Credit Union and Financing

Minsu

yea i got a job just to pay for the car, i have no other expenses. Im gonna pay the car in full in less than two years that the plan im gonna pay 750-800 a month.
with 13-15k down i need 13-15k finance so i can walk in the dealership will full cash so they will be at my feet. thats the plan. would it be smart to get the loan put it as DP then use my cash to pay off the loan? would that not be the smart thing to do.
or just go in full cash and pay the loan afterwards?

Ipl 370gt

TripleBlkZ

Quicker you pay down the loan the less interest will be added on. So for and example if you loan is 15k and you save the money to pay it off in 12 months and do it as a lump sum after 12 month you would have paid interest on the 15k about. Now lets say as a example you are banking 1.5k/mth even in a low interest account ~1-2%/yr but paying 8+% on the loan you are losing the difference. If you take the 1500 and slap it on the loan you now have it pay down that much and when the interest is calculated (most likely a daily calculation) it down with the lower balance so less interest is charge.

Example only numbers are not correct;

15k @ 8% may be $200 interest
13.5k (1500 extra payment) @ 8% may be $150 interest per month

Now compound that extra payment over 12 months and you would be cutting you interest by a decent amount then bankin the money and putting a lump sum down.

Also keep in mind you loan agreement has to allow over payment and early buy out so confirm that before signing. And let the loan run at least a year to build your credit even if you have the money to pay it out. Most financial company's like to see repayment history on your credit not just getting a loan an paying it off in 3months that meaningless for building credit.

TripleBlkZ

Also only get the loan for what you need minus your down payment. In your case looks like will be 30k or 15k loan. 30k might be harder to get because the finance company is now fundin 100% value of car they don't care if you can drop money on it later.

And keep in mind 30k loan will be a ~$500 monthly payment and will all be that unless you rewrite, the lump sum after the fact wont adjust you paymentunlike a 15k which might be only $250/mth

TripleBlkZ

IMO take the lower payment and over pay as you can. You don't want to be stuck with a 700/800 a month payment that you have to make because you signed up for that. Things maybe be good now but 2 years is a long time and what I something happens that you lose your income. It's easy to make a smaller payment with option to over pay the having a large payment and have that unknow risk of now be able to make it and lose the car.

Mt Tam I am

Does this $750/mo budget, include insurance elsewhere in your calculation? Good luck all around.

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