kno

iTrader: (22)

i bought my 2007 350 on Aug 2007 with a loan from the dealer, so far i owe 26k on my loan with a 7% interest. right now i have 30k in my savings acct. i know i can do lots of awesome mods to the car with that but i wanna cut some bills. one of my big ones is my z im paying $630 a month. here is my question, i want to payoff my car but i dont know how the interest works. when you wanna pay your loan in full at once, are they gonna charge me the 7% interest when i go pay my 26k in one payment? if so i would have to pay like 1800 on top of the 26k right? another option i was thinking was buying a 370z base with sport package they go for 33k, that would leave me with a loan of 12k-ish which will result in a new better car and still a lower car payment. or i also had an 07-08 nismo in mind which i can pay it in full from a private seller. what do you guys recommend?

dhays

iTrader: (10)

To answer your first question... In general, you are only paying interest on the amount of money that you have yet to repay to the lender. So, if you repay what you owe now, you won't have to pay any more interest. However, you need to dig out your loan documents to see if there is any prepayment penalty on the loan. This would be pretty unusual on a car loan, but worth checking out.

As to the rest of your options, I would suggest that whatever you do, don't do anything that will result in an auto loan. Second suggestion would be don't even consider buying a new car. New cars are for the foolish or rich. I'm assuming you aren't rich since most rich folk alsready know how money works.

Keep your car and pay off you car loan (after you have maxed out any IRA or 401k contributions for this year).

Dave

kno

iTrader: (22)

good advice ty very much

davidv

iTrader: (2)

No. Interest is calculated on the balance. 0.583 percent/month.

binder

iTrader: (8)

I wouldn't drain your account with this economy but if i HAD to spend it then it would definitely be towards paying the car off. You'll save in the long run by cutting that 7% interest off of there and if you're smart you would take that 630$ a month and put it straight back into the account to build it back up.

It all just depends on how safe you think your job is. If you're in a shaky occupation then i would keep as much saved as possible "just in case".

dhays

iTrader: (10)

Good point. Of course the OP was wondering about spending the money on mods or paying off the loan.

OP: I agree that if your job is at all in question, then you should hang on to your savings. I also agree that if you do pay off the loan (and a 7% ROI is huge right now) then you should take that $630/mo and invest it back into savings.

It is important to have some savings cushion just in case. I'm self employed and my wife has a very secure (if low paying) job but we still have got about $120k in non-retirement/non-business liquid investments sitting there "just-in-case".

kno

iTrader: (22)

again thanks for the advice all very good. you guys saved me from making a mistake. its that i got sooooo tempted last weekend when i went to the new car section while i was getting my z oil changed and saw the 370z. Boy is that car beautiful plus i saw one with sport package going for 33k and was very tempted. im sure i could of got the price down at least 2k. i have a good job, self employed, and im just gonna pay of my car and every paycheck deposit 300 dollars to my savings.

dhays

iTrader: (10)

Sounds like a winner. Believe me, I'd love a 370 as well! Maybe down the road a few years when the 370 is cheaper on the used market...