Author Topic: Pay off my car loan or continue saving?  (Read 721 times)

brownr72

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Pay off my car loan or continue saving?
« on: Nov 16, 2010, 10:41:57 AM »
so ive got about 10k in the bank so far, im trying to get to 20k by next april to put a down payment on some property. i took out a car loan about 3 years ago with a high interest(something like 15%). i owe 5780.80 with payments of 289.26 a month(220 in principal, 70 in interest). ive got about 2 more years and 3 months before its payed off. should i pay off my car loan or should i just make the minimum monthly payments and continue to save? right now im saving 1k a month and putting it into saving, if i were able to pay off the car i would be able to have 1300 a month to save.

James Falla

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Re: Pay off my car loan or continue saving?
« Reply #1 on: Nov 17, 2010, 05:59:44 PM »
Hello brownr72
 
Are you saying that you could pay £5780.8 today and settle your loan? If so, it is definitely worth using your savings to pay it off.
 
If you carry on paying the monthly installments, you will end up paying an additional £2030 in interest (27 mths x £289.26 = £7810 in total). By paying the loan straight away you will therefore be £2030 better off (+ a little bit of interest) in 27 months time as long as you continue to save the extra £300 a month you are gaining.
 
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