIGHLY reccommend paying extra, as much as you can, it won't hurt your credit to pay it off early, but if you don't, it will mos def hurt your bank account! Pay it off as quickly as possible and invest your money in a mutual fund or an IRA or something like that. You can also talk to a real financial advisor, as most people on here are knowledgeable about credit, but not professionals!
2006-11-15 19:11:51 · answer #7 · answered by chickpea 3 · 0⤊ 0⤋
I would pay extra each money so that you are ahead of your payments and you end up paying less in interest charges.
2006-11-15 22:13:52 · answer #8 · answered by Mariposa 7 · 0⤊ 0⤋
Paying more is always good even better is paying on time. If you pay more it take you less time to pay off the veh and the less interest you pay.
2006-11-15 19:15:38 · answer #9 · answered by goingfasterbmw 3 · 1⤊ 1⤋
the more you pay sooner you wont have car payments
2006-11-15 19:12:31 · answer #10 · answered by Pr!Sc!11@ @K@ G@bY 1 · 0⤊ 0⤋