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CU Medallion [54758]
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DebtNET: Paying off a car to nix comp & collision insurance
May 27, 2015, 11:23 AM
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vs Paying off car and keeping said insurances....
vs just making the payments as scheduled.
(Yes, RH, I know...but it was very VERY cheap to finance part of the purchase amount)
I've got a car that wouldn't take much to just pay off the remaining balance on the loan, at which point I could decide to drop down to just liability insurance*...the goal really, though, would be to reallocate the moneys for the car payment (and potentially the add'l coverages that might be dropped) to other debts
*The remaining 18 months will only 'cost' me about $67.5 (avg of $3.75 a month) if I kept paying the monthly amount, so it would really only make sense to pay this off instead of more expensive debt IF I cancelled the add'l coverages (about $27.5/mo), right?
Also, I get a giant discount @ the dealership on service, and minimal if any markup on parts...would it even be worth holding on to comprehensive/collision, regardless of whenever that is?
PS: I stopped checking a long time ago to see if any of that makes sense...
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CU Medallion [54758]
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Italics
May 27, 2015, 11:24 AM
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because, Italian.
It's what we do
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All-In [31907]
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pay it off and save $68....
May 27, 2015, 11:34 AM
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cancelling collision or not is a different matter
You need to consider if you can cash-flow repairs to your car if you have a wreck versus the amount the insurance will total it, etc...
But...i just read where you said you have "more expensive debt". Personally, I would pay off the smallest debt and then apply the saved payment to the next largest debt (Dave Ramsey debt snowball). If you're paying off debt quickly, the differential in the interest amount won't be much different and you've got a better chance of actually paying off the debt if you feel yourself building momentum.
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CU Medallion [54758]
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best bang for the buck is paying it off & cancelling insrc
May 27, 2015, 11:41 AM
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the monthly/overall savings would trump the reduction in credit card finance charges (have one card that's still got a balance on it...)...I'm already paying WELL over the minimum payment for the CC, paying off the car would add another 35% to what I'm sending.
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CU Medallion [54758]
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BUT, that's if it's worth getting rid of $27/mo insurance***
May 27, 2015, 11:42 AM
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All-In [43778]
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How much is the car worth right now?***
May 27, 2015, 11:45 AM
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All-In [31907]
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CU Medallion [54758]
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CC balance is 2x remaining car loan
May 27, 2015, 11:47 AM
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car is worth 4x remaining car loan
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All-In [43778]
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please tmale me an algorithm to help solve your formula
May 27, 2015, 11:49 AM
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HOW MUCH IS THE CAR WORTH MAN? Like $3k, $10k, $30k, OR HOW MUCH? IN REAL AMERICAN DOLLARS PLEASE.
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CU Medallion [54758]
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about $10k, mebbe a bit more
May 27, 2015, 11:50 AM
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what does it's street value have to do w/ it?
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CU Medallion [54758]
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(plus an undefined multiplier for celebrity status)
May 27, 2015, 11:51 AM
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All-In [43778]
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For me, if it was worth like $3k or something I'd prolly dro
May 27, 2015, 11:53 AM
[ in reply to about $10k, mebbe a bit more ] |
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p comp. At $10k, I'd prolly keep the insurance.
The credit card debt is a problem. Pay off the car, and start paying down that credit card like it's your job. Then never carry a balance on one again. Ever. For any reason. Then save up for an emergency fund.
If an emergency comes up in between and you think you might need to put it on a credit card, DON'T DO IT. Sell a child, go to 1 car, sell your house, turn to prostitution...ANYTHING but a credit card.
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CU Medallion [54758]
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that's essentially the plan
May 27, 2015, 12:01 PM
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though, I MAY just sell a kid for either the fun of it, or should I ever just want to do something (ANYTHING) in peace.
I'm doing all that stuff congruently....soon, I'll just pay off the CC just like I might w/ the car...but again, w/o including dropping the insurance, wouldn't that money be better spent taking a 50% chunk off the credit card?
ok...new algorithm (not really):
Pay off car, apply car loan $$ ONLY (keep insurance) to CC in addition to what I'm already paying, and it's paid off in 6 months
Leave car loan as is, put that money towards CC as one-time payment, and maintain current monthly payment, and it's paid off in 4(ish) months....
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All-In [43778]
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pay off the cc debt
May 27, 2015, 12:18 PM
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and never get into it again. It's evil, man.
