Should I pay off car loan?

[chiefsfan1]

Hey all. Its been awhile.
My beater Sable is dying and needs replacing.
We owe $5K on the Camry. Should I pay it off? Then buy another car?

 

[901Memphis]

Pay It off then buy a used car in similar condition to the camry if you want to save money. New cars are expensive investment with high depreciation.

There's not much downside to paying off a car loan unless you can't afford that

 

[TTK]

Originally Posted By: chiefsfan1
Hey all. Its been awhile.
My beater Sable is dying and needs replacing.
We owe $5K on the Camry. Should I pay it off? Then buy another car?


In general, never finance a car unless you can get near zero interest rates..

 

[Mr Nice]

Yes, pay off your Camry.

 

[Pop_Rivit]

Originally Posted By: chiefsfan1
Should I pay it off? Then buy another car?


You still owe $5,000 on a 6 year old car?
By all means, pay it off and make your next purchase one you can afford.

Originally Posted By: TTK
In general, never finance a car unless you can get near zero interest rates..


There is no such thing as free money. The loan interest on "zero" or "near zero" interest loans is rolled into the purchase price of the vehicle somewhere. At some point you will pay for the use of that money, so don't get suckered in by the "zero" or "near zero" interest rates.

 

[Warstud]

Depends on the interest rate your currently paying for the Camry vs the interest rate you'll be paying for a New car and the length of loan. Do the Math.

 

[Wolf359]

Originally Posted By: Pop_Rivit
Originally Posted By: chiefsfan1
Should I pay it off? Then buy another car?


You still owe $5,000 on a 6 year old car?
By all means, pay it off and make your next purchase one you can afford.

Originally Posted By: TTK
In general, never finance a car unless you can get near zero interest rates..


There is no such thing as free money. The loan interest on "zero" or "near zero" interest loans is rolled into the purchase price of the vehicle somewhere. At some point you will pay for the use of that money, so don't get suckered in by the "zero" or "near zero" interest rates.


I don't think you understand how low interest rates are these days. You can get 2% from Penfed and that's not rolled into the price of the car because you get it directly from them.

So yes, there is such a thing as free money. At one point their rates were down to 1.5%. S&P 500 has returned anywhere from 7-10% depending on the time period that you look at so some people prefer to invest the money and make money on the spread. Just depends what you're comfortable with.

 

[spasm3]

Originally Posted By: TTK


In general, never finance a car unless you can get near zero interest rates..


Even then, they usually use that as a bargaining chip. For 0% they might not discount the vehicle at all.

 

[99Saturn]

What's the interest rate on the loan? And what are you going to do with the money if you don't use it to pay off the car loan?

 

[KrisZ]

Do the sensible thing and roll in that 5k into a brand new vehicle.

 

[CELICA_XX]

Originally Posted By: spasm3
Originally Posted By: TTK


In general, never finance a car unless you can get near zero interest rates..


Even then, they usually use that as a bargaining chip. For 0% they might not discount the vehicle at all.


Like many things in life, the better your position financially, the better you'll end up.

I got a 0% loan and of course still negotiated the price of the car.

They always try to take advantage of you...

I just went in there and said "look, I'm buying a Prius in the next 24 hours. I will either buy it here, or I'll go to Dallas and buy one there"

 

[Eddie]

Need some information to make a decision.
1. If you have an investment paying a better interest than the car load interest, then don't pay it off.
2. If you can pay it off totally in one payment without, neglecting other necessities like food etc then pay it off.
3. Can you double your monthly payment without causing other problems then pay it off.

Next time buy what you can afford.

Ed

 

[TTK]

Originally Posted By: Pop_Rivit
Originally Posted By: chiefsfan1
Should I pay it off? Then buy another car?


You still owe $5,000 on a 6 year old car?
By all means, pay it off and make your next purchase one you can afford.

Originally Posted By: TTK
In general, never finance a car unless you can get near zero interest rates..


