Hi there, have a question I can't figure out the answer to.

My husband and I have one debt our truck. We have about 2500 in a ing account. We will have about 8 grand in that account by the end of the year. We owe about 20 grand on it with a 10.69 interest rate. We just refinanced to that. Should we keep paying that loan and save money for a house or pay it off as fast as we can then buy the house when we get through that? Why or why not?

Thanks!

Sometimes you just gotta do the math!

 If you have an emergency fund set aside, you're costing yourself money by putting funds into a savings account while you still owe, especially on such a large amount. How much interest is your savings account making each month? Is it enough to offset what your loan is costing?

If you put that $8,000 toward paying off the truck, plus your regular payments, how much longer will it take you to pay it off (take into consideration interest savings)? And when it's paid off, how long will it take you to build your savings, using the money you're using now, plus the amount of the truck payment?

I think the numbers will speak for themselves.

I am in no way a financial consultant.  I can only give you hypothetical advice and would strongly advise you to seek the counsel of a loan consultant or financial planner/advisor.

That being said: 

Your situation is a delicate one and it comes down to a matter of priorities.  Loans are tricky, and I'm hesitant to give you advice without knowing the parameters of the loan agreement (what is the auto loan term - years, months?).  For instance, let's say if you have a 10.69 interest rate on a $20,000 car loan and the auto loan term is 4 years or 48 months.  This means that your monthly payments on the truck loan should be around $513.00.  If you continue to pay this for four years, you will have the loan paid off with about $4,500 dollars interest ($513.00 x 48 months = $24,667) . 

So, if you kept up with your monthly payments of $513.00 without touching your ING account, at the end of your 4 years, you will end up paying a total of $24,667.00. 

Now, I do not know about your personal finances, but a monthly payment of $513 can be a little steep.  If you choose to pay less than that, it could cost you a lot more in the long run.  For instance, if you decide to pay the minimum monthly payment allowed on the loan, you could be paying off that truck for many years.  Like, I said, it comes down to a matter of priorities and you should figure out how much you can afford a month on the truck while still being able to save for your monthly budget, and a future house.

 I hope that this helps a little.  Remember, this is in no way financial advice.  I highly recommend that you seek out a financial advisor to help you with your situation.

Take care.

What is the truck worth?  Personally I would recommend selling it if you can get enough to pay it off, then buy something used for cash.

Not having a payment every month is really nice and gives you a lot of financial freedom, you'll also save on insurance payments.

I am the one who started the thread "save or pay off those bills" so I am an advocate of saving.

You need to know if you can pay off that loan early. There are some loans that you must not pay off early and that may dictate whether you pay it off or not. As far as selling the truck this is really not a sellers market right now. The big auto makers are making it very hard for we the lowly citizens to sell our used vehicles, as they are offering no interest on their loans and most folks will jump on that wagon and buy new instead of buying our used vehicles, been there done that, still have the truck and camper trailer to prove it.

So you really do need to find out the main thing, of if you are allowed to pay off the loan early before you can decide to pay it off or save the money.

its 60 months and it's 10.39 % not 10.69 sorries. 409 a month. Remember we have no other debt and our rent and utilities are 568 a month. I want to get a planner but I didn't think we had enough money to worry about doing that. We don't have nor will have kids or credit cards. With that rebate if we don't give more to ING at 3. something percent will have 3700 in may. I have another 700 set aside to pay in june so I could make a 4400 payment in june but should I....we are thinking of buying  a trailer if we can get it for the same we are paying now. We don't want to sell the truck, we use the truck and we love it. We aren't in danger we just want to do the smartest thing we can do with it.

thanks for the responses....I do appreciate the help

Yes when we refinanced we made sure there were no penalities for early pay off. And we also are paying 500 a month on a 409 payment as if the payment was 500 not 409.

Go to an accountant first then rearange things around to see if you can go with one big loan ...

I say no Im not a math tescher or anything but you need to talk with a bank finance person first before any decessions are made a big loan can get you in big trouble if you miss or  have a late payment then up the interest % it goes...

good luck

cynthia