Chevrolet Corvette Stingray C7 Forum - View Single Post

Rock36 · 04-21-2007, 05:06 AM

One thing to consider when paying off an auto loan early.

How much time is left in the loan? The amortization rate for a loan is setup so all the interest for the loan is paid mostly up front. You might already know that, but it bears stating.

So the longer you wait to start making extra payments the less and less you can really expect to save on interest. If you have less than a year left on the loan you might consider letting it ride out. You already paid the lender a large majority of the interest. In a situation like that the money you would use to make extra payments could potentially grow more in a savings, CD, or money market account. Or be better put to use paying down high interest debt like credit card debt if you have any.

Here try this link and play with it. It will show you how much money you can expect to save based on all kinds of factors. Then you can really decide if it is really worth paying of car loan early.

http://www.bankrate.com/brm/auto-loan-calculator.asp

Generally speaking though it is a decent idea to get rid of your debt. You may just find that the getting rid of the burden of a car payment early is worth more in peace of mind than actually saving on paying a lot of interest.

04-21-2007, 05:06 AM	#8
Rock36 I just like V8s Drives: 2007 Corvette Z06 Join Date: Mar 2007 Location: Stuttgart, Germany Posts: 919	One thing to consider when paying off an auto loan early. How much time is left in the loan? The amortization rate for a loan is setup so all the interest for the loan is paid mostly up front. You might already know that, but it bears stating. So the longer you wait to start making extra payments the less and less you can really expect to save on interest. If you have less than a year left on the loan you might consider letting it ride out. You already paid the lender a large majority of the interest. In a situation like that the money you would use to make extra payments could potentially grow more in a savings, CD, or money market account. Or be better put to use paying down high interest debt like credit card debt if you have any. Here try this link and play with it. It will show you how much money you can expect to save based on all kinds of factors. Then you can really decide if it is really worth paying of car loan early. http://www.bankrate.com/brm/auto-loan-calculator.asp Generally speaking though it is a decent idea to get rid of your debt. You may just find that the getting rid of the burden of a car payment early is worth more in peace of mind than actually saving on paying a lot of interest.