There is no such thing as free money. The loan interest on "zero" or "near zero" interest loans is rolled into the purchase price of the vehicle somewhere. At some point you will pay for the use of that money, so don't get suckered in by the "zero" or "near zero" interest rates.


True, but there is such a thing as a "good deal" with near zero rates.

 

[Warstud]

I think the manufactures offer low to 0% financing when car sales are slow and when inventory is high.

 

[djb]

Our most recent car buy was a Volt lease, the first time I've ever done that.

The reason for a lease is that we effectively got a discount that wasn't readily available with a regular purchase. GM needs to sell a bunch of cars (in this EVs for the quota), but they don't want to drop the list price. So they pile sales incentives into the lease. There didn't appear to be any way to get similar incentives for a straight purchase.

In the end I regretted getting a lease. It was through GM Financial, and was worse than the bad experience I expected. They seemed determined to get a late payment fee, switching their story from "automatic payment is already set up", to "give it a few days for the payment to process", to "you need to do the first payment manually". Then it took seven days after the money was withdrawn from my bank account before it was posted as a payment. I expect that in a few years we'll find they are as unethical and exploitive as Wells Fargo.

 

[chiefsfan1]

Originally Posted By: KrisZ
Do the sensible thing and roll in that 5k into a brand new vehicle.

That's the American Way!!!

we came into a inheritance. Paying off the Camry is first.
We needed a car at the time. I do realize it was not ideal.
We have enough to buy a new car, but wont.
Need some help here. How does one determine how much one can afford?
Im looking at a beater, say a Mazda B3000 for $5K with 140K on the clock.

 

[gregk24]

Originally Posted By: Pop_Rivit
Originally Posted By: chiefsfan1
Should I pay it off? Then buy another car?


You still owe $5,000 on a 6 year old car?
By all means, pay it off and make your next purchase one you can afford.

Originally Posted By: TTK
In general, never finance a car unless you can get near zero interest rates..


There is no such thing as free money. The loan interest on "zero" or "near zero" interest loans is rolled into the purchase price of the vehicle somewhere. At some point you will pay for the use of that money, so don't get suckered in by the "zero" or "near zero" interest rates.


So are you saying he should pay a higher interest rate?

 

[Ihatetochangeoil]

Originally Posted By: chiefsfan1
Originally Posted By: KrisZ
Do the sensible thing and roll in that 5k into a brand new vehicle.

That's the American Way!!!

we came into a inheritance. Paying off the Camry is first.
We needed a car at the time. I do realize it was not ideal.
We have enough to buy a new car, but wont.
Need some help here. How does one determine how much one can afford?
Im looking at a beater, say a Mazda B3000 for $5K with 140K on the clock.


I admire your frugality. Living beneath your means is living well. A new car is NOT an investment, it's an expense that most folks can live without. If I were trying to talk you into buying into an "investment," and I told you that it would cost you 20-40K to get in, followed by $2500 a year for insurance, legal fees (taxes) and necessary maintenance, and in 7 years your "investment" is worthless no matter how well you care for it, does this sound like a "good" investment?

I, too, can afford a new vehicle, but I won't waste my money. Drive it off the showroom floor and around the block, trade it in, and you've just lost $5K. I heard once a financial counselor giving advice on the radio. Several people asked about cars. He said a good rule of thumb is don't spend more than 6 months net income on a vehicle, and he told (using different words) a similar story to what I've mentioned above.

I have enough cash (checking balance) to go into a dealer and write them a good check for a new vehicle. I choose not to. My 14 year old car is very well maintained and I LIKE IT. I also have an aversion to those payment books.

Good Luck!!

 

[Wolf359]

There's lots of rules of thumbs on how much you should spend on a car. Others say no more than 10% of annual income on a car and that includes insurance, taxes, monthly payment and maintenance.

 

[Jim K]

pay cash for cars