January 26, 20179 yr Author Good call to not take the extra HELOC to pay the car....I've played this shell game and it turns out, not so effective. I take it you may be listening to some Ramsey lately ? We have been paying down on revolving and car loans and have it down to just mortgage and HELOC...no other debt. Feels a lot better, but still not finished. With my impending lack of employment, we needed to get tightened up and pile up some cash until we see what is going to happen. Always be sure to close those credit cards once paid in full...if not, they remain open on credit report and the needle on your number will not move I haven't listened to Dave for at least 10 years but I got the process down and that is what I am doing. Paying the small ones off, no credit period, enjoying life.
January 26, 20179 yr Anything extra you pay on top the principal and interest will comes straight off the principal of the loan, leading to a lower balance (obviously) and less payments when it's all said and done. On thing I would check on is early payoff penalty. Most banks if you have an online account will show you payoff information and it should show it there. Oh than that there are loan calculators you can google and see how much extra actually benefits you in the long run. So to answer what I think is your question, no pitfalls other than a potential early payoff penalty. Being out of debt is a beautiful thing. I'm not there yet, but getting close.
January 26, 20179 yr Author Anything extra you pay on top the principal and interest will comes straight off the principal of the loan, leading to a lower balance (obviously) and less payments when it's all said and done. On thing I would check on is early payoff penalty. Most banks if you have an online account will show you payoff information and it should show it there. Oh than that there are loan calculators you can google and see how much extra actually benefits you in the long run. So to answer what I think is your question, no pitfalls other than a potential early payoff penalty. Being out of debt is a beautiful thing. I'm not there yet, but getting close. When I borrowed on this car I chose a loan with no early payoff penalty after the first year so I am out of the woods.
January 26, 20179 yr When I borrowed on this car I chose a loan with no early payoff penalty after the first year so I am out of the woods. I bought my car knowing I would pay it off early and somehow the dealership slipped a fast one by me in the paperwork and I ended up with one on my loan. I've been dealing with it for months trying to resolve the issue. I'm not hopeful at this point.
January 26, 20179 yr Author I bought my car knowing I would pay it off early and somehow the dealership slipped a fast one by me in the paperwork and I ended up with one on my loan. I've been dealing with it for months trying to resolve the issue. I'm not hopeful at this point. Don't start me on the Unethical Quagmire that Car Dealerships are in this world.
January 26, 20179 yr Don't think there is. Just pay what you want to pay each month. Anything over the amount due should go directly towards paying off the loan. We've been doing that with my wife's car loan since she bought it. We're at the point that her next payment isn't technically due for 7-8 months. The only thing I would add here, is if you do this, be aware of where they are putting the "extra" payments. I had a situation many, many years ago where the extra money I paid came off the "back end" of the loan payments. Meaning, if I paid an extra month one time, it took off the final month of the loan...not necessarily the next immediate month. I didn't realize this at the time, and had a situation arise where I intentionally skipped a month's payment (thinking that I was already several months "ahead" of my scheduled payments) to use the money for vacation. Was a little suprised when I got the notice saying my payment was considered late.
January 26, 20179 yr Author The only thing I would add here, is if you do this, be aware of where they are putting the "extra" payments. I had a situation many, many years ago where the extra money I paid came off the "back end" of the loan payments. Meaning, if I paid an extra month one time, it took off the final month of the loan...not necessarily the next immediate month. I didn't realize this at the time, and had a situation arise where I intentionally skipped a month's payment (thinking that I was already several months "ahead" of my scheduled payments) to use the money for vacation. Was a little suprised when I got the notice saying my payment was considered late. This is exactly the kind of info I was looking for. Basically the bank dipping into the the gray area and actually have accelerated payments hurt my credit because the right and and the left hand weren't on the same page.
January 26, 20179 yr This is exactly the kind of info I was looking for. Basically the bank dipping into the the gray area and actually have accelerated payments hurt my credit because the right and and the left hand weren't on the same page. I think the best thing you can do is talk to your lending institution. Find out exactly what they offer and see if they can give you an idea of what would happen in various scenarios. The only thing I'd recommend is making sure whatever you do, is voluntary on your part. That way if you find yourself in a different financial situation 3 months from now, you're not locked into anything. At least that's my 2 cents.
January 26, 20179 yr If your goal is to simply pay off debt as far as possible then stay on the plan you mentioned - pay as much extra each month as you can. If you are asking if it's the right thing to do financially then there are some other questions that have to be factored in? Interest rate Remaining months How much extra per month you can afford What could you do with that money instead of applying it to the loan The right answer depends on your goal. Paying off debt faster is not always the solution that will net the most in the end.
January 26, 20179 yr What if I just want to pay extra each month, is there a right or wrong way to do that or does it all just depend on when the Bank gets the money and the end result is a couple of dollars here or there? Like a mortgage you have a total amount of payments. Double up payments per month and a 5 year loan goes to 2.5 just like that. Just depends on how long you want to owe on it.
January 27, 20179 yr Like a mortgage you have a total amount of payments. Double up payments per month and a 5 year loan goes to 2.5 just like that. Just depends on how long you want to owe on it. It wouldn't be exactly half the time due to the time factor. It would take a bit more than half of the original term.
January 27, 20179 yr I have paid off two cars quickly. They were both 48 month loans I paid off in 30 months both times. I chose 48 to have lower payments in case of unforeseen circumstances. On what I thought would be the last payment, I called the lending institution, one was Ford Credit , the other with GM. They told me how much I owed, I paid the last remaining balance by card and had them send me a confirmation email and a letter in the mail it was paid in full. They also send you Title stuffs also. This is critical.. E.G. if my payment was 500, I would pay 850 and they applied it to the principal.
January 27, 20179 yr Every bank I worked at would take all that was currently owed and the rest was applied to the principle balance unless told otherwise.
January 27, 20179 yr Being debt free is a great thing. When we were first married, we ran up our credit cards and learned the hard way how bad that was. We now have our house paid off, cars paid off and zero credit card debt. Have a small home improvement line of credit that we use from time to time. Bad thing about being debt free is that we are are old now! Takes a lot of time to get there!
January 27, 20179 yr Being debt free is a great thing. When we were first married, we ran up our credit cards and learned the hard way how bad that was. We now have our house paid off, cars paid off and zero credit card debt. Have a small home improvement line of credit that we use from time to time. Bad thing about being debt free is that we are are old now! Takes a lot of time to get there! My current situation and it sucks. Although, it's not my credit card debt but my lovely wife's
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