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Varsity [236]
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Re: that's essentially the plan
May 27, 2015, 1:24 PM
[ in reply to that's essentially the plan ] |
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What's your deductible on the Collision/Comp coverage? You can adjust the deductible and apply those savings to the CC debt in the near term (if you or your wife are unsettled at the thought of not having Collision/comp coverage).
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Oculus Spirit [81078]
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Unless he has like a $100 deductible, I haven't found
May 27, 2015, 1:27 PM
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that difference between $1000 or $2000 to be enough to pay off anything but a few lunches.
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CU Medallion [54758]
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it's $500***
May 27, 2015, 1:30 PM
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Oculus Spirit [81078]
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You could look at raising it to $1000 or higher
May 27, 2015, 1:33 PM
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but I'm betting the difference won't be enough to squat with. And much like my ridiculous homeowners insurance, then you'll need to have $1000 hanging out waiting to be used. (with my house its more like $20K, but that's a whol 'nother story).
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All-In [31907]
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pay off car loan....
May 27, 2015, 11:52 AM
[ in reply to CC balance is 2x remaining car loan ] |
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keep collision insurance
cut your lifestyle a bit more
then work on cc debt aggressively
if you cut your collision and then hit something, you'll be screwed and forced to take on more debt.
I would only cut collision if I was out of debt and had the cash to pay for repairs or replacement car. Personally, I have collision on my personal car and I have no debt and cash reserves. Mainly cause it's a mini-van and because wife driving.
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Oculus Spirit [81078]
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DR always says to pay off the smallest debt first
May 27, 2015, 1:31 PM
[ in reply to pay it off and save $68.... ] |
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but I would think it would make more financial sense to pay off the debt that has the worst interest tied to it, re: CC debt.
I guess he says to pay off the smallest loans first to get some type of feeling of doing something. But if I have a 7% interest rate CC (or higher) with $10K on it and a car with $7.5 K at 2 % interest rate, I'm going after the CC first.
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CU Medallion [54758]
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i see bofe sides
May 27, 2015, 1:35 PM
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we just paid off a 'no interest for a year' CC with a good chunk a few months before the year was up...and we were sending a good bit more than the min to THAT...which has already been re-directed to the other remaining CC....
FeelsLikeJohnGoodman.gif
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CU Medallion [54758]
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oh..the 1st (paid off) CC was 'the small balance'
May 27, 2015, 1:38 PM
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now the car is the small balance
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Oculus Spirit [81078]
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Yeah I get his reasoning I guess.
May 27, 2015, 1:43 PM
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Most of his listeners usually start with "We have 3 kids and 50K in CC debt, a $1500/month 30 year house payment, 2 new cars and make $50K / year. What can we do?"
I have a truck payment and a house payment, and honestly, I'm not paying either one off anytime soon even if i could because
1) I need a reason to get up and work 2) I probably won't be keeping either very long and their total interest rate is <5%. Whats the point?
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Heisman Winner [135619]
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My work here is done.***
May 27, 2015, 11:51 AM
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Heisman Winner [105622]
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WHOA, I am in on this late but I have some great advice.
May 27, 2015, 12:40 PM
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Sell car, buy Suburban, go on unpaid medical leave, make wife get waitressing job part-time, have 4 kids, live with your parents in their 3 BR trailer, generally be a pieceofshit. Do you even NEED indurance on cars? Obamacare cost too much, so you don't keep insurance on yourself. The kids have free insurance through Medicaid. Maybe you should see if the gov't has free car insurance too.
You're welcome for job and life advice from SiLofGreenr
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CU Medallion [54758]
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I knew exactly where this was going
May 27, 2015, 1:00 PM
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WAS NOT DISAPPOINT
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Heisman Winner [105622]
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Ask financial questions and I can give monthly updates.
May 27, 2015, 1:16 PM
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I love my life.
That Suburban look good doe...for the time being.
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110%er [6099]
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if you can afford to buy another car if it is stolen or you
May 27, 2015, 3:20 PM
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Wreck it, pay it off and drop the coverage. If you can't take the hit financially if you lose the car, keep the insurance. Either way, you should pay off the loan if you are able to do so.
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CU Medallion [50635]
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my head hurts***
May 27, 2015, 3:23 PM
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Replies: 28
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